Whistleblower protection and works constitution – the outsourcing of a reporting office to an external third party is subject to co-determination
In its ruling of 8 July 2025, the Schleswig-Holstein Regional Labour Court (LAG) determined that outsourcing an internal reporting office to an external law firm in accordance with the Whistleblower Protection Act (HinSchG) is subject to co-determination pursuant to Section 87 (1) No. 1 BetrVG (Works Constitution Act) – operational order. This is because the company cannot evade its obligation by outsourcing. It is not a non-binding offer to its employees to report, as the employer argued in court.
The LAG stated that the ‘whether’ of the establishment is not subject to co-determination, as it is specified in Section 12 HinSchG. However, the ‘how’ was open to design, as it influenced the orderly conduct of the employees and the organisation of the business and was therefore subject to co-determination. The ‘how’ of the reporting office also included, for example, the choice of reporting channel – external or internal – questions of anonymity, response time and the contractual design of the external operation. The employer must ensure through appropriate contractual provisions that the works council's participation rights are preserved when outsourcing to third parties. Since the employer had not involved the works council in the present proceedings, the LAG upheld the works council's application for an injunction.
By Dr. Nicole Elert
Abuse of position of power as managing director towards an employee
Over the summer, there were reports in the media about managing directors being dismissed for consensual romantic relationships with employees. This is not an unfamiliar topic in German labour law. In its so-called WalMart verdict 2003, the Federal Labour Court already established that a general ban on romantic relationships in the workplace is inadmissible, as Article 2 of the constitution protects the privacy of employees. Regulations that require relationships to be reported to the employer are therefore generally invalid. This also applies in the case of consensual relationships with a superior, provided that work performance or the working atmosphere are not affected. This can lead to conflicts of interest, as it could give the impression that the subordinate is being favoured or disadvantaged, other employees may feel unfairly treated, or there is a risk that the relationship of dependency existing in the employment relationship could be abused unilaterally.
On 9 July 2025, the Cologne Regional Labour Court (LAG) issued another ruling that has attracted a lot of attention under the heading of abuse of power. Legally, the case concerned the termination of an employment relationship at the plaintiff's request in accordance with Section 9 (1) sentence 1 of the German Employment Protection Act (KSchG) against the setting of a severance payment due to the unreasonableness of continuing the employment relationship in the context of insults and sexual harassment. More specifically, according to the press release issued by the Cologne Regional Labour Court, the case concerned sexist, humiliating and arbitrary comments made by the managing director via WhatsApp, who, in view of his displeasure with the development of his private relationship with the plaintiff, threatened her with sanctions under labour law, which ultimately resulted in a dismissal that was clearly contrary to social norms. The severance payment set by the Regional Labour Court was above average at two months' salary per year of employment.
By Dr. Nicole Elert
Are employers required to implement preventive measures in favour of severely disabled employees during the waiting period pursuant to section 1 (1) KSchG?
In its recent ruling of 3 April 2025 (judgment – 2 AZR 178/24), the German Federal Labour Court (BAG) has provided legal certainty and confirmed that employers are not obliged to implement a prevention procedure within the meaning of Section 167 (1) SGB IX prior to ordinary termination during the waiting period (Section 1 (1) KSchG).
What has been the issue?
A severely disabled employee was hired by the employer as head of building services and operations on 1 January 2023. A six-month probationary period was agreed. The employer was aware of the employee's severe disability at the time the contract was concluded. In March 2023, the employer terminated the employment relationship with due notice during the waiting period under unfair dismissal protection law, effective 15 April 2023, on the grounds of lack of professional suitability.
The employee filed an action for unfair dismissal in good time, arguing that the dismissal was invalid because the employer had neither carried out a prevention procedure in accordance with Section 167 (1) of the German Social Code IX (SGB IX) nor offered him a workplace suitable for his disability before giving notice of dismissal. In addition, he claimed that he was discriminated against by the dismissal because of his existing severe disability.
The action was unsuccessful in all instances up to the Federal Labour Court (BAG).
By Dr. Nicole Elert and Sabine Fabig
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