Term and Definition of Company Sanction
Die Company Sanction is a measure within labor law that can be imposed by employers on their employees as part of internal disciplinary procedures. It constitutes a repressive action that is applied within certain statutory and contractual boundaries. Company sanctions are generally used as penalties for breaches of contractual duties and—depending on the seriousness of the violation—range from warnings to salary deductions. The application of company sanctions is mainly found in collective labor law, particularly in businesses with works councils and pronounced co-determination.
Legal Foundations of Company Sanction
Statutory Regulations
Under German labor law, there is no explicit statutory basis for company sanctions in the sense of a catalog of norms. Their application relies on general regulatory labor law principles, collective bargaining agreements, and, in some cases, company rules, shop agreements, or individual employment contracts. Section 87, paragraph 1 no. 1 of the Works Constitution Act (BetrVG) grants the works council co-determination rights concerning regulations on company order and employee conduct in the workplace, and explicitly in disciplinary measures.
Collective Bargaining Agreements and Shop Agreements
Parties to collective agreements have sometimes stipulated detailed provisions regarding the types, requirements, and procedures for company sanctions within collective bargaining agreements. Likewise, shop agreements under sections 77 et seq. BetrVG may contain rules on the imposition and implementation of company sanctions. These regulatory frameworks specify the type, scope, and prerequisites for internal company sanctions.
Contractual Agreements in Employment Contracts
In individual cases, specific sanctions may be stipulated in employment contracts. However, these agreements must not contradict legislation, collective bargaining agreements, or shop agreements. Individual contractual provisions can only take effect if there are no conflicting collective law norms.
Types and Forms of Company Sanctions
Common Company Sanctions at a Glance
The most common forms of company sanctions include:
- Warning: Written notice of a breach of duty, combined with the threat of further sanctions.
- Reprimand or Formal Warning: Reprimanding measure which can serve as a preliminary step toward later termination.
- Fine or Salary Deduction: Financial sanctions that must remain within the limits permitted by law.
- Reassignment or Transfer: Reassignment to another workplace as a disciplinary measure, provided this is permissible under collective and individual contractual law.
- Temporary Exclusion from Company Benefits: Temporary withdrawal of voluntary benefits.
Certain measures, such as salary deductions, are permissible only under special circumstances and within narrowly defined limits, as they significantly interfere with property rights.
Distinction from Other Labor Law Sanctions
The company sanction must be distinguished from other labor law instruments such as the formal warning, which primarily serves to document a breach of duty. According to established case law, dismissal is the most severe sanction and does not qualify as a company sanction in the strict sense.
Requirements and Procedure for Imposition
Co-determination by the Works Council
According to section 87 para. 1 no. 1 BetrVG, the works council must be involved in the introduction and structuring of company sanctions. A workplace order introducing company sanctions without co-determination is ineffective with regard to its penalty provisions. The statutory basis aims to protect employees from arbitrary and disproportionate disciplinary measures.
Principle of Proportionality
The labor law instrument of company sanction is subject to the principle of proportionality. A sanction must be suitable, necessary, and appropriate. The aim of the measure—to restore company order—may be pursued only to the extent required to eliminate the disruption.
Hearing and Procedure
Before a company sanction is imposed, the employer must routinely provide the person concerned with a hearing. At the same time, the procedural requirements set out in collective bargaining agreements, shop agreements, or company rules must be observed. If these requirements are neglected, the company sanction can be challenged.
Legal Consequences of Impermissible Company Sanctions
Company sanctions that are impermissible or imposed in violation of mandatory co-determination rights may be overturned by labor courts. In addition, the affected employee may be entitled to correction of their personnel file, reimbursement of withheld amounts, or compensation for damages. A measure not based on a proper legal basis constitutes an unlawful act and is therefore ineffective.
Relationship to Other Sanctions in Labor Law
Company sanctions compete with other labor law instruments, such as non-promotion or reassignment for other reasons. The chosen sanction must take into account the individual circumstances of the case, the seriousness of the breach, and the employee’s length of service. Repeated company sanctions—if properly documented and proportionately imposed—may, in the event of recurrence, serve as an indication of the legitimacy of supplementary labor law measures (e.g. dismissal).
Options for Appeal and Legal Protection
Employees may file a lawsuit against improper company sanctions before the labor court. The procedure is governed by the provisions of the Labor Court Act (ArbGG). In practice, internal company complaint bodies—if available—are often recommended as a first step.
International Comparison and Historical Development
Historical Background
The concept of the company sanction was a widely used labor law instrument, particularly in the first half of the 20th century, especially in the context of large industrial enterprises and the public sector. With the progressive strengthening of individual legal protection and statutory co-determination rights, the importance of the classic company sanction has declined.
Comparison with Other Legal Systems
In other legal systems, such as in Anglo-Saxon countries, comparable disciplinary orders usually exist as part of the disciplinary procedure, but are subject to different legal regulations and procedural standards.
Literature and Further References
- Dütz, Labor Law in Practice, 5th edition, Munich 2020.
- Däubler, BetrVG Commentary, 17th edition, Frankfurt am Main 2021.
- ErfKomm, Provisions and Explanations on Works Constitution Law.
Note: These explanations provide a comprehensive overview of the legal classification of company sanctions in German labor law and cover their main areas of application, requirements, and limitations.
Frequently Asked Questions
What legal requirements must be met to impose a company sanction?
In order to impose a company sanction, certain legal requirements must be observed. In principle, the effectiveness of a company sanction requires a breach of duties applicable in the company, workplace regulations, or contractual employment conditions. The management or the responsible body, e.g. the works council, must carefully examine the facts and act in accordance with the labor law principle of equal treatment and proportionality. Furthermore, it must be considered whether a company order exists that allows for corresponding sanctions in the first place. The affected person must be granted the right to be heard and the opportunity to respond to the allegation. In addition, the respective co-determination rights of the works council according to section 87 para. 1 no. 1 BetrVG must be observed, insofar as measures affecting company order are concerned.
What statutory limits apply to company disciplinary measures?
Company sanctions must not violate higher-ranking law, such as the General Equal Treatment Act (AGG), the Protection Against Dismissal Act (KSchG), the Works Constitution Act (BetrVG), as well as applicable collective bargaining agreements or individual employment contracts. In particular, it must be noted that there are no legal requirements that provide for a rigid sanction system for company penalties. Only measures that do not infringe upon the employee’s personal rights or constitute an impermissible disadvantage are allowed. Likewise, a company sanction must not consist of the threat or execution of impermissible sanctions, such as fines without a corresponding tariff or contractual basis.
To what extent does the works council have a right of co-determination in company sanctions?
The works council’s right of co-determination must be strictly observed when drafting company orders, including provisions on company sanctions, under section 87 para. 1 no. 1 BetrVG. This applies to both the introduction and application of company sanctions. Companies are required to involve the works council when introducing or amending such regulations. If the employer imposes a company sanction without the works council’s participation, the measure is generally ineffective. The works council may also exercise the right to take initiatives in case of violations and seek the removal of impermissible measures.
What are the legal consequences of an invalidly imposed company sanction?
A company sanction imposed without a legal basis or without involving the works council is invalid. As a consequence, the affected employee must not suffer any legal disadvantage. There may be a right to rescind the measure or to claim damages, for example, if an unjustified fine was withheld. Additionally, in the event of serious violations, the works council may assert works constitution law claims for cessation. In the event of a dispute, the effectiveness of the company sanction may be reviewed by the labor court.
What role do collective bargaining agreements and shop agreements play in connection with company sanctions?
Collective bargaining agreements and shop agreements may contain provisions on company sanctions or provide supplementary regulations regarding how and under what preconditions they are permitted. If a sanction provision is included in the respective collective agreement, the employer is bound by it and may only act within the framework specified there. Shop agreements often specify the procedure, sanction catalogues, and procedural rights of those concerned. If such rules are absent, company disciplinary measures are only possible to a limited extent and in accordance with the general principles of labor law.
Can employees take legal action against an imposed company sanction?
An employee affected by a company sanction may pursue a legal remedy before the labor court. In the context of a declaratory action under section 256 ZPO, for example, it can be determined whether the measure was lawful. In the case of salary deductions or fines, the employee may file a payment claim against it. Legal recourse is particularly available where there are formal or substantive errors in imposing the company sanction or where the measure disproportionately infringes on the employee’s rights. The court conducts a comprehensive review of the legality of the company sanction, including co-determination, appropriateness, and proportionality.
