Labour law and the gas crisis: How can companies save energy?

The energy crisis is omnipresent in Germany. While gas storage levels are currently fairly high compared to last year, gas and electricity prices continue to skyrocket.

Quadrupling or quintupling of gas bills is not uncommon. As temperatures fall and demand for gas increases, companies should be thinking about saving energy.

Our first blog post in this series explored the question of whether how far employers might be obliged to pay employees' wages if government restrictions on gas supply resulted in a halt to production. (You can read this blogpost here.)

This second post in our series concerns measures companies can take to save gas and energy. As well as general energy-saving measures, employment law can also be used to reduce energy usage.

General energy-saving measures

Employers may benefit from general energy-saving measures, although a new energy saving regulation allows private employers to reduce heating costs by lowering temperatures in workspaces.

1. Process optimisation

As in private households, small daily energy-saving measures can add up over time. These include switching off lights, computers and other ‘energy vampire’ devices at the plug, instead of leaving them in stand-by mode.

Motion detectors for lights can help in less used rooms such as corridors or toilet areas. Switching off hot water for hand washing is technically legal (the Technical Rules for Workplaces or Technischen Regeln für Arbeitsstätten - ASR specify that, under the German Workplace Ordinance Arbeitsstättenverordnung cold water is normally sufficient, No. 5.4 para. 2 ASR A4.1) but investigating other options could be a better solution. Bavaria's Minister of Economic Affairs Hubert Aiwanger recently called for the legal promotion of switching fuels (eg gas to oil) for companies. Warmth generated by industrial companies could be used to heat offices. For some companies, a conversion of heating technology could even result in local electricity production.

From an employment law perspective, the works council’s participation rights might be applicable to all of these measures: If temperature or ventilation conditions change in the course of conversion measures, the works council has a right to information under section 90, paragraph 1, no. 1 of the Works Council Constitution Act (Betriebsverfassungsgesetz, BetrVG). If the use of the company's electricity supply by the employees is to be regulated, the works council may have a right of co-determination (under section 87, paragraph 1, no. 1 BetrVG) because this may affect organisational behaviour.

Irrespective of works councils’ participation rights, involving them in energy-saving considerations at an early stage has often proved helpful. Works councils can provide valuable suggestions and be enormously important in communication with a workforce.

2. Germany’s new Regulation on Securing Energy Supply

Heating less helps make price increases less painful. But employees’ health must be protected and minimum temperatures must be maintained by law.

The Technical Rules for Workplaces, for example, stipulate a minimum of 20°C for physically light and predominantly sedentary activities ie the "classic office activities" (No. 4.4 ASR A3.5). Correspondingly lower minimum temperatures apply for standing or heavier physical activity.

The "Ordinance on Securing the Energy Supply via Measures Effective in the Short Term" (Verordnung zur Sicherung der Energieversorgung über kurzfristig wirksame Maßnahmen, EnSikuMaV), which came into force on 1 September 2022 and is valid for six months, has now lowered these minimum temperatures by one degree each. According to this, private employers are allowed to reduce the temperatures for the aforementioned “classic” office activities to 19°C and to to 12°C for physically heavy activities. These temperatures are only minimum values for private employers. However, they are obligatory maximum values for public employers (with exceptions for medical facilities, schools, day-care centres etc).

In addition, the ordinance offers further measures to save energy, such as prohibiting keeping shop doors open and keeping advertising illuminated between 10pm and 4pm.

Furthermore, the "Ordinance to Secure the Energy Supply via Measures Effective in the Medium Term" (Verordnung zur Sicherung der Energieversorgung über mittelfristig wirksame Maßnahmen, EnSimiMaV), which will apply from 1 October 2022 and is limited to two years, also includes measures to increase the energy efficiency of heating systems and save energy across the economy. Owners of buildings (and thus also numerous employers) are subject to these obligations to inspect and, if necessary, optimise heating systems and pumps.

Energy saving through employment law

Saving energy through employment law instruments is focused on working from home and reducing overtime through compensatory time off or company holidays.

1. Working from home

Recently, the German Federal Minister for Economic Affairs and Climate Protection, Robert Habeck, suggested that employers should arrange for home working as far as possible so that employees use rooms that are heated anyway. Other energy savings could result from eliminating the commute. According to the German weekly newspaper DIE ZEIT, working from home could reduce Germany’s gas consumption by around five per cent.

But despite COVID-related adaptations, employers are generally not legally entitled to unilaterally order home working (even if this has often been handled pragmatically since March 2020). The protection of an employee's home is guaranteed by the German constitution, meaning that an employer's right to issue instructions does not include the ordering of working from home.

Of course, if working from home is agreed in an employment contract the situation is different. Without this or a specific agreement, a mutually agreed change to the employment contract is required. One exception is when a company’s survival is at risk. In companies where a works council exists, the council also has a right of co-determination in the decision on the "how" – but not on the "whether" (in accordance with section 87, paragraph 1, no. 14 BetrVG).

With the introduction of working from home, the question arises as to who bears the costs of the additional consumption of energy. Ultimately, working from home does not lead to the complete elimination of gas and electricity costs, but rather to their shifting to the employees.

If employees are obliged to work from home, a claim for reimbursement of the increased ancillary costs (including electricity and heating costs) resulting from working from home can be considered under section 670 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) by analogy.

Section 670 BGB only covers "necessary" expenses but precisely quantifying electricity and heating costs related to home working can be challenging.

To avoid complicated documentation, an individual agreement might be useful, for example by determining a monthly lump sum to be paid to employees. A relief for employees and thus possibly an incentive for them to working from home is also contained in the recently passed Annual Tax Act 2022 (Jahressteuergesetz 2022), according to which the lump sum for working from home will be increased and made permanent.

Taxpayers can already claim €5 for every calendar day they work exclusively from home. However, this was previously only possible for a maximum of 120 days per year and was limited in time. From 2023 on, taxpayers can now permanently claim an amount of €5 for up to 200 days for working from home. This increases the maximum amount from €600 to €1,000 per year.

2. Reduction of overtime through compensatory time off

The reduction of overtime through compensatory time off in winter can also relieve gas and electricity bills if workplace attendance is significantly reduced. Apart from the special provision in section 17 paragraph 3 Vocational Training Act (Berufsbildungsgesetz, BBiG) for vocational training relationships, there are no special legal requirements for this.

According to case law of the German Federal Labour Court, the ordering of compensatory time off requires a corresponding collective or individual contractual agreement according to which overtime can be compensated by compensatory time off. Unlike working from home, there is no entitlement of employees to compensation for the additional costs incurred under section 670 BGB by analogy, as it is not a matter of expenses "for the purpose of performing" the duties under the employment contract.

3. Ordering company holidays

The arrangement of company holidays, ie the complete closure of a business, holds even more savings potential. Especially in the cold months of the year, gas/energy consumption in offices tends to be particularly high, although many take holidays around the Christmas period.

From an employer's point of view, closing the business altogether during this period may be more worthwhile than keeping it open for a few employees.

When introducing company holidays, the right of co-determination under section 87 paragraph 1 no. 5 BetrVG must be observed in companies with a works council. This is because company holidays are general holiday principles whose introduction is subject to co-determination and, if necessary, would have to be enforced in a conciliation board (Einigungsstelle).

In companies without a works council, employers can introduce company holidays by virtue of their right to issue instructions. In order to do so, an employer must decide to shut down the enterprise for a certain period of time for operational, economic or other reasons and to grant employees leave.

Considerable organisational as well as financial advantages for employers can be considered as reasons for company holidays, which is quite conceivable in the case of significantly increased energy costs. Even if no upper limit for company holidays is set by law, according to the case law of the German Federal Labour Court, a maximum of about 60 per cent of the total holiday entitlement can be used for company holidays. If the company holidays have been legally established, they are – apart from cases of hardship - considered to be urgent operational needs and therefore preclude the employees' wishes for other holidays.

Conclusion

Employers have a number of options to save energy. Already by optimising daily processes such as switching off lights and stand-by devices, by lowering the room temperature and switching off hot water for washing hands, certain saving effects can be achieved. But also the “classic” employment law instruments such as working from home, overtime reduction and company holidays facilitate energy saving. In all cases, the participation rights of the works council, if such a council exists, must be considered. It is also advisable to regulate the possibilities of arranging working from home, overtime reduction and company holidays directly when concluding new employment contracts, in order not to argue about the effective introduction afterwards.

But if the measures highlighted here do not provide sufficient remedy, other labour law tools are available. The conditions under which short-time work and dismissals could occur as a result of the energy crisis will be the subject of the forthcoming third blog post in this series.