China Employment Law Network
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Employment Law in Germany

The German Employment Law is one of the most developed European Employment Laws that affords the widest protection to the employees. There is, however, no single consolidated employment or labor code. Instead it is codified in numerous sources, including German Civil Code (Bürgerliches Gesetzbuch), German health and safety law (Arbeitsschutzgesetz), Occupational health insurance (Gesetzliche Unfallversicherung), Federal Data Protection Act (Bundesdatenschutzgesetz) and Equal opportunities Act (Gleichbehandlungsgesetz). This extensive codification of the German Employment Law must be taken as a similarity with the Chinese Employment Law because both of these countries are within the civil law tradition with an overwhelming emphasis on codification and central planning.

Employment Contract:
The German Employment Law does not allow for the employment 'at-will' doctrine nor the existence of a purely 'oral' employment contract. Although there is no legal requirement for a written employment contract per se, there is a requirement for the employee to be provided with at least a written summary of the key aspects of the employment relationship. Documentation Act (“Nachweisgesetz”) requires a written record of some basic information, such as parties to the employment contract, the work to be performed, salary, benefits, vacation, start date, place of employment and notice periods.

This requirement is very similar to Article 17 of the PRC Labor Contract Law (2007), which requires a written employment contract that must contain employer's name, residence, legal representative or major principal, employee's name, residence, identity card number, time limit for the employment contract, work requirements and place of work details, work time, rest and vacation details, remuneration details, social security obligation details and workplace health and safety information. However, this is much more extensive list of requirements than is required under the German Labor Law.

Furthermore, it is typical for German employment contracts to be of unlimited duration and there are strict restrictions upon contracts with a limited term. This flows from an activist approach taken by the German courts that consistently invalidated automatic termination clauses through reliance on the Protection Against Dismissal Act (“Kündigungsschutzgesetz”). Thus, to be valid they must be in writing and the limitation on the duration of the contract must be justified on objective grounds, such as substitution on sickness or project work. However, there is an exception under section 14(2) of the Part-Time and Time-Limited Employment Act (Teilzeit- und Befristungsgesetz), which allows creation of employment contracts for a limited period of time even without a material reason but with a duration of only up to two years. This, again, reinforces the historic and cultural setting of the German Employment Law that is employee-centric rather than primarily aims to protect the employers, which is more the case in the Chinese Employment Law.

Social Insurance:
Germany is famous for its mandatory Social Security System, which makes it a legal obligation of the employer to contribute 50% to the health, home care and nursing, pension and unemployment insurances. Moreover, the employer is legally obliged to withhold the 50% employee contribution and pay it in together with their own contribution to the Social Security System. This is very similar to the employers' and employees' legal obligations to contribute to the social insurance in China under Article 2 of the the PRC Social Insurance Law (2010), which includes basic pension insurance, basic medical insurance, work injury insurance, unemployment insurance and maternity insurance. The amounts of contributions tend to vary between different provinces. Nevertheless, the similarities between the social insurance obligations under the German Employment Law and the Chinese Employment Law are uncanny.

Non-compete clauses:
Under the German Employment Law employees must refrain from competing against the employer during the term of employment. However, non-compete clauses after the contract of employment has expired is only enforceable if it is expressly agreed in writing and a number of essential conditions have been met. The non-compete clause must be reasonable as to the territory, subject matter and only up to two years in duration. Moreover, it must be unconditional the employer must pay a waiting allowance in the amount of at least 50% of the employee's annual remuneration for each year of the prohibition’s term. This is codified in section 60 of the Commercial Code (“Handelsgesetzbuch”). This is very different to the Chinese Employment law that stipulates under Article 23(1) of the PRC Labor Contract Law (2007) that non-compete clauses may be inserted into the contract and defines the persons that can be targeted by these clauses under Article 24 (which is essentially any employee but especially senior managers and senior technicians).

Intellectual Property:
The German Employment Law is unique in that it does not automatically guarantee intellectual property from the employee to the employer. It is based on an individual authorship rather than corporate secrets. Nevertheless, the employee is under a legal obligation to inform the employer of any patentable invention under the Employees’ Inventions Act (“Gesetz über Arbeitnehmererfindungen”). The employer then must provide adequate compensation and acquires the intellectual property in the new invention unless he releases the rights to it within four months. However, to avoid any infringements under the Copyright Act (“Urhebergesetz”), there should be a written agreement between the employer and the employee that the latter passes all the rights to the employer. This is strikingly different to the Chinese Employment Law that adheres to the corporate authorship and under Article 23(1) of the PRC Labor Contract Law (2007), Article 16 of the PRC Copyright Law and Article 6 of the PRC Patent Law passes all ownership rights to the employer. This is due to the fact that the invention has been created in the course of the employment for the employer.

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