Germany’s labour law and gas crisis – disruption in operational process can create havoc and jitters especially if it is “no work – no pay” !!!!
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GAS CONFLICT DROWNS GERMANY IN CHAOS – THROTTLING SHUT DOWN OF GAS SUPPLY TO COMPANIES
Karma who has ventured into global terrain walks and talks to understand the imbroglio in Germany!
The European gas crisis, triggered by the conflict in Ukraine, continues to pose tremendous economic challenges for the continent, directly hitting hard on Germany. The future prospects are dim because even if the resumption of gas deliveries takes place through the Nordstream 1 pipeline, it will not be of any big help as there are chances of only 20 percent of the previously usual gas volume that perhaps will be available through the pipeline, and to add to this, this assumption may not bear significant results as there is no certainty of this meager supply as well.
German Economics Ministers’ assurance?
“We just don’t know. Everything is possible.” This was German Economics Minister Robert Habeck’s succinct response to the question currently consuming his country’s government, industry, and public: When the 10-day scheduled maintenance to the Nord Stream 1 pipeline ends shortly, will the Russian state-controlled gas exporter Gazprom resume deliveries? Or will the President of Russia perform a gasectomy on Germany?
Let us take a look at what the report says :
- The Federal Network Agency’s latest supply status report shows how much gas is currently flowing in at three connector points as follows :
- Since 23 June 2022, the alert level of the gas emergency plan has been in place.
- The situation is tense and a worsening of the situation cannot be ruled out.
- At present, the security of supply in Germany continues to be safeguarded.
- Gas is currently being injected into storage. The total storage level in Germany is currently 64.6%.
- The storage level at the Rehden facility is 32.35%.
- Currently around the same amount of gas is being injected into and withdrawn from storage.
- Nord Stream AG has been carrying out maintenance on Nord Stream 1 since 11 July.
- Gas flows from the Nord Stream 1 pipeline are therefore currently at zero percent.
- Maintenance work is also being done at the Waidhaus transfer point. The transfer station is available again from today.
- Alternative transport routes such as the Yamal pipeline and the Ukraine route are available but are not being used to make up for the volumes not flowing through Nord Stream 1.
- As a result of the supply reduction, wholesale prices have increased significantly and have recently stabilized at a high level.
- Companies and private consumers must expect a considerable increase in gas prices.
Germany’s labour law and gas crisis – In July, Trade Surplus flips into deficit, and let us see what are the consequences :
- At the beginning of July, Germany’s three-decade-long trade surplus flipped into a deficit, driven by the rise in gas prices.
- The country’s wealth is created mostly by energy-intensive industries, whose import costs have soared.
- Inflation is at a record high, a recession looms and the euro is at parity with the dollar for the first time since 2002.
- Cheap Russian energy used to be a key source of the country’s global competitive advantage.
- Now Russia is making Europe and Germany pay the price for the outbreak in war.
Germany’s labour law and gas crisis – Let us take a look to see if Germany has any options or remedies available.
- Germany’s options are few, imperfect, and unpleasant.
- German Economics Minister Robert Habeck is bringing dirty coal plants back online and telling people to take shorter showers.
- Minister Robert Habeck is streamlining procurement and loosening environmental restrictions to build fixed liquefied natural gas terminals; meanwhile, he is renting floating terminals. And he has wooed authoritarian Gulf leaders in search of alternative LNG supplies
- These are painful concessions for a Green politician. But Minister Robert Habeck is in a hurry and has a strong pragmatic streak.
- It gets worse. Germany’s energy emergency law privileges private households over industry — but some companies say that gas rationing or shutdowns could force them to shutter their operations permanently.
- The government has just passed a law that allows it to bail out firms hit by the energy shock; the gas importer Uniper has already raised its hand and consumer gas prices might triple.
- This dire prospect is causing the liberal Free Democrats (who are in the government) and the opposition conservative Christian Democrats to loudly criticize Berlin’s decision to shutter Germany’s last three nuclear power plants by the end of the year.
- Ironically, it was earlier Chancellor’s conservative-liberal coalition that decided in 2011 to phase out nuclear power after the Fukushima power plant disaster in Japan.
- Since then, Germany has stopped investing in civilian nuclear power technology and expertise.
- The three plants are at the end of their safely viable lifetimes. They would cover only 6% of the country’s electricity needs; and industry needs process heat, not electricity.
- In sum: the cost and risk of an extension outweigh the benefit.
Germany’s labour law and gas crisis – Germany needs a new strategy to get out of the crisis :
- Yet a gas crisis in the European Union’s economic powerhouse will cause jitters across the continent.
- Uniper may be Germany’s biggest gas supplier; its main shareholder is the Finnish state-owned energy company Fortum.
- And Russia has fully or partially cut off gas supplies to almost a dozen EU countries.
- However, there is no European gas-sharing arrangement, only a handful of hastily concluded bilateral “solidarity” agreements.
- Countries that receive large quantities of non-Russian gas — France, the Netherlands, Spain, and Belgium — have not joined.
- What is needed now is an EU-wide energy security strategy. Russia is using the threat of a gas cutoff to break Germany’s societal resilience and political will.
The moot question that arises is who will bear the remuneration risk of a work stoppage due to energy shortages?
Will the employers remain obliged to pay salaries in the event that an emergency level is declared and gas supply is shut off and they are forced to close or restrict operations?
The well-known principle of ‘no work, no pay’ according to section 615 sentence 3 of the German Civil Code (Bürgerliches Gesetzbuch; BGB) does not apply if the employer has to bear the operational risk.
Germany’s labour law and gas crisis – Given below are the various sections of the German Civil code :
Section 614
Due date of remuneration
Remuneration is to be paid after the performance of the services. If remuneration is assessed by time periods, then it is to be paid at the end of the individual time periods.
Section 615
Remuneration in the case of default in acceptance and business risk
If the person entitled to services is in default in accepting the services, then the party owing the services may demand the agreed remuneration for the services not rendered as the result of the default without being obliged to provide a cure. However, he must allow being credited against him what he saves as a result of not performing the services or acquires or wilfully fails to acquire through the use of his employment elsewhere. Sentences 1 and 2 apply with the necessary modifications in cases in which the employer bears the risk of loss of working hours.
Section 616
Temporary prevention from performing services
The person obliged to perform services is not deprived of his claim to remuneration by the fact that he is prevented from performing services for a relatively trivial period of time for a reason in his person without fault on his part. However, he must allow being credited against him the amount he receives for the period when he is prevented under a health or accident insurance policy that exists on the basis of statutory duty.
Does it seem that the salary payout or no payout will depend on the operational risk and given below are the factors as to when there is a business risk or not ?
When doing business risk and individual risk exist?
According to the doctrine of business risks distributes economic risks, risks shall be located with the party that can best control the realization of risk or provides for the occurrence of a risk that cannot be controlled.
Pursuant to the German Federal Labor Court’s (Bundesarbeitsgericht) established case law, the employer bears the operational risk because they manage the business, organize operational processes and obtain the income.
Therefore, disruptions of the operational process within the employer’s sphere of influence regularly fall within their sphere of risk, with the result that they have to bear the remuneration risk. In addition, the employer also bears the risk for external circumstances that constitute force majeure, eg floods, and fires, but also, for example, the failure of the oil heating system in the company due to a sudden cold snap or a power failure due to a fault in the electricity plant.
As long as gas is available on the market, but the employer is forced to close or limit their business due to increased energy prices, it is the business risk to be borne by the employer that materializes.
But how is the question to be judged if the employer is no longer able to purchase gas due to a sovereign measure ie if the gas tap is turned off by the state?
Conclusion
Some commentators point to the decision of the German Federal Labor Court on the official business closures during the Coronavirus pandemic and advocate applying it to the shutdown of the gas supply by general order under public law.
In that case, the employer’s shop was closed by general order of the authorities in April 2020, the employee was therefore unable to work and did not receive any remuneration. The employee then claimed her remuneration for the month of April.
In its decision of 13 October 2021, the Fifth Senate rejected the employee’s claim for remuneration for the period of the ordered closure of the plant, as this did not constitute an operational risk.
The German Federal Labor Court based its decision on the purpose of the official measure. If the closure of the plant ordered by the authorities was carried out within the framework of general measures to combat the pandemic and – across all plants – to protect the population, the risk inherent in a particular plant did not materialize.
In this case, the impossibility to perform work was rather the consequence of the sovereign intervention to combat a risk situation affecting society as a whole, which the individual employer did neither cause nor was responsible for, even in the broadest sense.
However, direct conclusions on the situation of the gas crisis should not be drawn prematurely since the plant closure would only be an indirect consequence of the sovereign measure, unlike an officially ordered shutdown in the context of the pandemic. A business closure would merely be caused de facto, as employers would not be (economically) able to continue their operations without the necessary gas supply.
However, if one were to apply the German Federal Labor Court’s statements on the official plant closure during the pandemic to possible plant closures in the course of the gas crisis, caution would still be advisable.
The Fifth Senate almost casually points out in its decision that the employer is obliged to mitigate financial disadvantages for the workforce and to make use of available instruments (in particular short-time work) despite the fact that the operational risk has not been realized. Otherwise, the employer could be liable for damages to the employees.
In the case at hand, however, this was not relevant because the employee was marginally employed and therefore not entitled to short-time work benefits. Nevertheless, it should be noted that the German Federal Labor Court considers the introduction of short-time work as a priority and obliges the employer to become active and approach the works council and, if there is no works council, approach the individual employee to negotiate the introduction of short-time work. Only if this is not possible or proves to be unfeasible (e.g. due to lack of participation of the works council), it can be argued that the entitlement to remuneration is forfeited.
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Government.
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Proprietory blog of Karma Global Management Tech Firm
This blog has been compiled by the internal staff of Karma with the knowledge and expertise that they possess, for its monthly newsletter Issue 04 of October 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the
Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com