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Decision regarding the requirement of safeguarding employees’ rights if the employer changes by virtue of law in the context of a privatisation
Press Release No. 15/2011 of 16 February 2011
Order of 25 January 2011
1 BvR 1741/09
In view of the university hospitals' economic problems, the Land (state) Hesse decided in 2005 to unite the university hospitals of Gießen and Marburg and to privatise them afterwards. The Act Establishing the Gießen and Marburg University Hospital (Gesetz über die Errichtung des Universitätsklinikums Gießen und Marburg - UKG), which was adopted for this purpose and which entered into force on 1 July 2005, provides that all rights, duties and competences of the two university hospitals which so far have been autonomous shall be transferred by universal succession to the Universitätsklinikum Gießen und Marburg as a newly established public law institution. According to § 3.1 sentences 1 and 3 UKG, the employment relationships of the non-university staff who had worked in the patient care and in the administration of the two hospitals, and who until then had been in the service of the Land Hesse, were transferred to the Universitätsklinikum Gießen und Marburg. A provision corresponding to § 613a.6 of the Civil Code (Bürgerliches Gesetzbuch - BGB), which in the event of a transfer of business by legal transaction grants the employees affected a right to object to the transfer of their employment relationships to the new owner of the business, was not incorporated into the Act.
Furthermore, the Act contains the authorisation to privatise the new institution by way of an ordinance. Privatisation took place in 2006. The Universitätsklinikum Gießen und Marburg was converted into a limited liability company (GmbH). The Land sold 95 % of the participations in the newly created Universitätsklinikum Gießen und Marburg GmbH to a private hospital operator; the hospital operator undertook to refrain from dismissals for operational reasons until the end of 2010.
The complainant had been in the service of the Land as a nurse, and hence as a non-university employee, of the Marburg university hospital. She objected to the transfer of her employment relationship to the Universitätsklinikum Gießen und Marburg and later on to the limited liability company. Her action against the Land Hesse for a declaration that her employment relationship with the Land continues to exist was successful before the Labour Court (Arbeitsgericht), but not before the Higher Labour Court (Landesarbeitsgericht) and the Federal Labour Court (Bundesarbeitsgericht). It was held that the complainant was under no legal aspect entitled to a right to object. It was further held that the transfer of the employment relationships as well as the fact that no right to object was granted were justified by reasonable grounds of the common good.
By means of her constitutional complaint, the complainant essentially challenges a violation of her fundamental right to the free choice or retention of employment. She further asserts that her right to a lawful judge is violated because the Federal Labour Court would have had to refer the question of whether a right to object for the employees results from Community law (Directive 2001/23/EG) to the Court of Justice of the European Union for a preliminary ruling.
The First Senate of the Federal Constitutional Court has decided that the transfer of the employment relationships from the Land to the Universitätsklinikum Gießen und Marburg, which had been ordered by § 3.1 sentences 1 and 3 UKG and had been confirmed by the competent courts, is incompatible with the fundamental right to the free choice of employment, which is protected by Article 12.1 of the Basic Law (Grundgesetz - GG). The Land legislature is obliged to enact new legislation until 31 December 2011 at the latest. The contested judgments have been reversed and the matter has been referred back to the Higher Labour Court subject to the proviso that the proceedings will be suspended until new legislation has been enacted.
In essence, the decision is based on the following considerations:
1. The Land legislature encroaches on the free choice of employment, which is guaranteed by Article 12.1 GG, because due to the provision in § 3.1 sentences 1 and 3 UKG, the university hospital, as an institution with legal capacity, becomes the complainant's employer. Thus, a new employer she has not freely chosen is imposed on her. At the same time, the employees affected are directly deprived of the employer chosen by them. The encroachment gains particular significance by the fact that due to the planned privatisation, the employees' transfer to the Universitätsklinikum Gießen und Marburg sets a process in motion which removes them not only from the service of the Land but ultimately from the civil service. Interpreting § 3.1 sentences 1 and 3 UKG in conformity with the constitution by granting the employees a right to object which corresponds to the one provided under § 613a BGB is precluded in view of the fact that the Land legislature had deliberately decided against incorporating an employees' right to object into the Act.
The encroachment on the fundamental right to the free choice of employment brought about by § 3.1 sentences 1 and 3 UKG is not justified under constitutional law. The contested Act serves to carry out the privatisation of the university hospitals, which as such is a legitimate exercise of the organisational power of the Land. From the Land legislature's perspective, the objective of not granting the employees a right to object was to make privatisation easier; it can therefore still be regarded as suitable and necessary. However, the circumstance that the Land legislature in its capacity as employer curtails its employees' freedom of contract in order to make its decision to privatise easier is what makes the provision disproportionate.
The transfer of the employment relationships set out in § 3.1 sentences 1 and 3 UKG results in the Land dissociating itself from existing employment contract obligations without it having to ensure compliance with provisions regarding dismissal in the event of a contrary will on the part of the employee. This deprives the employee of a considerable degree of protection of vested rights. The exercise of a right to object would result in the employment relationship with the previous employer continuing to exist. If the need for employment ceased in its business, dismissal for operational reasons would be a consideration; such dismissal, however, would have to stand up to the requirements of the Act on the Protection against Unfair Dismissal (Kündigungsschutzgesetz). Whether the employee succeeds in retaining his or her employment with the previous employer on a long-term basis depends on the respective circumstances of the individual case. The weighing of the associated risks must, however, remain the decision of the employee exercising his or her freedom of contract. The employee's freedom of contract, which is protected by Article 12.1 GG, does not permit the legislature and the courts, because they supposedly have the better judgment, to take on behalf of the employees the decision about which of several employers to choose from offers more advantages.
The legislature must protect the employee's fundamental right to the free choice of employment at any rate where the change of employer will directly, by virtue of law, result in employment by a private employer instead of a public one, or where, as in this case, it is a step on the way to an intended privatisation. This is because in a privatisation process, the Land acts in a double role, namely as the (previous) employer and as the legislature which directly, by virtue of law, dissociates itself from its position as employer, thereby escaping its employment contract obligations. This, however, does not mean that it is exactly the provision under § 613a.6 BGB which is required under constitutional law. However, to the extent that the transfer of the employment relationship provided in § 3.1 sentences 1 and 3 UKG does not provide any opportunity at all to assert the continued existence of the employment relationship with the Land, this constitutes a disproportionate restriction of the interest, protected by Article 12.1 GG, of the employees affected in retaining the contracting party chosen; such restriction is not justified by the objectives pursued by the privatisation.
2. However, the complainant's right to her lawful judge under Article 101.1 sentence 2 GG is not violated. From the constitutional-law perspective, there are no objections against the Federal Labour Court having refrained from referring the issue to the Court of Justice of the European Union pursuant to Article 267(3) TFEU. In particular, it was able to justifiably assume that there is no basis in European Union law for an employees' right to object in the event of a transfer of business. Neither does Directive 2001/23/EC itself, which deals with the transfer of businesses, contain a provision about the right to object, nor has the Court of Justice derived an employees' right to object from the Directive. Instead, it has emphasised in the judgments in which it has discussed issues concerning the right to object that the legal consequence of the transfer of business which is ordered in Directive 2001/23/EC, i.e. the transfer of the employment relationship to the acquirer of the business, is mandatory. From the perspective of the Court of Justice, what is due to the employees' fundamental rights is only that they can decide against the establishment of a contractual relation with the acquirer of the business which is brought about by the transfer of the business. The Court of Justice has, however, explicitly denied regarding it as an objective of the Directive that those employees who do not wish to work for the acquirer of the business can continue their employment relationship with the transferor.