The company practice in labor law

A company practice is understood to be the voluntary, repeated action of the employer without an explicit reservation. For example, an employee's entitlement to the granting of benefits by the employer, which have not been explicitly stipulated in the employment contract, can be justified by the company practice. Recognition of the company practice under customary law is also applicable. Among other things, it is conceivable that an entitlement to a Christmas bonus or vacation pay can arise. The reason for the company practice is that one would like to conclude from the previous behavior of the employer that he would also like to commit himself to this service or his behavior in the future. 

As already mentioned in the article on on-call duty, the company practice also applies there. In general, the company practice is therefore not limited to a specific field of action of the employer. However, the employer's actions would have to have existed for at least three years, whereby it is important that this was also continued without interruption. Only then does case law apply the company practice.

Through the company practice, the employer has made the "objective fact" of a binding promise to the employees or the employee may then rely on the continuation of the employer's action. Only in this way does this also have the effect of establishing a claim for the future. However, it also remains to be examined whether the employer performs the service for more than just a small group or even individuals. Thus, in order to be entitled to the application of the company practice, the employer must provide the benefit at least to a definable group of employees or to a numerically superior part.

It should be noted, however, that the employer did not run the benefit under a reservation. Thus, the employer may always emphasize the voluntary nature of a benefit to its employees. A reservation is also to be assumed if the employer allows the benefit to take place "without recognition of a legal claim". Thus, the employer lacks an intention of obligation towards the employee and a company practice seems to be excluded. Another way in which the employer can ensure that a company practice does not take effect is to ensure that he does not regularly make the payment which could become a company practice. 

Thus, the requirement that a benefit must be offered for at least three years is missing. A fluctuating amount of the benefit is no longer a reason for not accepting a company practice. Until 2015, it was still possible to circumvent the company practice. This is now no longer possible. This has been decided by the Federal Labor Court and, conversely, it is no longer a matter of a constant level of remuneration. Since, in case of doubt, it can no longer be clearly and structurally stated how high the entitlement to such a payment really is as a result of the company practice, the employer is entitled to make a corresponding decision on the amount at its "reasonable discretion".

Other examples of company practice include the application of certain collective agreements in favor of employees, the granting of anniversary bonuses, the payment of meal allowances or travel allowances. But also the assumption of training costs or the provision of a parking space on the company premises. Even economically significant things such as a company pension plan can be based on the company practice, cf. § Section 1b I 4 BetrAVG.

If a company practice has arisen as a result of the preceding conditions, the employer cannot simply eliminate it again. There are actually only two ways for the employer to eliminate it. The employer can eliminate the company practice with the consent of the employee. This would be the mutually agreed cancellation of the company practice. The second option is to give notice of termination to the employee. It is no longer possible to eliminate a company practice by means of a so-called contrary company practice. 

In this case, the employer has simply added a note to the ongoing company practice from a certain point that he may amend the practice or eliminate the resulting legal claim. Thus, it would be possible for the employer to overturn the company practice from a certain point in time if the employees remain silent or if no objection is made. However, since March 2019, the Federal Labor Court no longer follows this possibility. Therefore, the employer can no longer make it as easy as originally thought.

The idea of whether the employer has a chance to challenge the company practice is not objectionable. However, it is problematic here that the company practice is based on a factual real behavior of the employer and not on an expressed declaration of intent. Therefore, the employee's trust in the future actions and payments of the employer can only be derived from the employer's actions. The condition of the § 119 Civil Codewhich would have to be present in order to be challenged, therefore do not do so.

Nevertheless, the real will of the employer is not completely irrelevant. Thus, it remains extremely important for the question whether a correct company practice has come into being. If the employer thus provides a service to which he himself thinks he is obligated, but which does not correspond to the truth at all, the employee can also recognize this or rather should have recognized it in good faith, he can act in bad faith and thus forfeit his trust in the future services. Bad faith is therefore someone who is not in good faith. This is particularly important in the case of company exercises in the public sector. Here, the employer is obliged to maintain an interest in economic efficiency. 

Thus, it is generally accepted that an employer in the public sector may, even according to objective opinion, only ever provide the service to which it also appears to be obligated under budgetary law. Therefore, an argumentation on the operational exercise without prior obligation is not necessarily promising. Similarly, a unilateral contradiction of the company practice by the employer is not sufficient. The possibility of revocation only exists if the employer has expressly left this open. In any case, this reservation of revocation must be expressed and declared unambiguously.

By means of a company practice, the employer normally enters into an obligation towards each individual employer. Therefore, this regulation cannot be easily averted by a works agreement. However, it remains questionable whether an existing company practice also applies to a new employee. An argument against this would be the employer's failure to perform towards the employee until then. 

Thus, the employer could terminate the company practice by unilateral declaration. And for precisely this reason, the company practice also has no effect for the new employee. However, out of a fundamental sense of fairness towards all employees, the latter could, on the basis of the general principle of equal treatment again give rise to a claim for itself under the AGG. In case of doubt, this is to be discussed within the individual case examination.