Increase in Basic Salaries for Permanent Employees?
In a recent ruling by the Cologne Higher Labor Court (AZ: 4 Sa 399/24), it was determined that non-union employees do not have a legal right to expect future full wage increases based solely on an employer’s voluntary alignment with collective bargaining agreements. This decision was reported by the German Bar Association (DAV).
The case in question involved a non-union employee of an insurance company who filed a lawsuit because they were not given the full collective wage increase for their entire salary. However, the court did not recognize the "operational practice" as legally binding, as it was not explicitly stated in the employment contract that the employee's salary should dynamically align with the collective agreement.
The court's ruling also clarified that an employer's voluntary practice of aligning wages with collective bargaining agreements does not grant non-union employees the right to receive full wage increases in the future. This is because non-union employees are generally considered "at-will" in most cases, meaning their wages and terms of employment can be changed unilaterally by the employer at any time, without requiring adherence to union-negotiated contracts.
Moreover, the court's decision highlighted that employer discretion over wages and terms for non-union workers is broad. Changes to pay or benefits can be made at will, and promised increases can be revoked or altered if the employer chooses. In contrast, union contracts provide protections such as negotiated wage increases, grievance procedures, and restrictions on unilateral employer changes, but these protections do not extend to non-union employees.
It is worth noting that the court's ruling did not specify whether the new employer passed on the full collectively agreed remuneration to the non-union employee in this case. Furthermore, the specific details of the "operational practice" were not defined or agreed upon in the employment contract.
In summary, unless there is a specific signed agreement or policy guaranteeing wage increases for non-union workers, the voluntary application of union terms by the employer does not create an expectation or right to future pay increases on the same terms. This ruling underscores the importance of clear and explicit contractual agreements between employers and employees regarding wage increases and terms of employment.
- Despite the insurance company's voluntary alignment with collective bargaining agreements, the court ruled that non-union employees, like the one in the case, do not have a legal right to expect future full wage increases based solely on this industry-finance practice.
- The court's decision in this business case highlights that employer discretion over wages and terms for non-union workers is broad, and without explicit contractual agreements, the voluntary application of union terms by the employer does not create an expectation or right to future pay increases on the same terms.
