Do certain forms of remuneration transfer on the transfer of an undertaking?
An interesting decision from the Federal Labour Court Germany in the case of Endres v. T-Systems International GmbH has recently been published concerning the transfer of remuneration on the transfer of an undertaking. Our colleagues at CMS Hasche-Sigle, Stuttgart represented the defendant in this claim and they were successful in arguing that specific forms of remuneration do not transfer with the undertaking.
The claimant, Mr Endres, was a former employee of Daimler-Benz AG (DaimlerChrysler AG since 1998). In certain specific circumstances Daimler-Benz AG granted its employees special conditions for acquiring vehicles produced by the company, i.e. Mercedes-Benz cars (the so called "company member scheme"). Employees were able to purchase the vehicles at a reduced purchase price, have them serviced free of charge or at a reduced price, buy spare parts at cheaper prices and sell the vehicles back to Daimler-Benz AG at a later date.
In 2000 DaimlerChrysler AG sold the division in which the claimant worked to T-Systems International GmbH, a wholly-owned subsidiary of Deutsche Telekom AG. In the course of this sale the claimant's employment relationship was transferred to T-Systems International GmbH under the laws associated with transfers of undertakings. The claimant, who had purchased Mercedes vehicles under the company member scheme on a number of occasions ordered a new Mercedes after his employment relationship had passed to T-Systems International GmbH and requested a discount on the basis of these provisions. The defendant, T-Systems International GmbH, turned this down on the grounds that the discount could not be granted to former group employees of Daimler-Benz AG.
The Federal Labour Court ruled in favour of the defendant. Its interpretation of the special benefit granted by the claimant's former employer Daimler-Benz AG was that the successor company, T-Systems International GmbH, was not under an obligation to grant staff whose contracts had been transferred the right to purchase products from their previous employer (here Mercedes-Benz vehicles) with the same special staff conditions. The Court ruled that staff purchases could only be made for products which the employer actually produced itself. The Federal Labour Court expressly ruled that the loss of the claimant's right to purchase Mercedes-Benz vehicles at special conditions did not constitute a breach of the business transfer provisions (in Germany § 613 a of the German Civil Code). The Court also dismissed the claimant's claim for financial compensation against T-Systems International GmbH.
This is an important decision. It distinguishes between different kinds of remuneration and suggests that remuneration which is linked to a certain employer and its products does not necessarily transfer.
This article was written in collaboration with Oliver Simon of CMS Hasche Sigle.
