The relocation of employees is a perennial issue. Even though much has been written in case law and literature about the requirements for a legally effective relocation, the question often arises as to what risks an employer bears if it relocates an employee to another position ineffectively. The Federal Labour Court recently had to decide a case in which an employee asserted claims for damages against his employer due to an invalid geographic relocation (BAG, ruling dated November 28, 2019 – 8 AZR 125/18, press release no. 42/19).
The plaintiff has been employed by the defendant for several years as a master metalworker and initially worked at the defendant’s place of business in Hesse. From November 2014, the defendant transferred the employee ‘for at least two years, possibly longer’ to its branch office in Saxony. The plaintiff complied with the relocation, but at the same time took legal action against it. The Hesse Regional Labour Court declared the relocation was not legally enforceable in May 2016, but the plaintiff nevertheless continued to work in Saxony from June 2016 to September 2016 in accordance with the relocation.
At that time, his main place of residence continued to be in Hesse and he commuted the distance to his ‘new’ place of work in Saxony weekly with his private car. The employee then sued, among other things, for reimbursement of travel expenses for the journeys between June 2016 and September 2016. The Labour Court’s affirmative ruling was then partially modified by the competent Regional Labour Court and the plaintiff was only awarded travel expenses (in accordance with the Separation Allowance Ordinance ‘TGV’) for travel by public transport every two weeks. The employee’s appeal was successful and the Federal Labour Court ruled that his claim for travel expenses was based on the Judicial Remuneration and Compensation Act (‘Justizvergütungs- und –entschädigungsgesetz’, or ‘JVEG’) and that he was therefore entitled to a claim for each kilometre driven with his private car in of EUR 0.30 per kilometre.
What costs must the employer bear when a relocation is declared ineffective?
The plaintiff claimed costs for journeys he had undertaken after a court had already ruled that the relocation from Hesse to Saxony was invalid. At first glance, the question arises whether the claim for damages could be rejected on the ground that the employee would no longer be required to transfer on his own initiative after the relocation was declared invalid by the court. According to the Federal Labour Court’s case law, employees are not bound (even provisionally) to instructions of the employer that are outside the limits of reasonable discretion (Federal Labour Court ruling dated October 18, 2017 – 10 AZR 330/16). It is not yet possible to say to what extent the Federal Labour Court discussed this topic in more detail in the present ruling, as only a press release has been issued to date.
The Regional Labour Court decision in this matter shows however that the defendant did not inform the employee until October 2016 that he no longer had to comply with the relocation and would be reinstated in Hesse. The court does not expressly address the question of whether it matters that the relocation has already been judged invalid by a court.
However, the Regional Labour Court’s judgement in this matter makes clear that travel expenses are generally considered to be an element of damages in the event of the ineffective relocation, despite the fact that the journey to the place of work is not generally remunerated by the employer. Further, according to the Federal Labour Court, the provisions of the Separation Allowances Ordinance, which provides, among other things, for reimbursement of public transport costs and which the lower court applied taking into account the employee’s obligation to mitigate damages, do not serve as a benchmark for the travel costs. Rather, the Federal Labour Court assumes that the JVEG rules apply and that the weekly travel costs of EUR 0.30 per kilometer driven must be reimbursed.
Employers must examine carefully whether an employee’s relocation meets the standard of reasonable discretion. If the employee complies with the employer’s instruction and it is subsequently determined by a court that the relocation was invalid, the employee can claim travel expenses of EUR 0.30 per kilometre driven (including for the period after a court determines the relocation to have been invalid). Any further claims for damages (e.g. for a second home) must also be considered.