BAG on compensation for damages in the event of a breach of the Evidence Act

After it had been very quiet around the Nachweisgesetz for several years and the initial excitement around its amendment in August 2022 had initially died down again, a recently published decision of the Federal Labor Court on the employee's claim for damages in the event of a breach of the Nachweisgesetz illustrates its (increased) importance.

In its ruling of September 22, 2022 (Case No. 8 AZR 4/21), the German Federal Labor Court (Bundearbeitsgericht) determined that employees may be entitled to damages if the employer fails to properly point out a contractual preclusion period and employees thereby fail to assert claims in a timely manner. Although this decision was made under the old version of the Verification Act, it must also be observed under the new Verification Act.

The background to the decision was a legal dispute between an employee and his former employer, a church congregation. The employee claimed outstanding remuneration payments due to an incorrect classification into a grade several years ago. The employment contract referred to the ecclesiastical KAVO with its annexes, according to which the plaintiff's remuneration was also based and which regulated a preclusion period, which the plaintiff had, however, missed.

In the opinion of the BAG, the claims for compensation were extinguished due to the failure to observe the preclusion period, as ignorance of a preclusion period does not result in the period being invalid. However, the employee would be entitled to a claim for damages against the employer if his ignorance was due to the fact that the employer had violated his obligation to provide evidence under Sec. 2 (1) Sentence 1 NachwG. In this case, however, the causality between the breach of duty and the damage incurred must be proven. A claim for damages is therefore only justified if the breach of the duty to provide information alone results in the lapse of a claim and the claim would not have lapsed if the information had been provided correctly. This is only the case for claims that are known to the employee, because only then would the employee have enforced his claim before the expiry of the preclusion period. In the case of known claims, however, it must be assumed in the opinion of the BAG that the employee would have observed the preclusion period.

PBC legal takeaways: In the event of a breach of the Verification Act, the employee is not only liable to fines, but also to claims for damages. Since the new Verification Act came into force, it is therefore essential to make proper and timely reference to preclusion periods, among other things, in employment contracts. We will be happy to advise you on the employer's obligations under the Verification Act and on options for drafting employment contracts.