No impermissible favoritism through high severance payment to a works council Press release no. 15/18 on BAG 21.03.2018 - 7 AZR 590/16

The plaintiff had been employed by the defendant since 1983. Since 2006, he held the position of chairman of the works council with a monthly gross salary of around EUR 5,000.00. In the summer of 2013, the defendant made serious allegations against the plaintiff. The plaintiff allegedly sexually harassed female employees. The works council refused to approve the extraordinary dismissal of the chairman of the works council as requested by the defendant. The defendant therefore initiated proceedings to replace its consent to the extraordinary dismissal at the competent labor court, citing conduct-related reasons that were disputed by the plaintiff. In these proceedings, the parties concluded an out-of-court termination agreement. The employment relationship was to end by mutual agreement on December 31, 2015. Until this date, the plaintiff was released from his duties by the defendant with continued payment of his salary. In addition, the plaintiff received a severance payment of around EUR 189,000.00 gross. After receiving the severance payment, but while the termination agreement was still being processed, the plaintiff no longer wanted the termination agreement to apply against him. In summer 2014, he therefore filed an action with the labor court to have the termination agreement declared null and void. The termination agreement unduly favored him as a member of the works council contrary to Section 78 sentence 2 BetrVG, which resulted in the invalidity of the termination agreement pursuant to Section 134 BGB.

The labor court dismissed the claim. The Saarbrücken Regional Labor Court also did not follow the plaintiff's argument and dismissed the appeal.

The BAG confirmed the decisions of the lower courts. According to Section 78 sentence 2 BetrVG, members of the works council may neither be disadvantaged nor favored due to their position. If an employer wishes to terminate the employment relationship with a member of the works council for cause and has already initiated a procedure to replace consent, a termination agreement concluded in parallel to the procedure does not generally constitute an impermissible favoritism. This also applies if the negotiating position of the works council is more favorable than that of a "normal" employee without a works council position. The more favorable negotiating position of the works council member is based solely on the special protection against dismissal regulated in Section 15 KSchG and Section 103 BetrVG.

Conclusion: With this ruling, the BAG has strengthened the principle of contractual freedom. In addition, the BAG has created legal certainty: Companies may pay higher severance payments to works council members compared to "normal" employees in order to avoid the high litigation risk that exists due to the special protection against dismissal. Nevertheless, care should be taken to ensure that there is an objective reason for the payment of special benefits to works council members in order to avoid the legal consequence of nullity pursuant to Section 78 sentence 2 BetrVG.