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Neighbor Germany

Author: Christian Lentföhr, attorney-at-law

Some basic tips how to deal in Germany
 
To start a business in Germany and its future success is highly depended of your understanding for a foreign culture. Whether you read Madame de Stael, Gordon A. Craig or Brigitte Sauzay, these are some of the magic rules you should keep in mind while dealing or working with "the Germans".
 
Tip No. 1: Choose your representatives carefully
 
In case you are planning to settle a German branch office, it is absolutely necessary that your representative speaks German fluently, knows already about Germany and the Germans, and that he is able to understand and accept the German attitudes and customs and learns live them. If you are able to find such a perfect person ask whether he (or she) is likely to explore the following jungle of German rules to business.
 
Tip No. 2: Take care for the relation to your German partner
 
This is what Germans find absolutely shocking: working short term, improvisation, last minutes solutions. Your partner will deeply appreciate a maximum of information provided in the right moment.
 
Not to early, not to late.
 
Tip No. 3: Respect delays and questions
 
Your partner will take respect and awaits that you respect his well established procedures. You will be judged by your respect of delays and time for answering questions, delay of delivery or delay of payment etc.
 
Answer any question immediately. If possible on the same day.
 
If you cannot answer immediately, inform your representative to indicate precisely when you will give him a decisive response.
 
Keep in mind that all questions posed in a letter or during a discussion deserve a written response.
 
Respect any time schedule you have agreed to – even if you feel a delay might not be foreseeable from your side.
 
Prepare every meeting with a detailed order of topics – and do not hesitate to recall to the topic of the meeting, name date and place, name the points of discussions, measures to be taken and so on.
 

Tip No. 4: Prepare yourself for the meeting
 
In Germany, a meeting has not the same sense as it might have in your country. Each meeting is a supplementary step to a decision. At each single step the relevant items are carefully examined and discussed. Only these, and no others.
 
Tip No. 5: Treat all your German partners with the same courtesy
 
The Germans work in organizations strongly segmented and in which information will not circle but only run through channels predetermined. If necessary give information twice through different channels.
 
Whatever the position in hierarchy of your opposite might be, treat the secretary with the same courtesy as the chef. You will have to pass her office first.
 
Tip No. 6: Never forget the rules of the game are different
 
Trading abroad is like passing a strange jungle, and behind each bush a native awaits you with bow and arrows.
 
Everything is different . . . the rules of competition, the market, the juridical form of companies and societies, the rules and customs of the financing banks, the role of syndicates and trade unions.
 
Don’t worry – be happy . . .
 
Of course all of these rules, taken from "Hall/Hall: Les différences cachées – comment communiquer avec les allemands", will not apply in each case for one hundred percent. But we feel it as our task to lead you through the obstacles and show you the famous pennies at the end of the rainbow.
 
 
Basic Rules of German Labour Law
 
The Laws of Labour in Germany, these are several public and private directives, which regulate the relation-ship between employer and employee, and which will give the legal frame to and determine the conditions of the work.
 
It is characteristic for the German labour law, that it is not a public domain. The rules are set by the legislative, by case law decisions of the Bundesarbeitgericht, collective agreements between unions and employers as well as collective agreements between employees and employer and finally the working contract. Moreover, for the protection of the employee, the Unfallverhütungsvorschriften (directives for protection against accidents) shall be considered. They describe the technical security, which must be observed for machines and technical facilities.
 
Regulations of the laws of labour will be found:

Recht des Arbeitsschutzes:

Private international labour law
 
Regarding the growing international interdependence, the question of the governing law is of importance for both employee and employer.
 
Example: A foreign employee is working at Germany or vice versa. There is no applicable international contract that binds all states on a common labour law. Which national labour law is applicable ?
 
Practically all employees, which are working within Germany, are submitted under German labour law. All other states claim the same exclusivity for their national laws.
 
However, regarding German international private law, article 27 EGBGB, the parties of labour contract are free to determine under which national law the contract is construed. This is of importance, if the labour contract has an international relation. An international relation is given either when one of the parties has a foreign nationality or the working contract has to bee fulfilled outside Germany. As long as there is no explicit choice of law, the laws of the state have to be applied, to which the working contract is mainly connected. This is the state:
 
- in which the employee will do normally his job, even if he is send for a while to an other state
 
- in which the branch office is settled, which formerly employs the employee, as long as the employee will not do his job regularly within the same state.
 
However, special circumstances may indicate a closer connection to another state, in which case the laws of the latter state are to be applied, article 30, § 2 EGBGB. This circumstances may be a common foreign nationality of the parties, seat of the employer, the contract language, currency, year of contract and so on.
 
The employee may not by choice of law derogated of the protection, which is given by ios cogens of the state which has the closest connection to the working contract (ordre public), article 30, § 1 EGBGB.
 
German courts will have international jurisdiction for all claims of foreign employees working inside Germany. There is also a tendency to claim for international jurisdiction in cases German employees are working abroad.
 
 
Basic terms of German labour law
 
Employee
 
There is no legal definition of the term "employee". However, jurisdiction worked out some basic points:
 
- the degree of dependence from orders
 
- time and place of labour
 
- membership in employer’s organization
 
- relationship an dependence to other employees
 
Since the costs for dependent work by employees are extremely high in Germany there is a strong tendency to work in so called "free collaboration". A free collaborator in this sense means a person who is working on his own costs for more or less one employer, mostly inside the office of the employer but without contractual regulation of his working hours and vacancies. To prevent this kind of working contracts, the courts of the first instance try to give a new definition for employees by watching the economic dependence of collaborateur.
 
! Since 1999, these type of workers are generally covered by social insurance. The costs have to be borne by the employer!
 
Employees in leading positions
 
As employees in leading positions, those persons are considered, who are in the functions of the employer, leading the enterprise in part or totally. In principal, employees in leading position are considered as employees under the protection of labour law. There are only a few exceptions due to their special confidential relationship to the employer:
 
- they are stronger bound to the interests of the employer as other employees
 
- they are under obligation for special performance of their working contract
 
- with regard to the confidential relationship the working contract may be terminated easier than regular working contracts
 
How to enter into a working contract
 
The parties of a working contract will mostly use the newspapers to get in contact. The insertion must be sexually neutral for either men or women, because of the prohibition of sexual discrimination.
 
The employer has to treat all certifications and other papers of the employee confidentially and may not disclose it to other persons.
 
The employer may not give the impression to the employee that a working contract will come into existence. Otherwise he will have to pay damages to the employee, when employee terminates his old working contract without getting a new one. The employer will have to pay the travel expanses when he ask the employee for visitation.
 
In principal, the employee is obliged to answer questions of the employer while applying for a working contract. However, there are a lot of questions which are legally forbidden. In these cases, the employee is not obliged to answer these questions correctly.
 
All questions concerning the professional career, knowledge and experiences, certification may be posed.
 
Some forbidden questions:
 
- It may not be asked, whether a female candidate will marry in the next future due to the protection of motherhood.
 
- Due to European law the question for pregnancy is forbidden.
 
- Sanity of the candidate may only be asked for with regard to existing illness which may hinder the candidate to perform his working contract. Earlier illness may only be asked for in case, it is relevant to the new working contract.
 
- Membership of an union may not be asked for.
 
Salary of former working contracts may not be asked for.
 
- Membership of religion or party may not be asked for except the candidate applies for a job by church, a party etc.
 
In case the employer has more than twenty employees, the legal representation of the employees the so called Betriebsrat, must be involved before the signature of the working contract.
 
 
Vacancies
 
By law each employee is entitled to 24 working days per year for vacancies. By collective agreement between trade unions and employers mostly 30 days are foreseen. Considering that Germany is in a leading position for legal holidays you will time by time miss your staff.
 
Vacancies must be taken and given (!) until the end of december of each year. On demand of the employee, this period may be prolongated until 31st of march.
 
Working permission
 
Members of the states of the European Union or the European Economic Space need no working permission for a working contract in Germany. They neither need a visa but a passport. They will get a permit for residence for at minimum five years after the conclusion of the working contract.
 
Other persons not being member of a EU or EES state will need a valid passport, a residence permit and a working permission, as long as there is no other bilateral agreement between Germany and their mother state. Since Turkey has an association-agreement with the EEC some special regulations will apply.
 
A missing working permission entitles the employer to terminate the working contract. In case of missing working permission, the employer may be fined up to 100.000,00 DEM or sentenced to jail.
 
Labour contracts limited in time
 
Since 1996 a working contract may be limited up to 24 months, without any special reason. During this period a working contract may be prolongated for maximal three times. An unlimited working contract may not be derogated by a limited working contract. The prolongation of two limited working contracts must be without interruption.
 
An exception is made for employees elder than a sixty years. They may receive limited working contracts without further legal obligations.
 
Termination of Labour Contracts
 
A labour contract may end either by termination from either side or by mutual agreement from both sides. If an employer has more than five employees, the law on protection against termination of labour-contracts (Kündigungsschutzgesetz) demands a justification of the termination.
 
The termination of a labour contract is justified if a specific reason is given, which should be named to the employee.
 
Legal reasons are:

- reasons in the person of employee
 
- reasons in the behavior of the employee
 
- reasons in the enterprise itself, namely the lack of labour.

By law it is further required, to consider social effects of the termination for an employee. Therefore a social comparison (Sozialauswahl) has to be made between employees on the same hierarchy-level, regarding age, marriage, children etc.
 
However, the same social idea can require to offer another job to the employee. In general, this job should have the same standard of qualification and same payment. If no such job exists, it might be necessary to offer a less qualified and less paid job. Hence, a termination of a labour contract is highly problematic.
 
! Please find legal aid as soon as possible. !
 
To specify the approximate costs of a fair and unproblematic termination is difficult. In general, the value of indemnification will be calculated on the basis of the duration of the labour contract on the one hand and the legal justification of a termination on the other hand.
 
 
» Part 2: German Company Law - legal and fiscal aspects
 

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