Flat rate for late payments? – Not in labor law!

Only a few years ago the new Section 288 Paragraph 5 of the German Civil Code (BGB) was introduced. The regulation stipulates that the debtor of a payment claim - unless he is a consumer - should be obliged to reimburse a lump sum of € 40.00 if he defaults on payment. The obligation exists even if the creditor has not suffered any (quantifiable) damage as a result of the delay. Rather, the creditor is intended to be compensated for his “general administrative effort”.

Until then, such a flat-rate compensation was not known to the German legal system. Therefore, since this regulation came into force in July 2014, there has been a discussion in the labor law literature and case law as to whether the regulation can also be applied in labor law and whether the employer who falls behind in paying wages by even one day should receive a flat-rate compensation of € 40.00 has to be paid.
The respective opinions were justified as follows:
In some cases it was argued (in an employee-friendly manner) that Section 288 Paragraph 5 of the German Civil Code (BGB) applies to all obligations due to its meaning and purpose. Therefore, its applicability in labor law should also be affirmed. This argument was essentially countered by the fact that such an obligation on the part of the employer would not be legal in view of the requirements in Section 12a of the ArbGG. The Federal Labor Court has consistently ruled that the provision excludes all flat-rate compensation claims. If this long-standing case law is consistently applied, the flat rate payment for late payment in accordance with Section 288 Paragraph 5 of the German Civil Code (BGB) may also not be required in labor law.
The dispute was not only conducted in labor law literature. The labor courts have also assessed this legal question differently, with the prevailing opinion and in particular the majority of the state labor courts affirming the applicability of Section 288 Paragraph 5 BGB in the employment relationship (instead of many: LAG Munich from April 18, 2018 - 11 Sa 42/18, LAG Lower Saxony from February 27, 2018 – 10 Sat 25/17, LAG Cologne from March 8, 2018 – 8 Sat 796/17). The opposing view, however, was only represented sporadically (LAG Cologne from October 4th, 2017 - 5 Sa 229/17, ArbG Düsseldorf from May 12th, 2016 - 2 Ca 5416/15, ArbG Nuremberg from November 11th, 2016 - 12 Ca 6016/15).
In its more recent decision (judgment of September 25, 2018 - 8 AZR 26/18), the Federal Labor Court clearly contradicted the (until then) prevailing legal opinion. According to the published press release, the court referred to the special nature of labor law regulated in Section 12a ArbGG and rejected the applicability of Section 288 Paragraph 5 BGB.
The decision has now created legal clarity. Employers can now face the “40 euro lawsuit” that employers feared after the introduction of Section 288 Paragraph 5 of the German Civil Code (BGB) with relative calm. The labor courts will most likely adhere to the “Erfurt guidelines” and reject the employees’ corresponding demands in the future.