Bonuses are permissible weapons to break strikes

Judgment of the Federal Labour Court of 14 August 2018 in Case No. 1 AZR 287/17

The Federal Labour Court (Bundesarbeitsgericht) recently handed down an important judgment on the German law applicable to strikes: as a matter of principle, employers may offer employees bonuses in order to encourage them not to take part in strike action (strikebreaking bonuses).

What were the facts of the case?

The plaintiff was an employee, who worked full-time in sales for a retail company and received a gross monthly salary of EUR 1,480. In 2015 and 2016, members of the German United Services Union (ver.di, the Vereinte Dienstleistungsgewerkschaft) went on strike over a number of days at the facility at which the plaintiff worked. The aim of this strike action was the adoption of a collective agreement, which recognised regional collective retail wage agreements. Before the strike started, the employer issued a company notice stating that all employees, who chose not to participate in the strike but instead carry out their normal duties, would be paid a strikebreaking bonus. This bonus was first set at EUR 200 gross for each day of the strike for full-time employees, and was later reduced in a subsequent company notice to EUR 100 gross (part-time employees would be paid proportionately). The employee took up the call to strike and stopped work for a number of days. Despite this, he brought a claim for payment of the strikebreaking bonus in the amount of EUR 1,200 gross. The claimant relied on the labour law principle of equal treatment: in line with this principle, where an employer adopts measures, which are intended to benefit employees, the employer may not arbitrarily favour one employee over another comparable employee. Accordingly, the plaintiff argued, the strikebreaking bonus constituted an unjustified benefit for those employees who chose not to participate in the strike action. Employees who chose instead to strike should also have a claim for the payment of the respective bonus.

How did the Federal Labour Court decide?

The Federal Labour Court (BAG) held that the strikebreaking bonus was an acceptable weapon for employers. The offer of a bonus payment to all employees who were willing to work did constitute unequal treatment between striking and non-striking employees. However, this was justified under the law related to industrial disputes. The employer sought to use such payments to avoid disruptions to their operations and to counteract the pressure from the strike. The freedom under labour law to use various weapons applies to unions and employers equally and it allows an employer to use a strikebreaking bonus as a weapon. The union was not defenceless against the offer of a strikebreaking bonus and could adjust its battle tactics (e.g. by rotating which employees were striking). In contrast to the lower court, the BAG held that the amount of the strikebreaking bonus would normally not be a suitable criterion to take into account when assessing the appropriateness of the measure. The lower court held that the first bonus of EUR 200 was disproportionately high and therefore inappropriate because it exceeded the daily earnings of an employee who chose to strike many times over. In contrast, in the BAG’s view, the amount of the strikebreaking bonus was not a suitable criterion for the assessment of the appropriateness of the strikebreaking bonus, because the amount would be subject to an economically self-regulating effect in any case and, in particular, it would directly influence the effectiveness of the strikebreaking bonus as a weapon.

What are the practical consequences?

The BAG rightly confirms its previous case law, which viewed the offer of a strikebreaking bonus before or during strike action as a permissible weapon, in principle. Further, in this judgment, the BAG expressly clarifies, for good reason, that the amount of the strikebreaking bonus as compared to the employee’s income will not normally be relevant to the question of the appropriateness of the bonus. Employers therefore do not have to ensure that there is a specific ratio between the strikebreaking bonus and the employee’s income in order for the bonus to be legal admissibility.

Which practical tips should companies note?

Companies should definitely note that, in line with the judgment of the BAG, an offer of strikebreaking bonuses to employees, who choose not to strike, can only apply to future strike days. Any retroactive offer i.e. after the industrial dispute has ended (such as to recognise the loyalty of employees, who did not participate in the strike, or to honour exceptional burdens caused by the strike action) is impermissible: such a retroactive effect would allow employees, who took part in the strike action, to successfully claim payment of the corresponding strikebreaking bonus. Employees must therefore ensure that any strikebreaking bonuses are offered before or during the strike action and that they only apply to the future. In addition, employers should also keep be aware of the risk of a so-called collectively agreed disciplinary clause after a strike. In many cases, at the end of industrial action, a so-called collectively agreed disciplinary clause is agreed, in order to restore peace in the workplace. This is quite common in the wake of a new collective agreement, and prevents the employer from asserting its legitimate interests in connection with the excesses of the strike action. If the collectively agreed disciplinary clause contains a passage, for example, which provides that strike participants should not be placed at “any disadvantage”, strikebreaking bonuses must, in principle, be awarded retroactively to striking employees, too.

If you have any questions related to this topic, please feel free to contact Dr Wolfgang Lipinski (Lawyer, Licensed Specialist for Labour Law) and Florian Denninger (Lawyer).