Good news for employers: Default of acceptance only in case of employee’s intensive efforts to find a new job

If an employee takes legal action against his or her dismissal, such dismissal may turn out to be invalid – often after lengthy proceedings. In such case, employers run the risk of having to pay the employee a considerable amount of back wages, as they are in default of accepting the employee's work performance.

A decision of the Berlin-Brandenburg Regional Labor Court dated September 30, 2022 (6 Sa 280/22) now limits such risk in favor of the employer. The court decided that employees not using best efforts to find a new job had no claims arising from a default of acceptance.

The Regional Labor Court did not allow an appeal against such decision because, in the judges’ opinion, this was an individual case without general importance and the decision was within the scope of the German Federal Labor Court’s case law. We have no information as to whether or not the plaintiff filed a complaint against the denial of further appeal (Nichtzulassungsbeschwerde).

The German Federal Employment Agency and the job center submitted to the employee several job offers

During the entire proceedings against (several) unfair dismissals, the employee was registered as unemployed with the German Federal Employment Agency – a period of four years. When the complaint against unfair dismissal was successful, the employee demanded from the employer his wages payable for these four years. The employer denied such claim for wages for default of acceptance with reference to the set-off regulation in Art. 11 German Employment Protection Act (“KSchG”) and held the opinion the employee could have sought another employment during such period. However, he had maliciously failed to accept another reasonable job. Despite the fact that he had received various job offers from the Employment Agency and from the job center, he had only shown little or insufficient job application efforts.

The decision: Is the number of applications proportional to the duration of unemployment?

Both the Berlin Labor Court and the Berlin-Brandenburg Regional Labor Court followed the employer’s argumentation and dismissed the claim for payment of wages due to default of acceptance. In its reasoning, the Regional Labor Court stated that the employee’s efforts to find a new employment had been insufficient. With only 103 job applications during a 29-month period, the employee had – mathematically – written less than one application letter per week which, in the court’s opinion, was not sufficient in order to qualify as sufficient job application efforts. Since the employee had been unemployed during the period for which he asserted his claims, he could and should have spent the amount of time equivalent to a full-time position for his efforts to find a new job. In the court’s opinion, 103 job applications in 29 months do not meet this requirement. The Regional Labor Court also objected to the quality of the applications and also considered this to be an indication of a malicious failure to accept work the employee could reasonably be expected to accept pursuant to Art. 11 No. 2 KSchG.

The decision has important consequences for employers

The decision of the Berlin-Brandenburg Regional Labor Court significantly reduces the risk for employers of being exposed to high claims for default of acceptance in the event of invalid dismissals. If the employee’s application efforts are insufficient, he cannot successfully assert claims for default of acceptance. If, on the other hand, he uses his best efforts to find a new job, these efforts will be successful sooner or later, which significantly reduces the employer’s risk of being in default of acceptance. Only in cases where the employee does not find a new job despite intensive efforts, the employer’s risk of being exposed to claims for default of acceptance remains high.

Whether or not an employee used his best efforts to find a new job after being dismissed will be a case-by-case decision. The burden of proving that the employee maliciously failed to accept another employment lies with the employer. It is up to the employer to verify that the Employment Agency offered the plaintiff employee a reasonable job and that the latter maliciously failed to accept such job.

The employer has a right to be informed by the employee about the job offers the latter received from the Employment Agency (cf. decision of the Federal Labor Court dated May 27, 2020 – 5 AZR 387/19). Upon the employer’s request, the employee must inform his employer about the individual job offers received from the Employment Agency and from the job center, stating the job description, working hours, place of work and remuneration for each job offer.

Based on such information which must mandatorily be provided by the employee, the employer must substantiate the reasonableness of the offered work and any possible malice in the employee’s failure to make efforts to obtain it. It is then up to the employee to respond in an equally substantial manner.

Recommended action for employers in order to avoid default of acceptance

Every employer is well advised to demand from the employee, at an early stage after notice of termination has been issued, comprehensive information as to the job offers submitted by the Employment Agency. If the employee attempts to use the risk of default of acceptance as a threat during settlement negotiations, in order to urge the employer to conclude a settlement and in order to obtain the highest possible severance payment, the employer should notify the employee about the latter’s obligation to use reasonable efforts in finding a new job and should demand the corresponding information.

It remains to be seen whether the courts will follow the Berlin-Brandenburg Regional Labor Court’s case law and how the Federal Labor Court will decide, if applicable. We will keep you posted.