Bundesarbeitsgericht (Federal Labour Court), Tenth Senate, Judgment of 28 October 1992, case no. 10 AZR 129/92, Entscheidungssammlung zum Arbeitsrecht 247 sub § 112 BetrVG
Appeal against Landesarbeitsgericht (Regional Labour Court) Düsseldorf, Judgment of 13 February 1992, case no. 13 (14) Sa 1213/91
Note: This judgment was cited with approval by the Court of Appeal in Barry v Midland Bank  1 All E R 805, at 821h..
The parties are litigating about the amount of a severance payment to be paid to the plaintiff under a social compensation plan (Sozialplan,, i.e. a collective agreement under § 112 Betriebsverfassungsgesetz 1972 or BetrVG = Works Constitution Act 1972). The plaintiff, who was born on 28 November 1960, had worked for the defendant as a textile worker since 15 September 1975. The plaintiff was made redundant on 30 June 1991 by appropriate notice on the ground that the defendant was closing down the production and the entire works.
Before 1979, the plaintiff worked full time. From 1979 until 1985, the plaintiff worked half-time. Between 17 September 1985 and 31 July 1990, the plaintiff worked part-time at 87.5% of the regular weekly working hours at the defendant’s works. From 1 August 1990, the plaintiff worked 20 hours per week, whereas the weekly working time for full-time employees was 38.5 hours.
There are no male part-time employees at the defendant’s works.
On 13 December 1990, the defendant agreed with the works council (Betriebsrat) on a reconciliation of interests (Interessensausgleich) [an agreement] and a social compensation plan [both under § 112 BetrVG]. As concerns severance payments, the social compensation plan contains i.a. the following provisions:
2. The amount of the severance payment is generally calculated according to the length of time for which the employee was attached to the works. Of this time, only full years which were completed on 31 December 1990 are taken into account. Part-time employees receive severance payments in proportion to the [full-time] working hours under collective agreements (tarifliche Arbeitszeit).
3. It is agreed that the severance payment amounts to DM 600.00 for each full year of having been attached to the works.
10. The maximum overall amount to be paid out is fixed at DM 751,000.00.”
On the basis of the social compensation plan, the defendant made a severance payment to the plaintiff which amounted to DM 4,675.32 net, according to the time which the plaintiff had spent at the works and her working hours at the time when the labour relationship was terminated (DM 600.00 x 15 years : 38.5 hours x 20 hours).
By her action, the plaintiff claims DM 2,149.68 net as an additional amount of severance payment.
The plaintiff believes that her severance payment should amount to a total of DM 6,825.00. She argues that her years of full-time employment must be taken into account with the full amount of DM 600 per year. In addition, she argues that the social compensation plan, as interpreted by the defendant, would amount to sex discrimination against her, since it was the care for her children which prevented her from having continuous full-time employment.
The plaintiff has moved that the defendant should be ordered to pay to her DM 2.149.68 plus interest at 4%p.a. from 3 July 1991.
The defendant has moved that the action should be dismissed. The defendant believes that it is the working hours of the plaintiff at the time of the notice which is to be used for calculating the amount of the severance payment under the social compensation plan, because the social compensation plan was to compensate for the disadvantages which the employees would suffer in the future. In the defendant’s view, this does not violate the principle of non-discrimination, because part-time employees are less in need of protection than full-time employees; the former are less affected by losing their workplace than the latter. This, in the defendant’s view, is a sufficient reason for distinguishing between the two.
The Arbeitsgericht (Local Labour Court) dismissed the action. The plaintiff’s appeal on points of fact and law (Berufung) was without success. By her further appeal (Revision), the plaintiff continues to pursue her claim for payment. The defendant asks for the appeal to be dismissed.
The plaintiff’s appeal is unfounded. The previous instances were right to rule that the plaintiff has no claim for additional severance payment.
I. The Landesarbeitsgericht assumed that, in its interpretation of the social compensation plan, the defendant had calculated the severance payment correctly. The distinction between full- and part-time employees in allocating the amount of severance payment was not to be criticised. The social compensation plan was to ease the loss of social status quo at the time of the termination of the labour relationship. It was therefore justified to calculate the amount of the severance payment in accordance with the working hours at the time of the termination of the labour relationship. The severance payment was not inteded as an additional salary for work performed in the past, but as an aid for bridging the gap until the time when the employee would find new work or receive retirement benefits. For part-time employees, the loss to be compensated equalled their status quo, i.e. that of a part-time employee. Even if the regulation did in fact only apply to women, this did not amount to a violation of the principle of non-discrimination. The distinction was made on an objectively justified basis, i.e. that the value which an employment represents to a full-time employee at the time of the termination of the contract is not the same as the value which it represents to a part-time employee.
II. These considerations of the Landesarbeitsgericht merit approval.
The plaintiff has no additional claim for severance payment. The defendant was right to calculate the severance payment due under the social compensation agreement of 12 December 1990 to the amount of DM 4,675.32 net, and has paid this amount to the plaintiff.
1. According to the social compensation plan, the plaintiff can claim severance payment in proportion of her working hours at the time of the termination of the contract to the [full-time] working hours under collective agreements. As the Landesarbeitsgericht has rightly established, this result follows from an interpretation of the social compensation plan.
According to the established practice of this Bundesarbeitsgericht, social compensation plans are works agreements (Betriebsvereinbarungen) of a special nature and are to be interpreted in the same way as collective agreements (Tarifverträge) (BAG, Judgment of 4 June 1987, case no. 2 AZR. 393/86 n.v.; BAG, Judgment of 27 August 1975, case no. 4 AZR 454/74, Arbeitsrechtliche Praxis no. 2 sub § 112 BetrVG [= Entscheidungssammlung zum Arbeitsrecht § 4 TVG Bergbau no. 4, this reference added by EzA editors]. What is decisive in this context is – in analogy to the principles of statutory interpretation – at first the wording. Then, beyond the purely literal meaning, one also needs to consider the true intention of the parties to the works agreement and, accordingly, the aim and purpose which this provision was intended to serve, provided that, and to the extent that, these have found an apparent expression within the works agreement. One also needs to consider the overall context within which this provision is placed, as the true intention of the parties to the works agreement can be followed from this context; it is only by this way that the aim and purpose of the provision can be established correctly.
In particular when considering the reconciliation of interest of 12 December 1990, it follows from the above that the social compensation plan, in accordance with § 112 subs. 1 sent. 2 BetrVG, was to compensate for, and to ease, those economic disadvantages which resulted from the closing down of the works. According to its aim, purpose and overall context, the social compensation plan intends to compensate for the loss of social status quo of the defendant’s employees at the time of the termination of the labour relationships. This becomes particularly apparent in the provision according to which those who are unable to work due to a long-term illness, and those who are entitled to retirement benefit, do not receive any severance payment. For those employees, there is either no economic value in the lost employment (as in the case of the long-term sick), or this loss is compensated in another way (i.e., by retirement benefits). If the purpose of the severance payment was to remunerate for work rendered in the past, no explanation could be found for the exclusion of those employees.
If one considers furthermore that a social compensation plan, according to its statutory definition, is to provide an employee with aid for bridging the gap between redundancy and either a new employment or, at the longest, the receipt of retirement benefits (BAG Judgment of 15 January 1991, case no. 1 AZR 80/90, Arbeitsrechtliche Praxis no. 57 sub § 112 BetrVG 1972 [= Entscheidungssammlung zum Arbeitsrecht § 112 BetrVG 1972 no. 56; this reference added by EzA editors], it also follows that the calculation of the severance payment is to be made in accordance with the labour relationship at the time of the notice. Accordingly, it is the remuneration received at the time of the termination of the labour relationship which is decisive. In addition, § 10 Kündigungsschutzgesetz (KSchG, Dismissal Protection Act), to which the social compensation plan of 12 December 1990 also refers, relates in its subs. 3 to the monthly earnings for the month when the labour relationship comes to an end.
For the present case, this implies that the calculation of the severance payment under no. 2 sent 3 of the social compensation plan is to be made according to the plaintiff’s working hours at the time of the termination of her labour relationship. Therefore, the defendant has calculated, and paid, the correct amount for the severance payment. The plaintiff has no additional claim for severance payment.
2. Neither does a claim for a higher severance payment accrue to the plaintiff under the principle of non-discrimination. Under § 75 BetrVG, both parties to works agreements are under the obligation to treat equally the employees who are employed at the works. The provision in the social compensation plan, acording to which part-time employees receive severance payments in proportion of their individual working hours at the time of the termination to the [full-time] working hours under collective agreements, does not violate the general principle of non-discrimination, or the prohibition on discrimination against part-time employees, or the prohibition on sex discrimination.
(a) The principle of non-discrimination in labour law prohibits any disadvantaging of individual employees against other employees in a comparable position which is not objectively justified. A distinction is not objectively justfied if there are no reasons for the different treatment whcih merit approval (established practice of this Bundesarbeitsgericht, cf. the latest Judgment of 28 July 1992, case no. 3 AZR 173/92, to be published [Entscheidungssammlung für Arbeitsrecht § 1 BetrAVG Gleichbehandlung no. 2, this reference added by EzA editors].
(b) § 2 subs. 1 Beschäftigungsförderungsgesetz (BeschFG, Act to Promote Employment), generally prohibits any different treatment of employees on the ground of their part-time employment. However, a different treatment of part-time employees can be permitted for objectively justfiable reasons, which, for example, can be based on the performance of work, qualification, work experience, or different requirements to be met at the workplace.
(c) According to the social compensation plan of 12 December 1990, part-time employees receive severance payments in proportion to the [full-time] working hours under collective agreements. The link which this provision makes between the different amounts of severance payment and the working hours of the individual employees is objectively justified. If one considers the aim and the purpose of the severance payment under the social compensation plan, i.e. to provide employees with aid for bridging the gap between redundancy and either a new employment or the receipt of retirement benefits, it merits approval and is reasonable to link [the amount] to the working hours of the individual employee. The individual working hours are essential for the social status quo which the employee loses by the closing down of the works, because the remuneration is calculated accordingly.
(d) Neither does no. 2 sent. 3 of the social compensation plan amount to any violation of the prohibition on discrimination on the ground of sex in the remuneration of employees. Art. 119 subs. 1 EEC Treaty (the principle of equal payment), which, according to the jurisdiction of the European Court of Justice, has immediate effects in the member states, does not only prohibit such discriminations which follow immediately from provisions which expressly distinguish on the ground of sex, but also prohibits provisions which, although they are formulated in a gender neutral way and are thus equally applicable to women and men, nevertheless have negative effects on more women than men for reasons which are based on sex or on gender roles (BAG Judgment of 9 October 1991, case no. 5 AZR 598/90, Entscheidungssammlung zum Arbeitsrecht § 1 LFZG no. 122). However, a different treatment of men and women does not amount to a violation of Art. 119 subs. 1 EEC Treaty, if there are objectively justifiable reasons for this treatment which have nothing to do with discrimination on the ground of sex (ECJ Judgment of 13 May 1986, case no. 170/84, Arbeitsrechtliche Praxis no. 10 sub Art. 119 EWG-Vertrag). There are such reasons in the present case. Even if no men work in part-time employment for the defendant, the aim and purpose of the severance payment under the social compensation plan, i.e. to provide this bridging aid, do justify the differenct calculation according to the individual working hours in relation to the [full-time] working hours under collective agreements. The severance payment under the social compensation plan is aimed at easing the loss of social status quo, and this status quo is in particular reflected in the individual working hours. The same is true for the remuneration to be paid to a part-time employee: it is, on an overall view, lower, and calculated according to the individual working hours. Therefore, the different treatment of part-time and full-time employees in the social compensation plan is justified by the purpose of the severance payment.
Translation by Gerhard Dannemann.
©1997 Gerhard Dannemann