Termination of working from home agreement

In a decision dated March 16, 2023 (Case No. 18 Sa 832/22), the Regional Labor Court of Hamm, Germany, ruled that the termination of an additional agreement on working from home is permissible if the employer was effectively granted the right to terminate the agreement independently from the employment contract.

The Case

The parties dispute whether the claimant is entitled to perform his work from home in accordance with a side letter in addition to his employment agreement.

The employer operates a software company located in B. The claimant lives elsewhere. He has been working for the employer as a sales account manager since February 1, 2017. The parties entered into a "Supplementary Agreement on Working from Home", signed November 29, 2016, allowing the claimant to perform his work primarily from home. To terminate this agreement, the parties agreed the following:

"# 7 Termination home-based work

This Agreement shall terminate at the latest concurrently with the employment relationship based on the employment contract between the parties, dated November 28, 2023, unless terminated earlier by one of the parties.

Termination of this agreement must be in writing at one month's notice. Upon expiry of the notice period, the right to working from home shall end with the effect that the employee shall then perform his work at the company’s office."

After the claimant had been on sick leave for several months, the employer terminated the additional agreement. The notice letter included a statement that the underlying reasons for the agreement to working from home had changed to an extent that the only conceivable option for the claimant to continue his employment with the company, at the time, was to perform his work in the office at the company's headquarters in B.

The employee took legal action against the dismissal. He claims that the provisions of the supplementary agreement are so called ‘pre-formulated general terms and conditions’ (AGB) of the employer. The right to terminate the agreement independently from his employment is invalid.

The court’s reasoning

The employee is not entitled to perform his work primarily from home on the basis of the additional agreement of November 29, 2016. The employer has terminated the arrangement effectively. As a general rule, a termination affecting only single terms and conditions of an employment, is unlawful under German law, since a unilateral change of contractual employment conditions against the will of the other party is legally impossible. However, an independent termination can be permissible if the terminating party has been explicitly granted the right to do so. In this case, a unilateral amendment of employment conditions does not take place against the will of the other contracting party, but on the basis of the agreed right of such an independent termination.

The agreement also does not circumvent the laws of mandatory employee protection against dismissal (Sec. 1, 2 German Protection Against Dismissal Act). The termination did not affect the main duties of the employment relationship being reciprocally related (“Synallagma”), but the question whether and under which conditions the employee was allowed to work from home.

Even if the working from home agreement as a whole or just the provision of # 7 were to be regarded as ‘pre-formulated general terms and conditions’ (AGB) with the effect to be reviewed under the law of general terms and conditions (Sec. 307 to 309 German Civil Code (BGB)), this does not result in the invalidity of the termination provision. The agreement on working from home does not relate to a contractual obligation of the employer, but to the work location, which is covered by the employer's right of direction. The employee is also not unreasonably disadvantaged. The court’s evaluation is guided by legal principles stipulated in Sec. 106 German Trade Regulation (GewO), leaving the right to determine the place of work to the employer. The termination provision agreed between the parties does not deviate significantly from the legal valuation.

Comments

In his legal action, the employee only challenged the termination provision of the agreement on working from home. The court did not have to decide on the employer’s instructions coming along with the termination letter to perform other duties now in the office.

The decision is encouraging for working from home arrangements in the future. Employers will now find it easier to agree on such agreements with their employees, a practical need that meets the current labor market situation.