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  • LUTZ | ABEL advises Instaclustr on acquisition of credativ

    LUTZ | ABEL advises Instaclustr on acquisition of credativ

    Led by Hamburg partner Frank Hahn, a team of LUTZ | ABEL lawyers advised Australian Instaclustr group on the acquisition of credativ.
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    Instaclustr, a global provider of open source data technologies, successfully completes the acquisition of the German and US credativ companies. Through the acquisition Instaclustr expands know-how and geographical presence.

    Instaclustr offers an integrated data platform of open source technologies and consulting services. The company manages more than seven petabytes of data for more than 500 clients from various industries.

    With the acquisition of all shares in the German and US credativ companies, Instaclustr is not only expanding geographically, but is also acquiring a powerful and internationally respected company in the open source sector that expands both the breadth and depth of Instaclustr's current portfolio by offering new technologies such as PostgreSQL.

    Together with the Australian law firm Talbot Sayer, the US law firm Husch Blackwell and the law firm BRP Renaud, a LUTZ | ABEL team led by Hamburg partner Frank Hahn provided comprehensive legal advice to Instaclustr on the transaction. A PWC team provided tax and financial advice. "We are very happy to have assisted Instaclustr in entering the German market. The transaction allowed us to prove our capabilities to manage complex, cross-border deals for our clients efficiently and in a target-oriented manner," said Frank Hahn.

     

    Advisors buy side

    Germany: LUTZ | ABEL Rechtsanwalts PartG mbB

    The team led by Frank Hahn (lead, M&A / Corporate Law, Hamburg) consisted of Dr Bernhard Noreisch, LL.M., Philipp Hoene, Jan-Phillip Kunz LL.M. (all M&A / Corporate Law, Munich), Constanze Hachmann, Nina Sophie Osten (both M&A / Corporate Law, Hamburg), Dr Henning Abraham (Employment Law, Hamburg), Andreas Kössel (Employment Law, Munich), Christoph Valentin  (Employment Law, Hamburg), Dr Cornelius Renner (IP-/IT-Law and Data Protection, Berlin), Ute Schenn (Corporate Commercial, Stuttgart) as well as Vera Lederer (Construction and Real Estate Law, Munich).

    In addition, Dr Martin Beutelmann (BRP Renaud, Foreign Trade Law) has also advised.

     

    Further advisors on the buy side:

    Australia: Louisa Di Bella (M&A, Talbot Sayer)

    USA: Jenny Witt and Kenyon Briggs (M&A, Husch Blackwell)

    Tax Law Germany: Dr Lars Lawall and Bernd Niedermayer (both PWC)

    Tax Law USA: Christina Kim (PWC)

    Finance: Nils Lanze and Dr Andreas Klug (both PWC)

     

    Advisors sales side

    Germany: Dr Marc Henze and team (Orth Kluth) as well as Erwin Miller (Pensions)

    USA: Leonard T. Nuara (M&A, Flatiron Law Group LLP)

    Tax and Finance: Larsen Lüngen (Stallmeyer)

     

    Germany: LUTZ | ABEL Rechtsanwalts PartG mbB

    The team led by Frank Hahn (lead, M&A / Corporate Law, Hamburg) consisted of Dr Bernhard Noreisch, LL.M., Philipp Hoene, Jan-Phillip Kunz LL.M. (all M&A / Corporate Law, Munich), Constanze Hachmann, Nina Sophie Osten (both M&A / Corporate Law, Hamburg), Dr Henning Abraham (Employment Law, Hamburg), Andreas Kössel (Employment Law, Munich), Christoph Valentin  (Employment Law, Hamburg), Dr Cornelius Renner (IP-/IT-Law and Data Protection, Berlin), Ute Schenn (Corporate Commercial, Stuttgart) as well as Vera Lederer (Construction and Real Estate Law, Munich).

    In addition, Dr Martin Beutelmann (BRP Renaud, Foreign Trade Law) has also advised.

     

    Further advisors on the buy side:

    Australia: Louisa Di Bella (M&A, Talbot Sayer)

    USA: Jenny Witt and Kenyon Briggs (M&A, Husch Blackwell)

    Tax Law Germany: Dr Lars Lawall and Bernd Niedermayer (both PWC)

    Tax Law USA: Christina Kim (PWC)

    Finance: Nils Lanze and Dr Andreas Klug (both PWC)

     

    Advisors sales side

    Germany: Dr Marc Henze and team (Orth Kluth) as well as Erwin Miller (Pensions)

    USA: Leonard T. Nuara (M&A, Flatiron Law Group LLP)

    Tax and Finance: Larsen Lüngen (Stallmeyer)

  • Overview of the costs of patent infringement and patent nullity proceedings in Germany

    Overview of the costs of patent infringement and patent nullity proceedings in Germany

    Since the beginning of 2021, a new cost regime regarding the legal fees for lawyers and courts applies in Germany. Roughly estimated, this will lead to a fee increase of 10 %. This article provides an overview.
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    Cost issues in patent infringement and patent nullity proceedings

    Unlike many other foreign legal systems, Germany has a costs regime that is guided by the principle that the losing party in a legal dispute should bear the costs of the legal dispute. As a consequence, the losing party must pay both court costs and opposing attorneys’ fees. There is a legal framework for this with tables that show how much these costs to be paid by the losing party are in detail. If the party has not reached a different agreement with its own attorney and/or patent attorney, these statutory rules may also determine which fee is to be paid to these own attorneys / patent attorneys - irrespective of the outcome of the proceedings.  

    This legal framework does not only affect attorneys’ fees to be paid or costs to be reimbursed but determines several other factors. For example, the claimant must advance court fees before the commencement of proceedings and ensure that the action is served on the defendant in the first place.

    There is an important parameter for the amount of all these fees addressed, namely the "litigation value", which is also called the "object value". The litigation value, which the claimant states as a unilateral estimate in the statement of claim and which is determined by the court during the proceedings, indicates the economic significance of the claimant's claims.

    To avoid misunderstandings and to answer a frequently asked question: the litigation value to be stated by the claimant and determined by the court is a very rough estimate that only has an impact on the cost issues. For example, the litigation value says nothing about the amount of damages the claimant can claim from the defendant after a successful patent infringement case or the actual value of a patent that is the subject of patent nullity proceedings.

    Another important preliminary remark: In Germany, patent infringement proceedings and patent nullity proceedings are separate. The court entrusted with the patent infringement cannot decide on the invalidity of the patent but can - at most - stay the infringement proceedings if parallel patent nullity proceedings are pending. This often leads to parallel proceedings concerning patent infringement on the one hand and patent nullity on the other.

    Statutory Minimum Fees_Regional Court

    Statutory Minimum Fees_Higher Regional Court

    The two tables below provide an initial overview of the costs to be expected in first instance and second instance patent infringement proceedings. For the third instance, i.e. the non-admission appeal and/or the appeal proceedings before the Federal Court of Justice, a table has been omitted because there is too wide a range of cost-relevant possibilities for this.

    Statutory Minimum Fees_Federal Patent Court

    Statutory Minimum Fees_Federal of Justice

    Explanation of the tables:

    The most important remark first: The tables do not represent the cost risk conclusively. They only give a rough overview of which costs the losing party has to reimburse to the winning party, which fees have to be advanced by the claimant at the beginning of the case or which security bond has to be provided by the claimant. The costs actually to be borne by a party may be higher for several reasons, for example because it has reached a fee agreement with its attorneys. In addition, the tables do not take into account various items regularly to be reimbursed by the losing party, such as: travel costs, costs for prior art searches, translation costs and, in rare cases, expert costs.

    How are the tables to be understood?

    1. The first column shows typical litigation values as they are often set by the courts in patent infringement and patent nullity proceedings. The highest value is EUR 30 million, because this is the legal upper limit in this system. This value is only set in rare, economically very significant cases. Of course, in such cases the economic interest may have an even higher value, but this does not change the fact that the statutory fees based on this value reach their upper limit.

    In the not uncommon cases where the patent owner has filed a patent infringement action and the alleged infringer has filed a patent nullity action in his defence, the Federal Patent Court hearing the patent nullity action in the first instance will initially base its decision on the litigation value set by the court hearing the patent infringement proceedings. If the Federal Patent Court has no other indications justifying a higher litigation value, it increases the litigation value set by the infringement court by 25 %.

    2. The second column lists the fees payable to one's own attorney and patent attorney for the respective instance. If there is a fee agreement, they may also be higher. In patent infringement proceedings, the case is usually handled by an attorney and a collaborating patent attorney. In patent nullity proceedings it is different: the process is usually handled by a patent attorney who is usually only assisted by an attorney if patent infringement proceedings are also pending.

    3. The third column lists the court fees to be advanced by the claimant at the beginning of the proceedings. The full payment of the court fees is important because otherwise the action will not even be served on the defendant. The question of whether the claimant or the defendant must advance the respective court fees in the further instances depends on the judgement of the previous instance.

    For example, if a defendant in a patent infringement case is convicted in the first instance, he must advance the court fees in the appeal proceedings, i.e. the second instance.

    4. The fourth column lists the fees that a losing party must reimburse to the opposing party for its attorney and patent attorney for the respective instance. In patent infringement proceedings, these are regularly the fees for an attorney and a cooperating patent attorney.

    A differentiation must be made for patent nullity proceedings:

    If parallel patent infringement proceedings are pending, the fees for a patent attorney and a collaborating attorney are regularly recoverable. If the patent nullity action is brought without there being parallel patent infringement proceedings, only the fees for either the patent attorney or an attorney-at-law, but not for both, are recoverable as a rule.

    5. The fifth column shows the cost risk for the respective instance. The amount is made up of the individual amounts in columns 2, 3 and 4. These are the minimum costs to be borne by the unsuccessful party.

    6. The sixth column lists the amounts that in certain cases must be paid by the claimant as security at the beginning of the proceedings.

    This so-called "security bond" is intended to cover the risk of the sued party actually being reimbursed its costs in the event of a successful outcome. It does not have to be provided if the claimant has his or her ordinary residence in a member state of the European Union or a state party on the Agreement on the European Economic Area.

    For all other claimants, it must be examined whether, exceptionally, security bond does not have to be provided on the basis of international treaties. To give a prominent example: An American claimant must provide security bond.

    The important first instance courts for patent infringement proceedings in Germany, namely Düsseldorf and Mannheim, calculate the amount of the security bond differently. The amounts concerned are shown in the sixth column with (1) for the Düsseldorf Regional Court and with (2) for the Mannheim Regional Court.

    The Federal Patent Court applies a different calculation in patent nullity proceedings. The corresponding amounts for this court are also listed in the sixth column. If it turns out during the proceedings that the defendant would have a higher claim to reimbursement of costs if it were to prevail, the court may also increase the security bond to be provided.

    The security bond is regularly provided in the form of a bank guarantee to be handed over to the defendant. If the claimant wins the case, the defendant must return the bank guarantee.

    In summary, the cost risk for patent infringement and patent nullity proceedings in Germany is relatively low compared to other jurisdictions. In the USA in particular, considerably higher costs must be expected.

    However, unlike in many other jurisdictions, there is a procedural principle that the losing party must bear the costs of the proceedings, i.e. opposing attorneys’ and patent attorney's fees as well as court costs.

  • The Federal Court of Justice applies its own standards on novelty

    The Federal Court of Justice applies its own standards on "novelty" (art. 54(2) EPC)

    In its decision “Conditioning Method” ("Konditionierverfahren") of April 21, 2020 (Ref.: X ZR 75/18), the Federal Court of Justice overturned a judgement of the Federal Patent Court and upheld the German part of the European patent EP 1 495 486
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    The issue in dispute was whether a system for conditioning semiconductor wafers sold and delivered by the patent owner to a customer approximately two years before the priority date of the patent in suit was detrimental to the novelty of the patent as "public prior use".

    The Federal Patent Court has assumed this. The Federal Court of Justice (BGH) assessed this differently and formulated it as a guiding principle:

    "Delivery, installation and use of a system at a purchaser's site do not readily establish a sufficient likelihood that arbitrary third parties will examine the system and thereby obtain knowledge of the invention."

    The BGH first cites its own case law (judgment of December 9, 2014, ref.: X ZR 6/13 - "pressing gripper", and judgment of November 8, 2016, ref. X ZR 116/14), according to which prior use is obvious if there is not only the theoretical and remote possibility that any third party, and thus also persons skilled in the art, may obtain reliable and sufficient knowledge of the invention. This is to be assumed under normal circumstances if a device according to the invention has been offered or supplied to a third party. In the case decided, however, the BGH considered only a theoretical or remote possibility of knowledge to be given.

    Several factors were decisive for this assessment: The customer's employees were unable to gain knowledge of the internal structure of the patented cooling and temperature control system during normal operation of the plant before the priority date. They were not allowed to make any changes to the device except for changes to the measuring software. Also, a closer examination of the device by third parties was not possible without the buyer's consent. The BGH was also convinced that there was no sufficient probability that employees of the customer would have attempted to gain knowledge of the functioning of the patent-compliant cooling system up to the priority date of the patent in suit or that they would have allowed third parties access to the system for this purpose. Installation, maintenance and repair of the system were the sole responsibility of the patent owner. In order to verify the patent-compliant functioning, the system would have had to be damaged and then repaired.

    The decision is remarkable for various reasons and seems to contradict the case law of the European Patent Office. There are two issues to be differentiated: Firstly, what does "the public" mean, and in particular, do the customer's employees belong to this "public"? Secondly, what has been made "accessible to the public" by the supply of the plant against the background that the essential components of the invention were only recognisable after damage?

    On the first issue, the case law of the BGH (most recent ruling of November 8, 2016, Ref.: X ZR 116/14, para. 25) states very clearly:

    "The sale of an object which anticipates the teaching of the patent in suit, without establishing a duty of secrecy, does not in itself lead to obviousness. Rather, the not merely theoretical possibility must be opened up that any third party, and thus also persons skilled in the art, may obtain reliable and sufficient knowledge of the invention".

    The case law of the Boards of Appeal of the European Patent Office deviates considerably from this: if there is neither an explicit nor an implicit non-disclosure agreement, the customer is part of the public. This is stated in the Board of Appeal decision T 2210/12 of October 7, 2016 under point 1. 2.2 concerning a system supplied to VW:

    "Since the company VW itself already constitutes part of the public, it is irrelevant whether further third parties had access to the factory sites or not."

    The Board of Appeal decision T 2272/11 of April 5, 2016 comes to the same conclusion. Already on this first issue, there is a clear difference between the case law of the BGH and the Boards of Appeal.

    On the second subject, the starting point and the continuously cited basis for decisions of the Boards of Appeal of the European Patent Office is the opinion of the Enlarged Board of Appeal G1/92 of 18.12.1992, which states on page 3:

    Where it is possible for the skilled person to discover the composition of the internal structure of the product and to reproduce it without undue burden, then both the product and its composition or internal structure become state of the art.

    There is no support in the EPC for the additional requirement referred to by Board (…) that the public should have particular reasons for analysing a product put on the market, in order to identify its composition or internal structure.

    On page 4 it continues:

    The introduction of such an additional requirement would remove a commercially available and reproducible product from the public domain. It would mean an unfounded deviation from the principles applied in respect of the other sources of the state of the art as defined in Article 54 (2) EPC and it would obviously represent an element of subjectivity leading to uncertainty in applying the concept of novelty as defined in this Article.

    These statements by the Enlarged Board of Appeal seem to diametrically contradict the BGH point of view - also - as justification, that the purchaser of the plant for conditioning semiconductor wafers had not had sufficient reason to analyse the mode of operation. On closer analysis, however, this conclusion is not compelling: The BGH decision mentions another aspect, namely that the employees of the buyer were not allowed to make any changes to the system except for changes to the measuring software. Installation, maintenance and repair of the system were the sole responsibility of the patent owner. Even if the BGH decision on this aspect is not completely clear, the assumption is justified that the patent owner only maintained the warranty for the plant on the condition that it was also maintained by the patent owner and that the employees of the buyer were accordingly prohibited from dismantling and damaging it.

    However, this does not seem to completely eliminate the conflict with the case law of the Enlarged Board of Appeal, because the patent owner delivered an installation to a customer without a non-disclosure agreement and it was objectively possible to examine the installation and to recognise the function according to the invention. Dismantling the system at the customer may have led to the loss of warranty claims; however, the BGH decision does not clearly state that the dismantling was prohibited for legal reasons.

    This constellation is quite different from that of an explicit or implicit non-disclosure agreement. If a delivery is made under such an agreement, the supplier (in this case the patent owner) has not willingly transferred the delivered object into the "public domain", and a violation constitutes a breach of contract.

    In summary, the BGH applied a very favourable and generous standard for the patent owner in the decision. A discussion of the case law of the Boards of Appeal of the European Patent Office would have been desirable.

  • Oral hearings before the Patent Senate of the German Federal Court of Justice during the Corona pandemic

    Oral hearings before the Patent Senate of the German Federal Court of Justice during the Corona pandemic

    The Patent Senate of the German Federal Court of Justice restricts physical access to the court room in oral proceedings. Only two attorneys are admitted for each party. All other in-terested persons are to participate online.
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    Public trials with contact restrictions?

    One of the many challenges posed by the Corona pandemic is the organisation of oral proceedings in court. In Germany, the general principle applies that hearings must be “public” as set out in section 169 of the German Judicature Act (GVG). This leads to challenges especially in patent cases, for which the Tenth Senate of the German Federal Court of Justice has jurisdiction as the second instance in patent invalidity cases and as the third instance in patent infringement cases. Often several attorneys at law, patent attorneys, the parties and other persons interested in the case are involved. How can contact restrictions be reconciled with the general principle that a trial must be "public"?

    Digital transmission of the hearing

    One possible way is shown by section 128a of the German Code of Civil Procedure (ZPO), which gives the court the possibility to “permit” the parties, their attorneys and advisors to stay at another location during oral proceedings and to perform procedural acts from there. In this case, the image and sound of the hearing are transmitted in real time to this location and to the court room.

    The presiding judge of the Tenth Senate of the German Federal Court of Justice, Dr Klaus Bacher, has published his view on this option in a blog. It can be summarised as follows: The Tenth Senate implements this option by using “Microsoft Teams” for an online video conference. The claimant and the defendant may be represented in the court room by an attorney at law and a patent attorney. Further attorneys, patent attorneys, legal advisors, translators, etc. can participate online.

    Limitation to a maximum of two attorneys per party

    The most recent experience with oral proceedings before the Tenth Senate is that attendance in the court room is indeed strictly limited to two attorneys per  party. Thus, the just mentioned possibility to “permit” the parties and their attorneys to be in another location during the hearing is interpreted in such a way that – with the exception of two attorneys per party – anybody else must mandatorily stay away from the court room during the hearing.

    Whether the restriction of physical access to the court room is in line with the legal requirement that the hearing must be “public” is likely to generate interesting discussions in the future.

  • LUTZ | ABEL advises Hirschvogel Ventures on series-A financing round in Belgian start-up Magnax

    LUTZ | ABEL advises Hirschvogel Ventures on series-A financing round in Belgian start-up Magnax

    Belgian start-up Magnax secures EUR 16 million in a series A financing round.
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    LUTZ | ABEL - in cooperation with Loyens & Loeff - advised Hirschvogel Ventures on a series A investment in the Belgian start-up Magnax. The young company specialises in the development and production of electric motors. The advisory team of Hirschvogel Ventures consisted of Jan-Phillip Kunz, LL.M. (LUTZ | ABEL Rechtsanwalts PartG mbB, VC/M&A, Munich) and Loyens & Loeff N.V., Brussels.

  • Personnel reductions despite short-time working – a follow-up

    Personnel reductions despite short-time working – a follow-up

    The corona crisis continues to keep us on edge. Short-time work and government protective measures are often no longer sufficient to offset the economic effects due to the prolonged duration of the corona crisis.
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    Therefore, many companies now have to deal with the issue of personnel reductions in a concrete way. Against this background and the fact that a decision is to be made in September on whether the short-time working facilities associated with the Corona crisis will be retained in Germany beyond 31 December 2020, many employers are confronted with the question of whether short-time working and restructuring are mutually exclusive and what conditions and liability traps need to be paid particular attention to.

    Problem: Terminations for operational reasons despite short-time working

    The requirements and objectives of short-time work and redundancies for operational reasons are divergent. While the granting of short-time work requires a merely temporary loss of working hours and serves to secure jobs, operations-related terminations require a permanent loss of employment opportunities, which makes the permanent termination of employment relationships unavoidable. At first glance, this is difficult to reconcile.

    From a legal point of view, it must therefore be noted that dismissals of employees on short-time work for operational reasons are socially unacceptable if they are justified by the same reason for which short-time work was ordered. In this case, a dismissal for operational reasons does not usually have the "urgent" operational requirement required under § 1 (Subsection 2, Sentence 1) of the German Dismissal Protection Act. Operations-related terminations during short-time work therefore require additional - beyond the reasons for short-time work - or changed circumstances. This is the case, for example, if the situation of the company has deteriorated further since the announcement of short-time work and the employer now assumes a permanent - instead of, as initially, merely temporary - loss of orders.

    Taking this particular feature into account, short-time work and personnel reductions can be used as complementary means of successfully restructuring companies, which became necessary due to the Corona crisis and its economically sustainable effects - e.g. long-term decline in orders and crisis-related changes in processes. However, such an approach requires a well-thought-out concept and detailed documentation on the part of the employer.

    Practical advice: In this starting position, dismissals by the employer must be carefully prepared.

    • From a liability point of view, care must first be taken to ensure that no restrictions on dismissal are expressly promised or provided for in the underlying agreement (individual agreement, works agreement or collective agreement) when short-time working is introduced. 
    • It is unproblematic if short-time working is introduced in one company or department of a company, while another company or department is being restructured on the basis of an independent business decision. In this case, short-time work is used - to ease the economic burden on the company - only for those employees whose jobs are not to be cut. In other areas, which are clearly demarcated from this, a reduction in personnel can be implemented. 
    • The situation is more demanding from the point of view of employment law if short-time work was initially ordered in the company or department affected by short-time work and a restructuring with a reduction in personnel turns out to be necessary afterwards.
      • In this constellation, extraordinary care must be taken to justify a permanent loss of working hours as of now, because according to law the introduction of short-time work indicates only a temporary lack of work.
      • The restructuring concept must not be based on reasons which have already been used to justify the introduction of short-time working. Either new reasons or a restructuring concept completely detached from the causes of short-time work are required.
    • If the employer takes the operational decision
      • to close down a business or a certain part of a business or
      • to carry out an operational change in the form of a substantial reduction in personnel (§ 17 KSchG),

    the basis for the granting of short-time compensation ceases as soon as concrete implementation steps are taken, e.g. notice of termination, conclusion of reconciliation of interest agreements with final lists of names, etc.

    Conclusion

    Employment law challenges are being exacerbated by the economic impact of the ongoing corona crisis. The interaction of short-time work and dismissals for operational reasons requires careful preparation and documentation in the form of a restructuring concept in order to avoid possible liability traps.

    Furthermore, specific follow-up questions are to be expected, in particular in connection with wage claims after a dismissal for operational reasons - is there now again a claim to the contractually agreed wage or do dismissed employees continue to receive only short-time working compensation?

    We will be happy to keep you up to date on the coming developments. However, legal advice for individual cases is still recommended. We would be pleased to offer you our assistance and to inform you about your possibilities. Please do not hesitate to contact me.

     

    Read more about concrete practical tips on dismissal for operational reasons despite short-time work.

  • Staff reductions - Termination due to operational reasons despite short-time work?

    Staff reductions - Termination due to operational reasons despite short-time work?

    For many companies, staff cuts are unavoidable during the Corona crisis, when short-time work and government protective shielding measures are no longer sufficient. Is it possible to make redundancies during the current short-time work period? Which employment law pitfalls should be avoided?
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    The corona crisis is increasingly affecting the employment market: According to a survey conducted by the Ifo Institute in Munich, companies in numerous sectors are planning to lay off employees or not renew fixed-term contracts. More and more companies that were previously able to prevent staff cuts thanks to short-time work and government protective shield measures are now starting to think specifically about layoffs. Against this background, we answer the most important questions about staff cuts in the crisis.

    Are dismissals permitted despite short-time work?

    There are no special provisions for dismissals for conduct and personal reasons during the current short-time working period. Employees can therefore be dismissed under the previous conditions if they violate their contractual obligations or if there is a personal reason for dismissal. The situation is different for terminations for operational reasons necessitated by the effects of the Corona crisis.

    A dismissal for operational reasons during short-time work is socially unacceptable if it is justified on the same grounds on which short-time work was ordered in the first place. In this case there is generally not the "urgent" operational necessity for a dismissal for operational reasons as required by §1, Subsection 2, Sentence 1, of the Dismissal Protection Act. In addition, a dismissal for operational reasons presupposes a permanent loss of work. However, this will not be the case when short-time work is ordered, as short-time work always requires only the temporary loss of work.

    A dismissal for operational reasons during short-time work therefore requires additional - beyond the reasons for short-time working - or even changed circumstances. This is the case, for example, if the situation of the company has deteriorated further since the announcement of short-time work and the employer now assumes a permanent - instead of, as initially, merely temporary - discontinuation of the workload. In addition, collective law requirements must also be observed: Company agreements and collective bargaining agreements may contain provisions that generally exclude dismissals for operational reasons during short-time work.

    What are the requirements for a dismissal for operational reasons?

    If the Dismissal Protection Act applies, a dismissal for operational reasons presupposes that there are urgent operational requirements which make it permanently impossible to continue the employment of the employee in the affected company. There are no special or facilitated conditions due to the corona pandemic:

    1. A business decision leads to a probable permanent loss of the need for employment.
    2. There is no possibility of continued employment throughout the company (!) for the employee whose job is cancelled.
    3. If there are comparable employees, a company-related (!) social selection is carried out.

    What should be considered if a comparatively large number of employees are to be dismissed?

    If more than 20 employees are employed in a company and more than 5 employees are to be dismissed within 30 days, it must be checked whether there is a mass dismissal that must be notified to the Federal Employment Agency.

    Depending on the number of employees, § 17 KSchG provides for the following graduation regarding the obligation to notify mass dismissal:

    Company size

    Number of redundancies within 30 calendar days

    Usually more than 20 and less than 60 employees

    More than 5 redundancies

    Usually at least 60 and less than 500 employees

    10% of regularly employed workers or more than 25 redundancies

    At least 500 employees

    At least 30 redundancies

    Termination agreements and employees' own terminations must be taken into account when determining the above-mentioned thresholds if they were "initiated" by the employer. An inducement by the employer exists if the employer makes it sufficiently clear to the employee that he/she will terminate the employment relationship (at the same time as the employee's notice of termination or the termination agreement is requested).

    What kind of special conditions must be considered when a works council exists?

    If a works council exists, participation rights must be observed in any case. Which co-determination and participation rights the works council has in particular depends on the scope of the concrete personnel reduction measure:

    • The works council must be consulted before each termination of employment in accordance with § 102 of the Works Constitution Act (BetrVG).
    • In the case of mass dismissals within the meaning of Section 17 (1) KschG, the works council must be fully involved (obligation to provide information and advice).
    • Insofar as the personnel reduction measure meets the requirements of a change in operations within the meaning of § 111 BetrVG, a reconciliation of interests and social plan obligation exists in principle.

    The works council has numerous possibilities to delay the negotiations - and thus the implementation of the personnel adjustment measure. Not least against this background, a thorough preparation of the planned measure is absolutely essential. 

  • Home office – not only an option in times of COVID-19

    Home office - not only an option in times of COVID-19

    Home office was already in vogue prior to the Corona crisis. Due to the current situation, the German minister of employment, Mr. Hubertus Heil, wants to legally establish the right to work from home. This right is planned to be valid also once the crisis is over. But what needs to be considered from a employment law perspective in order to introduce home office legally?
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    In times of COVID-19 it is recommended to anyone who can work from home to do so, regardless of whether someone shows any symptoms or features of groups at-risk. In order to prevent a collapse of the health care system, it is highly important to keep the infection curve as flat as possible from the very beginning.

    Due to modern technology, such as laptops, broadband internet, cloud-based systems and more, barely anyone is still bound to a fixed workplace anymore. Even prior to the crisis, more and more employers started to give their employees the choice of where to work. The possibility of working from home makes a job more attractive and might increase the employee’s satisfaction. Apart from pandemics, home office can be an interesting option as it enhances flexibility, greater self-determination and work-life balance.

    Approximately 20% of employees in Germany are used to work remotely from home several times a month – home office became already popular before COVID-19 caused to re-think. However, anyone who is considering home office as an option must keep the legal and organizational framework in mind.

    1. Who decides whether employees may work from home or not?

    Currently, employees are not entitled to a mobile or home-based workplace. Ultimately, it is the employers who decide about how their employees are organized – even in times of a crisis. However, if home office is – to a certain extent - already granted or tolerated without the legal basis, the demand for home office might grow due to the so-called operational practice (“betriebliche Übung”).

    2. What has to be legally considered if employees take their work home?

    Employees who take home sensitive information, such as printouts, files or forwarded e-mails, risk to face employment law related sanctions - depending on the scale of sensitivity even their termination of employment. Therefore, employees are well advised to consult their employer in advance in order to determine whether and which company documents they are permitted to take home. Employers, on the other hand, should bear in mind that even a tacit acceptance of home office can cause an increase of demands to work from home. In case there are no rules, home office should only be an exception.

    3. Which conditions must be met for home office?

    Principally, the employee's working field must be considered as suitable for home office. Company schedules, external customer appointments or meetings still should have priority. If home office can be integrated properly into the company processes without any disturbances, work efficiency will not be affected and the employee’s performance at home can absolutely be as successful as in office. However, an absolute must is the availability of adequate and properly functioning hardware, such as a pre-set mobile device and a sufficiently fast internet connection. Hardware and software conditions must guarantee a secure connection to the corporate database and the communication network as well as a safe way for data backups.

    4. How to record the employee’s working hours?

    According to the decision of the European Court of Justice of 14 May 2019, working hours from home must be recorded accurately as well.

    The usual requirements, such as maximum working hours per day (maximum 10 hours), sufficient rest periods (at least 11 hours) and the ban on working on Sundays or public holidays have to be carefully attended to. A small hint: Compared to employees who work in the office, those who are working from home or on the move do work about four hours more per week on average.

    In addition to the Working Hours Act, the employer is also responsible for occupational safety measures, including risk assessment, protective measures, instructions and regulations for computer workstations – especially with regards to home office workplaces. The employees themselves are obliged to ensure the requirements for a safe workplace.

    5. Which measurements have to be followed to ensure data protection in times of GDPA

    The employer is obliged to take the required preventive measures to ensure the corporate data protection. Safe approaches include for example VPN connections for secure data transfers and the only use of software or files that are approved by the employer himself. Further, the employee has to ensure that no unauthorized person, including family members, have access to any mobile device in use. In addition, passwords must not be passed on and must be kept inaccessible to third parties. It is recommended to not install unsafe (social media) applications or services, such as WhatsApp on the work mobile, as this way confidential (contact) data might be revealed.

    Apart from the obligation to protect corporate data the employees themselves have also the right to protection of their own data and privacy. This means, that the employer may only control equipment and work performance in compliance with applicable data protection regulations.

    6. Does the works council have a voice in the topic of home office?

    The works council has no say when it comes to the decision for or against mobile working as such. However, the works council does have an influence in some factors, such as working hours, the use of technical equipment (not yet subject to co-determination), the prevention of work-related accidents or transfers. Therefore, the works council has to be involved in the planning process. The employer on the other hand is obliged to provide respective information to the works council which then has to ensure proper conditions of the (mobile) workplace.

    7. Who has to bear the costs of mobile equipment?

    In case the employee is allowed to work from home, the employer has to bear the respective costs This includes the costs for office and technical equipment as well as telecommunication costs. No matter if the employer is providing all necessary equipment, the employees are using their own devices (“BYOD - Bring your own device”) or both parties agree on a mixture of own and corporate equipment, a contractual basis of the conditions is essential.

  • Short-time work in times of the coronavirus

    Short-time work in times of the coronavirus

    Overview of short-time work and short-time compensation for employers and employees.
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    While readers outside of Germany may not have heard of “short-time work” (Kurzarbeit), within Germany the use of this tried-and-tested tool is on the rise again. With the rapid spread of coronavirus now virtually paralyzing Germany, tens of thousands of employers are currently announcing they would switch employees to shorter work hours due to coronavirus outbreak in order to manage HR-costs and preserve jobs during the crisis. A large part of the employees’ lost income will be replaced by short-time work compensation (Kurzarbeitergeld) granted by the Federal Employment Agency if the workload is temporarily reduced due to the COVID-19 pandemic. This month the Bundestag rushed through legislation to expand the scheme and ease access to short-time work compensation taking effect retroactively as of 1 March 2020.

    What is short-time work?

    Short-time work is a temporary reduction in the regular working hours due to a considerable but temporary shortage of work. The working hours can be reduced partially or completely (so-called “zero short-time work”). Thus, the employees are temporarily partially or completely released from their obligation to perform their duties under the employment agreement and their remuneration is reduced accordingly.

    What is short-time work compensation?

    Short-time work compensation is granted by the Federal Employment Agency and is intended to mitigate the disadvantages suffered by employees as a result of the reduction in remuneration. The short-time work compensation amounts to 60% of the net pay difference for employees without a child and for employees with at least one child to 67% of the net pay difference. As of 1 March 2020, the Federal Employment Agency will fully refund employers’ social security contributions.

    How to introduce short-time work?

    The employer cannot unilaterally order short-time work unless this has been agreed in advance. Short-time work may be introduced on the basis of a collective bargaining agreement, a works agreement or an agreement with the employee. If the employment contract does not provide for the employer’s right to unilaterally order short-time work, the employer must first agree the envisaged short-time work with the employees concerned individually.

    What are the prerequisites and the procedure for short-time work compensation?

    Taking into account the legislative measures of March 13, 2020, short-time work compensation in connection with a temporary reduction of workload due to the COVID-19 pandemic will be granted if the following prerequisites are met:

    • Notification of short-time work to the local employment agency (first step). Employers should ensure to submit complete documents to prove that the prerequisites for short-time work are met.
    • At least 10% (previously 30%, as of 1 March 2020 only 10%) of the employees of the company are affected by a loss of working hours of at least 10%.
    • Positive working time accounts – if any - must be reduced to zero. As of 1 March 2020, employees are no longer required to build-up a negative balance in their working accounts.
    • Eligible employees: Only employee whose employment relationship is not terminated and who are subject to payment of social security contributions. As of 1 March 2020, temporary agency workers are also entitled to short-time work compensation.

    If the employment agency confirms that these prerequisites are met, the employer must - in a second step - apply for short-time work compensation within three months.

  • LUTZ | ABEL advises Nitrobox in single digit million financing round

    LUTZ | ABEL advises Nitrobox in single-digit million financing round

    The software start-up Nitrobox GmbH from Germany announced to have completed a financing round in the single-digit million euro range.
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    The financing round was led by "NeueCapital Partners" fund from Silicon Valley and Porsche Ventures, the venture capital unit of the Stuttgart-based sports car manufacturer. LUTZ | ABEL advised on the transaction.

    The German software start-up Nitrobox GmbH closed a financing round in the single-digit million euro range. "NeueCapital Partners" fund from Silicon Valley and Porsche Ventures, the venture capital unit of the Stuttgart-based sports car manufacturer, took a stake in the company.

    Nitrobox has developed a cloud platform which can be used in several sectors for automatic monetization and billing of digital business models. In the field of mobility, Nitrobox is already working with several car manufacturers, including Porsche. The start-up supports the order-to-cash process of new business models: services such as car sharing, functions-on-demand, digital parking tickets or charging services can be fully automated via the Nitrobox platform. The company intends to use the funds from the financing round primarily to further expand its market position in Germany and to prepare for its entry to the US market.

    As in previous rounds, LUTZ | ABEL provided legal advice to Nitrobox. The team included the following attorneys: Dr. Lorenz Jellinghaus (Partner, Hamburg) Dr. Sebastian Sumalvico (VC, Munich) and Nina Sophie Osten (VC, Hamburg).