21 April 2020

In economic crisis situations, employers must, as far as possible, take targeted measures to save both the jobs of employees and the company itself.

In addition to the recently much-discussed possibility of implementing reduced working hours (see our recent blog post "Reduced working hours (RWH) due to coronavirus"), jobs can also be saved under certain circumstances by deploying employees flexibly and outside the scope of their contractual agreements. Such alternative employment may involve different tasks at the company itself, at a group company or even at a third-party company, subject to compliance with employment law provisions. The employer may also authorize employees to take up a secondary employment of their own choice during periods of absence due to economic reasons.

Assignment to another activity or another place of work

The employer usually hires individual employees for specific activities at a particular place of work. Therefore, it requires more than an instruction from the employer to assign another activity and/or another work location.

On the one hand, this principle can be breached by contractual agreements according to which the employer can assign the employees other (comparable) tasks or different work locations - with the other contractual conditions remaining unchanged. On the other hand, based on their duty of loyalty, employees must temporarily carry out other tasks or accept a transfer to another place of work in the event of urgent operational needs, but not to another company. In both cases, this applies only if the employees can reasonably be expected to perform these other tasks. The following criteria in particular must be taken into account when assessing what is reasonable: duration and operational necessity of the alternative assignment, distance from the old to the new work location, private situation of the employee (residential and family situation), compensatory measures of the employer (e.g. reimbursement of any additional travel costs).

In economic crisis situations, urgent operational needs are likely to be given. The employer can therefore temporarily assign employees - even without a corresponding contractual agreement - to another reasonable activity and/or another reasonable place of work (presumably also within the group). Whether such an alternative assignment is reasonable for the respective employee must always be assessed on the basis of the specific circumstances of the individual case. An assignment of only a few weeks' duration with comparable tasks, with an insignificantly longer commute to work, would generally be deemed reasonable.

However, the instruction that an employee should temporarily work for a third-party company is not permissible even in the case of urgent operational needs. This requires a contractual basis or the express consent of the employee concerned. The employment of the employee with another Group company or with an independent third company also qualifies as personnel leasing within the meaning of the Federal Law on Employment and Labor Leasing and its Ordinance (AVG and AVV). The relevant provisions must be complied with.

Personnel leasing: Temporary transfer

Personnel leasing occurs when a company provides its employees to an external company (placement company) for the purpose of performing work while integrating them into the latter's work organisation. In this case, the placement company does not legally become the employer of the leased employees. However, it does have essential rights to issue instructions to them as well as monitoring and due diligence obligations (quasi-contractual legal relationship; see also Art. 26 AVV).

The leasing of personnel can take various forms (temporary work, agency employment and temporary transfer of employees; Art. 27 AVV) and requires a permit if it constitutes a commercial activity. The only exception to the authorisation requirement is the so-called temporary transfer of employees (Art. 28 AVV), which is of interest in the present case.

Temporary transfers of employees occur when the employer makes employees available on an exceptional basis, at short notice and when an opportunity arises, i.e. not specifically planned. Accordingly, the leasing of employees is not a standard offer of the employer (no regular recurrence), but serves to bridge employment gaps within their own company. Correspondingly, there are no special features in the employment contracts of the employees who are to be leased with regard to assignments in third-party companies, the duration of the employment contract is independent of any assignments in the companies where the employees are deployed and the temporary transfer is not intended to generate a profit.

If a company in an economic crisis, such as the current one, has the option of leasing its employees to a third party company as an exception (not provided for in the employment contract), we believe that this falls under the permit-free, temporary transfer of employees. In its directive on the AVG, SECO also states that the main purpose of the temporary transfer of employees is to preserve jobs in the event of an economic downturn in the company by transferring the employees to another company.

Irrespective of the absence of a permit requirement, employers must still observe the (further) provisions of the AVG and the AVV when leasing employees on a temporary basis (temporary transfer). The company must conclude a leasing contract with the placement company in accordance with Art. 22 AVG. In addition, the employer and the employees concerned must conclude an addendum to the employment contract regulating the leasing and the details of the work assignment (see Art. 19 AVG).

Secondary employment

If employees cannot be leased to another company, but consider the possibility of a second job during their down time, the employer can (if desired) issue authorization. This should be done in writing and the terms of the secondary employment should be regulated. The approved secondary employment must not result in the employees being unable to fulfil any of their primary contractual obligations which are still possible or which may become possible again in the near future. In addition, it must be expressly agreed that the earnings achieved through the secondary employment must be deducted from the salary paid by the employer.

The VISCHER employment team is happy to assist you with any questions you may have.

Authors: Marc Ph. Prinz, Jeannine Dehmelt

Topics: Employment LawCoronavirusFlexible Deployment of EmployeesAssignment of other tasks/work placePersonnel Leasing


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