ArbG Essen: Inflation compensation also during parental leave

A provision in the collective agreement on special payments to mitigate the rise in consumer prices dated 22 April 2023 ("TV Inflationsausgleich"), which excludes employees on parental leave from receiving inflation compensation, is therefore in breach of the principle of equality under Article 3 (1) of the German Basic Law. Employees on parental leave must therefore be treated as if they belonged to the group of people who are eligible.

(ArbG Essen, judgement of 16.04.2024 - 3 Ca 2231/23)

No objectively comprehensible differentiation from other eligible persons without remuneration

Sections 2 and 3 of the TV Inflationsausgleich require that the employee was entitled to remuneration on at least one day between 1 January 2023 and 31 May 2023 in order to be eligible for the inflation compensation and also that they had this entitlement on at least one day in the reference month.

During her parental leave, the claimant did not fulfil this requirement. However, she successfully invoked the principle of equality under Art. 3 para. 1 of the German Basic Law. The court ruled that the exclusion of employees from the group of beneficiaries was objectively arbitrary.

Decisively, the court took into account that the inflation compensation does not constitute remuneration for work performed, to the legal detriment of the effectiveness of the collective agreement. Rather, the parties to TV Inflationsausgleich also provided for an entitlement to inflation compensation in other cases without remuneration. Employees who are not paid a sick pay supplement by the social insurance institutions due to cash benefits, as well as employees who only receive child sick pay during the reference period, are eligible under the TV Inflationsausgleich.

The court considered the cases to be comparable insofar as the employment relationship continued in each case without the obligation to work and remuneration being paid as consideration for such work. The employer did not provide any financial contributions. In all three cases, employees were "loyal to the company", meaning that a return to work could generally be assumed. All three groups of employees were also equally affected by the increased cost of living, which the inflation compensation is intended to counteract.

With that said, no consistent differentiation had been made. The Labour Court did not accept the fact that, in contrast to the other two cases, the main contractual obligations during parental leave are not 'impaired' but are suspended, as a permissible differentiation criteria. The fact that the end of parental leave has already initially been determined does not justify a different judgement.

Legal consequence: payment of the inflation compensation

The legal consequence of the violation of the collective agreement provision against Art. 3 Para. 1 of German Basic Law was not the invalidity of the entire collective agreement provision, but only the invalid exclusion provision. As a result, the employee received the entire inflation compensation claimed.

However, the court did not award the claimed compensation in accordance with Art. 15 Para. 2 of the German General Equal Treatment Act (AGG) because the defendant employer had not acted with at least gross negligence, as required by Art. 15 Para. 3 AGG. The discriminatory nature of the provision was not apparent. Moreover, contrary to the plaintiff's view, Section 15 (3) AGG also conforms to EU law.

Conclusion

Against the background of this decision, employers are well advised to carefully examine any claims for inflation compensation and to await further developments in this matter. The Essen Labour Court allowed the appeal due to a lack of sufficient supreme court case law on the grounds of fundamental importance.