German Labor Court Expands Employer Rights to Scrutinize Dismissed Employees’ Job Applications

Quick Hits

• The Regional Labor Court of Cologne ruled that employers can demand detailed information about the form and content of job applications if there are specific indications that the dismissed employee’s application efforts are insincere.
• The decision illustrates that even after winning a wrongful termination suit, individuals must make genuine efforts to find new employment or risk having to disclose their application materials in court when claiming back pay.
• The judgement shows that dismissed employees must undertake serious self-initiated job application efforts to avoid accusations of maliciously omitted earnings when claiming back pay.

For many years, German labor courts treated the defense of maliciously omitted earnings very restrictively, with the result that there was almost an automatic link between the finding of invalidity of a dismissal and the obligation to pay back wages. Since a decision in 2020 by the Federal Labor Court (BAG) (May 27, 2020 – 5 AZR 387/19), however, the defense of maliciously omitted earnings has gained significantly more practical relevance in the context of invalid dismissals.

A recent decision by the Regional Labor Court of Cologne (LAG Köln) (judgment of January 7, 2025 – 7 SLa 78/24) adds further contour to the much-debated question of what obligations a dismissed employee bears in seeking new employment so as not to expose themselves to the accusation of “malicious omission” in connection with back pay of salaries. The judgment also expands the employer’s rights to information where, based on specific indications, the employer can have substantial doubts about the sincerity of the employee’s job application efforts.

Facts of the Case

The employee, employed as a professional driver by the employer since 2015, received both an immediate and, in the alternative, an ordinary termination of employment on July 27, 2022. The employee successfully challenged these in a wrongful termination suit. After the court determined that the dismissals were invalid, the employee demanded back pay for default of acceptance starting from the date of the ineffective extraordinary termination. To assess potential maliciously omitted alternative earnings, the employer asked the employee to provide information regarding job referrals from the Federal Employment Agency and about their own application efforts.

The employee provided the employer with a list including, among other things, sixty-five self-initiated applications. In sixty-two cases, the employee noted “no response,” and in one case stated the result as “not hired due to unfair dismissal litigation.” Based on this, the employer doubted the sincerity of the employee’s application activities and refused to make the back-pay settlement. The employee then filed a suit again. In the litigation, the employer took the position that the employee must have credited against the entire claim amount earnings maliciously omitted. The employer demanded that the employee produce the application materials to scrutinize their sincerity. The employee, for their part, argued that they had fully satisfied their duty to provide information by disclosing the scope of their application activities.

LAG Köln’s Decisions

The Cologne Labor Court (ArbG Köln) (judgment of December 6, 2023 – 15 Ca 2733/23) followed the employee’s view and ordered the employer to pay back wages for default of acceptance. On the employer’s appeal, the LAG Köln (judgment of January 7, 2025 – 7 SLa 78/24) set aside the first-instance judgment, except for a smaller amount that the employer owed the employee as continued pay due to incapacity for work. The employee’s claim for pay in default of acceptance was, at least for the time being, precluded by the defense of maliciously omitted earnings under Section 11 No. 2 KSchG because the employee had not yet adequately complied with their duty to provide information.

In the LAG  Köln’s view, the employer’s information right in this case encompassed not only information about job referrals from the Federal Employment Agency and about the employee’s own application efforts, but also the—hitherto unprovided—information regarding the content and form of the unanswered applications. The rationale behind this correct view is that, in litigation regarding pay in default of acceptance, the employer bears the burden of pleading and proof for the existence of maliciously omitted earnings under Section 11 No. 2 KSchG. Because the employer typically has no information about the dismissed employee’s application efforts, the employee has a secondary duty, based on good faith, to provide the employer with information upon request.

However, under the precedent established by the BAG in its May 27, 2020 – 5 AZR 387-19 ruling, the employer’s right to information requires, among other things, that the defense of maliciously omitted employment be sufficiently likely to succeed. After the employee disclosed referrals from the employment agency and numerous self-initiated applications, the ArbG Köln no longer considered that likelihood to be present. The notion that these self-initiated applications might have been mere “sham applications” given the high rate (sixty-two of sixty-five) of unanswered applications was, in its view, “pure speculation”. The LAG Köln rejected this on appeal. There is a significant labor shortage in the transport and logistics sector. If, notwithstanding that, ninety-five percent of applications remain unanswered, this suggests that something is wrong with the applications themselves. And where the employee additionally notes for one application “not hired due to unfair dismissal litigation,” it is reasonable to infer that they proactively disclosed in the application their legal dispute with their former employer. Such conduct is not consistent with someone genuinely seeking employment.

Legally, it makes no difference whether an individual thwarts the taking up of other employment through inactivity and insufficient application efforts, or whether they formally submit applications but signal through the content of those applications that they have no real interest in starting work. The LAG Köln therefore continued to see a sufficient likelihood that the defense of maliciously omitted earnings would succeed. As a result, it granted the employer a broader right to information about the form and content of the applications so the employer could examine whether “fictitious applications” were being made and, if necessary, plead this in court. Because the employee did not provide this information, the employer was able to successfully assert a right to refuse performance with respect to the wage payment.

Key Takeaways

The LAG Köln’s judgment is welcome. It clarifies the legal landscape for back pay in default of acceptance owed to improperly dismissed individuals in two respects beyond the individual case decided:

First, the case law has long held that individuals must apply for suitable positions referred by the employment agency and, within reasonable bounds, pursue openings forwarded to them by the employer. The present judgment makes clear that someone seeking back pay in default of acceptance must also undertake serious self-initiated application efforts to counter the allegation of maliciously omitted earnings (the LAG Berlin-Brandenburg, judgment of September 30, 2022 – 6 Sa 280/22, even demanded application efforts “full time,” which the BAG, in turn, considered too far-reaching, see BAG of February 7, 2024 – 5 AZR 177/23 and of January 15, 2025 – 5 AZR 273/24).

Second, the decision provides employers facing back pay claims by dismissed individuals with an important tool to scrutinize not only the scope but, where there are well-founded doubts, also the sincerity of the application efforts. Where there are specific indications that someone is submitting applications only for show and is not genuinely interested in accepting new employment, such as unusually few responses or proactive references to ongoing litigation with the prior employer, the employer may demand information on the form and content of the applications, i.e., regulary request production of the application materials.

This decision again underscores that even after prevailing in a wrongful termination suit, one cannot simply rely on receiving back pay. Anyone who does not make serious efforts to obtain new work, with appropriate regard for the prior employer’s interests, must expect to disclose their application materials in court when litigating regarding pay in default of acceptance.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border, Trucking & Logistics, and Wage and Hour blogs as additional information becomes available.

Dr. Martin Landauer is a partner in the Munich office of Ogletree Deakins.

Niklas Thiel is a law clerk in the Munich office of Ogletree Deakins.

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