Federal Labour Court (BAG), Judgment as of 4/22/2009
File number 5 AZR 436/08

Summary

On an appeal brought by the plaintiff, the Federal Labour Court (BAG) set aside the judgment of the lower review court and remitted the case to this court to hear and decide the matter anew.

The female plaintiff was employed as an unskilled temporary worker in the landscaping business of the defendant from 1992 to 2002. Neither party was bound by a collective bargaining agreement. The plaintiff, a Portuguese woman, did not speak or understand German. Under the terms of her employment contract, which was drafted in Portuguese, she received an hourly wage of € 3.25. Her working hours were irregular, up to 352 hours per month. The employer provided her and her family with housing on the business premises.

The plaintiff demanded back pay on the basis of wage usury. The lower review court dismissed the action. The BAG held, however, that further findings were necessary and remitted the case to the lower review court in its capacity as a trial court.

The BAG held that a wage agreement is invalid on the basis of wage usury if the weaker position of the one party is being exploited and if there is a “striking incongruity” between the work to be performed and the wage actually paid for it. The BAG held that the relevant time for the assessment is not the time at which the employment relationship was entered into, but rather the entire period of time during which an unconscionable wage agreement is in place. A wage agreement that was originally valid may become invalid if it is not adjusted in line with general wage developments. The court also held that the overall nature of the employment relationship must be taken into account, which in this case included the unlawful excessively long and irregular working hours of the plaintiff, which made it even clearer that she was being exploited.

The BAG supplied the lower review court with guidelines for the new inquiry as to whether there was a “striking incongruity” between the work performed and what was paid for it. The first thing to examine is the objective value of the work performed, which is to be determined by reference to the union wages in the particular branch and region. If there are no union wages or if the wage customarily paid is lower than the union wage, then the general wage level in the region is presumed to be the standard.
The BAG was of the opinion that a "striking incongruity" exists when the wage paid is less than two thirds of the usual union wage. The comparison to be made here is between the basic remuneration paid and the basic union wage, in both cases to the exclusion of bonuses and similar things. The concrete facts/circumstances (e.g. payments in kind) of the employment relationship must also be taken into account since these may necessitate a correcting of the 2/3-threshold. The BAG saw no reason in the present case to make such a correction.

On the subjective side, the only requirement for a finding of wage usury is that the benefitting party have knowledge of the incongruity. Neither a special intention to cause harm nor knowledge of the 2/3-threshold is required. What is required, however, is the existence of a reprehensible mindset, which is presumed to exist when the benefitting party recklessly closes his/her eyes to the knowledge that the other party is only agreeing to the unfavourable contract because of his/her weak position. It was regarding these subjective aspects and the customariness of the union wage in particular that the lower review court, in its capacity as a trial court, still had findings to make in the present case.

Decision in full text: