News on default of acceptance – when do employees have to accept credit for maliciously omitted earnings?

If dismissal protection proceedings end with a court ruling that the dismissal(s) are invalid and the employment relationship has not been terminated, the employer is regularly threatened with follow-up proceedings in which the employee asserts a claim for a so-called ‘default of acceptance’. If the employee has intentionally failed to accept a reasonable job during the dismissal protection process, he/she must allow the potential earnings not achieved to be offset against this default of acceptance wage. Such a deduction can be considered, for example, if employees deliberately prevent placement offers from the employment agency or violate social law obligations to act.

Background and history

Section 11 no. 2 of the Dismissal Protection Act is decisive for the question of when such a malicious omission exists. This stipulates that the employee must have what he or she could have earned if he or she had not maliciously failed to accept reasonable work deducted from the remuneration owed to him or her by the employer for the period after dismissal.

The assessment of bad faith requires an overall weighing up of the interests of both parties, taking into account all the circumstances of the specific individual case.

In recent years, the Federal Labor Court has taken a position in several decisions on malicious omission pursuant to Section 11 No. 2 Dismissal Protection Act and related issues:

• For example, in its decision of May 27, 2020 (5 AZR 387/19), the Federal Labor Court granted employers a right to information against the employee regarding the placement proposals submitted by the employment agency. Knowledge of specific placement proposals regularly enables employers to assert the objection under Section 11 No. 2 Dismissal Protection Act, for which they bear the burden of presentation and proof.

• In its decision of October 12, 2022 (5 AZR 30/22), the Federal Labor Court clarified that, when weighing up bad faith in accordance with Section 11 No. 2 Dismissal Protection Act, it must also be taken into account whether employees have violated social law obligations to act. This applies, for example, to the obligation under Section 38 (1) Social Code III to register with the employment agency as a jobseeker within three days of receiving notice of termination without notice.

The facts of the case

In November 2017, an employer terminated the employment relationship with the employee for cause and, alternatively, with notice. The Regional Labor Court ultimately ruled that the terminations were invalid in July 2020.

The employee declared to the Federal Employment Agency that he did not wish to receive any job offers after receiving the notices of termination. He also informed the employment agency that he could apply if he was forced to do so. However, he would inform a potential employer when applying for a job – even before an interview – that legal proceedings were ongoing with his last employer and that he absolutely wanted to continue working there. The employee did not make any independent efforts to find other employment.

After the invalidity of the dismissals was established by the court, the plaintiff sued for payment of the wage for default of acceptance. The decisive point of contention was whether the employee’s statements to the employment agency had to be taken into account to his detriment in accordance with Section 11 No. 2 Dismissal Protection Act.

On the legal considerations of the Federal Labor Court

Unlike the Regional Labor Court, according to the Federal Labor Court, this conduct of the employee must be taken into account to his detriment in the context of § 11 No. 2 Dismissal Protection Act. The mere formal notification of unemployment was not sufficient due to the employee’s statements. With his statements, the employee was ultimately aiming to prevent the submission of specific job offers and, if necessary, to remove any chance of success from a forced application from the outset. According to the Federal Labor Court, this is not permissible.

The highest national labor court also considered this aspect in the context of the burden of presentation and proof with regard to the objection under Section 11 No. 2 Dismissal Protection Act. Using the legal concept of frustration of conditions (Section 162 BGB), the Federal Labor Court arrived at a gradation of the burden of presentation and proof in line with the interests of the parties.

After the employer conclusively demonstrates that there were concrete and reasonable employment opportunities for the employee, the employee must explain and prove why an application there would have been unsuccessful. Such a presentation is often only possible to a limited extent for employees. This applies in particular if the employer, who has been well advised by a lawyer, has taken action itself and the employee has to explain the failure of a large number of possible applications.

In addition to dealing with this special feature of the case, the Federal Labor Court further developed its case law on Section 11 No. 2 Dismissal Protection Act as a whole.

• If the employee registers as a job seeker with the employment agency after termination of the employment relationship and follows up on their job placement offers, he will not regularly be accused of deliberate inactivity.

• However, the highest German labor court clarified that in individual cases it may be incumbent on employees to apply for a job independently of placement offers from the employment agency if a realistic employment opportunity arises. In this case, however, the employee is not obliged to make application efforts to the extent of a full-time position, as the Berlin-Brandenburg Regional Labor Court had ruled in its decision of 30.09.2022 (3 Sa 100/21).

• The Federal Labor Court gave practical advice to employers, according to which it is possible to send employees suitable job offers in order to encourage them to consider these employment options. These offers could come from newspapers or private “job portals”, for example.

• As part of this decision, the court also commented on the extent to which the employee must accept a deterioration in working conditions in the event of a new job.

According to Section 11 No. 2 Dismissal Protection Act, only maliciously omitted earnings from other feasible work can be taken into account. The feasibility is assessed based on the type of work, the person of the employer and/or other working conditions. In doing so, it determines that an activity in which the earnings to be achieved would be less than the unemployment benefit is unreasonable during the period of receipt of this benefit.

Summary for practice

The following practical recommendations can be derived from the decision:

• The employee’s breach of obligations to act under social law may have to be taken into account to his detriment in the context of the consideration pursuant to Section 11 No. 2 Dismissal Protection Act. Employers should follow up on this point.

• Employers are entitled to send employees suitable job offers in order to actively encourage them to consider these employment opportunities.

• In individual cases, it is incumbent on employees to apply for a job independently of placement proposals if a realistic employment opportunity arises.

• In any case, a job offer is unreasonable if the employee would receive less pay there than under unemployment benefit during the reference period. Employers should take this into account when selecting suitable job offers.

• If employees prevent the employment agency from sending them job placement proposals or intentionally deprive potential job applications of any prospect of success, it must be taken into account. This is to the detriment of the employee when weighing up interests, as well as the burden of proof and demonstration of bad faith in accordance with Section 11 No. 2 of the Dismissal Protection Act. Corresponding cases should be checked for corresponding indications in the employee’s behavior.

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