untangling the web employment law litigation in europe tuesday, november 10, 2015
TRANSCRIPT
Untangling the WebUntangling the WebEmployment Law Litigation in EuropeEmployment Law Litigation in Europe
Tuesday, November 10, 2015
HOUSEKEEPING
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Brief overview of
employment law litigation
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German Labor Court (Arbeitsgericht): special court to litigate employment law cases
•First instance: One professional judge, two lay judges who are appointed by court administration but suggested by employers’ associations and unions.
•Second instance: Same structure as first instance.
•Third instance: Federal Labor Court: Five judges, three professionals and two lay judges, appointed as for first and second instance.
•Two compulsory procedural steps before the labor court: Conciliation hearing (1) Judgment hearing (2):
-(1) Conciliation hearing (chaired just by professional judge): Judge will suggest a settlement to the parties but has no power to rule on the case in this hearing.
-(2) Judgment hearing: If settlement fails, full bench (three judges) will rule on the case after this hearing.
GERMANY
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Specifics of employment law litigation:
•Claim needs to be filed in writing at the labor court, naming plaintiff and defendant and stating what the plaintiff claims from the defendant (e.g. outstanding salary, reinstatement after dismissal, reference letter after dismissal). General rule: party bears the burden of proof for all facts supporting their claim or their defense. Defendant does not need to defend in writing before the judgment hearing.
•The parties can let attorneys represent them in all hearings, but labor court have the habit of ordering parties to prepare in person in front of the court if the court believes this will help to settle or to understand the case better.
•The representation of the parties by an attorney is not mandatory in the first instance but in front of the appeals court (second instance) and the Federal Labor Court (third instance). Employees can be represented by unions (unions offer this as a service to their members) and employers can be represented by their employers’ association (also offer as a service there).
Degrees of jurisdictions:
•Three levels: Labor court and Regional Labor Court (as appeals court).
•Then, the Federal Labor Court is a third level of jurisdiction, this court reviews only the compliance with law and not the facts.
GERMANY
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GREECE
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Greek Magistrate Courts / First Instance Courts : Special Labor Disputes Procedure
•Professional Judges who have graduated from the National School of Judges;
•Cases divided into 2 different levels: a. cases under 20.000 € : Magistrates Courtb. cases over 20.000 € : First Instance Court
•Optional procedural step before the hearing = the filing of injunction measures with a request for a provisional order
Hearing: Public hearing - Representation of the parties not mandatory, although in the majority of cases parties are assisted by a lawyer.
General rule, although not thoroughly respected: the Court shall endeavor to reconcile the parties during the hearing.
GREECE
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Procedure :
•Submission of file with written briefs: the parties submit their respective file and supporting documents until the end of the hearing to the Court.
•Oral procedure: the witnesses are cross examined during the hearing by the attorneys and the Judge, the attorneys submit their objections and develop their pleadings orally.
Degrees of jurisdictions:
•Two degrees : Magistrates or First Instance Court (first degree) and First Instance Court (acting as Court of Appeal) or Court of Appeals respectively (second degree).
•Finally, the Greek Supreme Court - which reviews only legal defaults of the Court of Appeals decision, but not the merits.
• Employment rights regulated by an extensive statutory framework (heavily influenced by European legislation)
• Enforcement through:
- statutory tribunals and bodies
- civil courts (in appropriate cases)
IRELAND
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The French Industrial Tribunal : special court of employment law
•Lay judges who are elected among their peers ; Equal representation : 2 employee’s members / 2 employer’s members (in the event of a tie vote, intervention of a professional judge which implies a new hearing and pleadings)The fact that the members of the Industrial Tribunal are not professional is very criticized and a new law of August 6th, 2015 introduced provisions relating to their status: compulsory training, code of conduct and disciplinary proceedings.
•The cases are divided into 5 different branches: 4 depending on the company’s activity (farming, industry, trade, various activities) and 1 branch for the employees with the executive status
•Two compulsory procedural steps before the Industrial Tribunal: Conciliation hearing (1) Judgment hearing (2)-Conciliation hearing (1 employee member/ 1 employer member): The members shall endeavor to reconcile the parties – Members sitting in camera (non-public hearing)The conciliation phase has been strengthened by the new provisions of the law of August 6th, 2015.During this hearing, the members can grant provisional claims, i.e. remuneration, severance payments, etc.-Judgment hearing ( 2 employee members / 2 employer members) during which the case is litigated (pleadings) – Public hearing
FRANCE
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Specifics of employment law litigation : Procedural guidelines
•Oral and written proceedings, i.e. the parties must exchange their respective submissions and written evidence before the judgment hearing and in due course in compliance with the adversarial proceedings’ principle (audi alteram partem) and the oral pleadings during the judgment hearing are also important to convince the Tribunal.•The parties must attend personally the hearings, except for legitimate reasons. In practice, the attendance of the employer (or his representative) is important for the conciliation hearing, but less for the judgment hearing.•The representation of the parties is not mandatory and the parties are usually assisted by a lawyer but can be assisted by employee(s) belonging to the same company (or by a member of the company for the employer), union delegate(s), husband or wife (common-law husband/wife), •New claims may be submitted at any time, i.e. new claims can be submitted before the Court of appeal whereas they were not raised by the employee before the Industrial Tribunal).
Degrees of jurisdictions:
•Two levels : Industrial Tribunal and the Court of Appeal (professional judges: single judge or chamber)
•Then, the French Supreme Court which is not a third level of jurisdiction because the Court reviews only the compliance with law and not the facts.
FRANCE
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How do cases move
through the system ?
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GREECE
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Brief description
•Filing of a lawsuit with the Court’s secretariat.
•Date of hearing is fixed on submission date. Plaintiff is responsible to serve the lawsuit to the defendant by a competent court bailiff.
How long does it take to process a claim?
•Processing of a claim depends on how full the dockets of the Court are, so usually the hearing date is fixed approx. 1 to 1,5 years after submission of the lawsuit.
Exceptions, for claims included in injunction measures or strike cases, where the Court must rule sooner.
•As of hearing date, Court issues its judgment within approx.1 year (except judgments issued in temporary injunction relief measures).
•Proxy lawyers are then notified by the relevant Bar Association on the issue of the judgment.
•As of the service of judgment, two deadlines exist: the defeated party has either 30 days as of the judgment’s date of service or 3 years as of the date the judgment was issued, to file an appeal.
Exceptions, for judgments regarding strike cases, where such deadline is significantly shorter i.e. 3 days.
•The appeal has a suspending effect on the judgment, with the exception of case where a provisional enforcement has been ordered by the Court.
•Hearing of claim before the Court of Appeals (Special Employment Disputes Chamber) approx. 2 years as of the submission of the appeal.
GREECE
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What means of evidence are allowed in employment law disputes and how are they evaluated?
Accepted means of evidence :
•By way of indication public and private documents, emails, company/employee documents, receipts, notes, website printings, newspaper segments etc.
•Affidavits, i.e. sworn testimonies of witnesses taken before a Notary Public.
•Oral cross examination of witnesses during the hearing.
Evaluation:
•The principle is that of the free evaluation of all types of evidence by the Court.
Brief Description
Pre-2014: Tribunals and Courts
• Employment Appeals Tribunal• Equality Tribunal• Labour Court• Rights Commissioner• National Employment Rights Authority
….Workplace Relations Act 2015 (1 October 2015)
IRELAND
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New Two-Tier Structure
(1)Workplace Relations Commission (WRC) six functional areas:
• advisory and information service• registration service• conciliation and early resolution service• adjudication service• compliance and enforcement service• corporate and strategic service
(2) Labour Court
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IRELAND
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Complaint
Inspection
Adjudication
Early Resolution
Appeal & Enforcement
Labour Court Courts
Prosecution
Enforcement
OR
(in private)(in public)
(in public)
IRELAND
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How long does it take to process claims?
•Depends on the nature of claim itself•e.g. prior to 1 October 2015:
- Unfair Dismissal Claims and Equality (approx 18 – 24 months)
- Civil Courts (2 years +)
•Reform - new streamlined structure of WRC, intention to speed up resolution of claims – Case heard at first instance in 8 -12 weeks
IRELAND
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Evidence in Employment Law Disputes
Statutory Bodies/Labour Court• Detailed written submissions prepared by both
parties• Evidence on oath / sworn evidence• Cross examination
Civil Courts• Detailed evidentiary rules unique to each court• Expert witnesses• Admissibility of evidence• Discovery
IRELAND
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Brief description
•The referral to the Industrial Tribunal is very easy, i.e. by registered letter with acknowledgement of receipt or filed within the court administrative service. Then, the Industrial Tribunal sends notice to the parties for the conciliation hearing.Exceptions to the conciliation hearing and direct reference of the case to the judgment hearing, e.g. claims for fixed-term contract(s) to be « re-considered » as indefinite term contract, « constructive dismissal »,etc.
•If the parties did not reach an agreement during the conciliation hearing, the case is referred to the judgment hearing.
How long does it take to process a claim?
•The processing of a claim depends on the Industrial Tribunal’s workload, i.e. approx. 3/6 months for the conciliation hearing and then 6 months/2 years for the judgment hearing.Exceptions, for some specific claims, the Tribunal must rule within a shorter period: « constructive dismissal » (1 month), redundancy (6 months), etc.
•From the judgment hearing, the Tribunal releases the deliberation (only the operative part of the decision) in approx. 1 to 3 months (except « deliberation on the seat »). •Then, the full written decision is notified to the parties after. approx. 0 to 3 months.•From the notification of the decision, the parties have 1 month to appeal. The appeal has suspending effect on the decision, with the exception of provisional execution which can be automatic for some claims or ordered by the Industrial Tribunal.•Before the Court of appeal (specific chamber dedicated to employment law cases), the processing of claim depends also on the Court of Appeal (6 months to 2 years for the pleading hearing).
FRANCE
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What means of evidence are allowed in employment law disputes and how are they evaluated?
•Reminder of the principle: Adversarial proceedings implying that the parties must exchange their respective written evidence.
•Standard means of evidence: -EmailsOn the employer’s side, the emails have the presumption of professional nature, so any emails may be used from the professional mail box of the employee, with the exception of emails having the subject « private and confidential ».
-Company/employee documents.However, on the employee’s side, he/she can use the documents belonging to the company (i) only if there are useful for his/her claims and (ii) if he/she had free access to these documents as part of the performance of his/her employment contract.
-Testimonies, i.e. written testimonies because testifying on the stand being not usual before the Industrial Tribunal given the adversarial proceedings’ principle.
•How are they evaluated:-« No party may make evidence for himself ».-The quality of the one who testifies may vary the value of the testimony.
FRANCE
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Brief Description
•Filing a claim with the labor court can be done by sending the statement of claim to the court or asking the court secretary to record the statement of claim. The court will generally not review the potential merits of the case at this stage.
•Then the court will summon the parties for the conciliation hearing.
•If the parties did not reach an agreement during the conciliation hearing, the case is referred to the judgment hearing.
How long does it take to process a claim?
•The labor court is obliged to hear termination cases fast track and will summon for the conciliation hearing within two weeks after the claim was filed.
•The time between conciliation hearing to judgement hearing depends on the current workload of the court and can last up to six months, sometimes longer, the average is three months.
•The parties have one month to appeal a decision in the first instance and another one month to submit the reason of the appeal in writing to the appeals court.
•The decision of the appeals court can be challenged within one month after the written decision of the appeals court was issued in front of the Federal Labor Court and another one month to submit the reason why the case should be heard by the Federal Labor Court. This court does only hear a very small number of cases, which are relevant for the general interpretation of the law.
GERMANY
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What means of evidence are allowed in employment law disputes and how are they evaluated?
•General principle: Each party needs to present the evidence supporting their position (plaintiff: supporting the claim; defendant: supporting the defense).
•Accepted evidence:
-Evidence by presentation to the court, e.g. materials shown in the courtroom, print-out of emails etc.
-Evidence by presenting of witnesses
-Evidence by expert witnesses
-Evidence by documents
-Evidence by testimony of the parties
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How and when to settle a
case?
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• Compromise Waiver Agreement• Consideration• Waiver of Claim(s)• Independent Legal Advice
• When to settle…• Substantive merits• Procedural deficiencies
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When?
•A case may be settled at any time and that, until the judge makes the decision.Once the parties filed with their respective argumentation and evidence, settlement is less usual.However, settlement can be still a good option considering that the exchange of the evidence allows to update the assessment of the litigation risk.
•The following saying may be relevant: « An out-of-court settlement agreement is always better than a bad decision of the judge ».
How?•Out-of-court settlementThe parties can settle at any time through their respective lawyers and they must only inform the judge about the effective out-of-court settlement (to remove the case from the List and record the withdrawal).
•Before the conciliation board: the agreement of the parties is certified by the conciliation’s minutes.During the conciliation hearing, flat-rate scales provided by law can be used to set the amount of the settlement pay which depend on the employee’s seniority (not compulsory and the parties usually settle on the basis of higher amounts)
•Before the judge (after the conciliation phase): the settlement agreement may be subject to approval of the judge (not compulsory)
•Mediation: alternative dispute resolution, once the pleadings are made, the judge can suspend the deliberation pending the mediation procedure.
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When?
•The Labor Court Proceedings Act requires the court to urge the parties to settle the case. In termination cases, the employer (defendant) carries the bigger financial risk. Because if the termination is ruled invalid by the court, the employee can not only claim reinstatement but also outstanding salaries for the time she/he was not employed. About 60 to 80 % of termination cases are settled out of court or in court.
How?
•Out-of-court settlement
In termination cases, the parties can agree on a certain termination date and a severance pay. Severance pay can be calculated with the formula factor x seniority of the employee x gross monthly salary. The factor is increased if the employer’s chances to prevail in court are lower than those of the employee.
•In-Court-Settlement:
The settlement is recorded by the judge in the minutes of the hearing or in a separate court order as agreed by the parties. The court can never force the parties to settle.
GERMANY
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GREECE
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When?
•A case may be settled at any time until issue of the Court’s judgment.In practice, once the case is heard, settlement is less usual.
How?
•Out-of-court settlement:
The parties can settle at any time by execution of a settlement agreement. In case a settlement is achieved, the Secretary of the Court must be notified so that it be dispensed of issuing a decision.
•Before the Court (on the day of the hearing): such settlement must be ratified by the Court and is enforceable.
How expensive is litigation
and who has to pay?
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• The referral to the Industrial Tribunal and the Court of Appeal is free, i.e. there are no court fees.
• Expenses incurred by the parties in the proceedings (« Article 700 of the French Procedure Civil Code »): the judge may order the unsuccessful party to pay a fixed-lump sum in compensation of the expenses incurred in the proceedings (travel expenses, attorney fees) by the successful party. This fixed-lump sum does not correspond to the exact amount of the expenses, often a lower amount.
When the employee is unsuccessful, the Tribunal or the Court is reluctant to order this payment on this basis.
In addition, the employer cannot make a claim for recovery cost (including attorney fees) under French law.
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•Cases can be brought in front of the labor court free of charge, there are no court fees.
•Each party has to pay their attorney fees in the first instance; in the appeals court and in front of the Federal Labor Court the not prevailing party pays their own and the opposing counsel’s fees but only to a capped amount stipulated by the Attorney Fees Act.
E.g. litigating a case in front of the labor court, appeals court und Federal Labor Court can cost the not prevailing party between € 6,000 to 10,000 net.
GERMANY
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GREECE
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• The referral to the Magistrates, First Instance Court and the Court of Appeals is subject to certain standard court fees.
• Court fees (Article 176 of the Greek Civil Procedure Code): the Court may order the defeated party to pay the court fees by the successful party. This sum is fixed by the Court without necessarily corresponding to the actual amount of the expenses. However, the Court is bound to define the fees by reference to the amount claimed.
• It is not possible to file an appeal against a judgment solely with regard to the adjudicated court expenses.
Awards/Damages
•Compensation will depend on particular case
For example:• Unfair Dismissal – max. 2 years remuneration • Discrimination – max. 2 years remuneration• Civil Court Awards (e.g. work related stress)
o District Court - < €15,000o Circuit Court - < €60,000 (for personal
injury)o High Court – unlimited
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Costs
•General rule that each party bears own costs … however
•Civil Courts – inherent discretion as to award of costs (e.g. “loser pays” principle)
•Legal costs can be expensive e.g. injunction proceedings in the High Court between €80,000 to €120,000 +
IRELAND
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What are the three do’s
and don’ts?
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Do ✓
•Make sure that you have evidence available for all important points of your defense.
•Make sure that your witnesses are going to confirm what you stated in your briefs to the court (and not the other way around).
•In termination cases: Watch out if the plaintiff took already a new job while suing the old employer (e.g. LinkedIn profile!), which will undermine plaintiff’s position in the case.
GERMANY
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Don’t ✗
•Do not wait too long to settle a case, even if you were successful in the first instance.
•Do not settle precipitously, even if you were not successful in the first instance.
•Do not litigate cases where you know that employer failed to meet formalities for termination (e.g. lack of works council consultation or no warning before dismissal for poor performance). Settle them - QUICKLY!
Do ✓
•Have the best available witness to testify: the witness to be examined before the Court plays an important role in the outcome of the case.
•Be able to provide written evidence from the company’s HR files (for example payroll copies on all amounts paid to the employee, written warnings on any bad performance issue e.t.c.) •Be able to prove that termination was the ultimate solution the employer was left with (after having exhausted all other available options).
GREECE
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Don’t ✗
• Never contest or contradict the Judge.
• Do not have as your witness the Managing Director or the Senior Executive of the company.
• Do not proceed to the hearing if you can settle: a settlement is always better than a court case.
Do ✓
•Have the best objective evidence and be thoroughly prepared.
•Make an honest assessment of the outcome and advise the client accordingly.
•Try and dismiss claims based on jurisdictional considerations.
IRELAND
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Don’t ✗
•Antagonise the Tribunal/Court.
•Prosecute/defend spurious cases.
•Ignore evidentiary difficulties in a case.
Do ✓
•Identify the most relevant way to « tell the story » to « build » the case, i.e. the story must be consistent with the written evidence and complete (any issue raised by the employee must be answered)
•Document and gather material about the case: e.g. be able to prove the dismissal with written evidence. In employment law litigation, the burden of the proof is often on the employer. For instance, in case of dismissal’s challenge, the principle is « should doubt subsist, it should benefit the employee ».
•Look closely at the written evidence of the employee, which always contains useful information for the employer’s defense [the devil is in the detail]
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Don’t ✗
• Reciprocally with the 3rd Do ’s - Do not file with written evidence which could jeopardize your defense (, i.e. prior to any submission, you should be sure that the information does not harm your interests.)
• Do not have an aggressive attitude towards the judge and the employee: employer’s attorneys are seen as « villains », so adopt a low profile (no personal attacks, be cheerful, do not interrupt the judge and the employee’s attorney).
• Do not give the opportunity to the employee or his/her attorney to have the final say during the hearing: the employer’s attorney pleads in last position, so it is important to prevent the employee or his/her attorney from arguing again at the end of your argument.
What type of claims have
you seen increasing in the
last three years?
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GREECE
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Most popular claims:
•Invalidity of the termination as abusive and claim for salaries due or reinstatement.
•Claims on overtime, work on Sundays and public holidays, as well as claims on non paid vacation days, as well as claims arising out of stock option plans.
•Unilateral detrimental change of the employment terms and conditions leading to the termination by the employer (“constructive dismissal”).
• Unfair Dismissal/Redundancy
• Equality/Discrimination Claims
• Whistleblowing
IRELAND
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• Number 1 in claims: Dismissal or redundancy’s challenge by the employee.
• Claims relating to discrimination, equal treatment (including on the basis of the principle « equal pay for equal work »)
• « Constructive dismissal » which is usually based on claims relating to the employee’s remuneration, including variable compensation (incentive pay, commissions, etc.), the substantial change of the employee’s contract, employee’s health condition and psychosocial risks (including « moral harassment », burn out, etc.)
• Claims relating to working time, i.e. overtime, annualized working days system.
In most cases, please note that the employee makes several claims. For instance, on the top of the challenge of his dismissal, he has ancillary claims (e.g. backpays, working time issues, etc.).
FRANCE
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• Number 1 claim: 80 % of all court cases are termination cases.
• Claims relating to discrimination – in particular old age discrimination, equal treatment (including on the basis of the principle « equal pay for equal work »).
• Claims related to working time and overtime and salary/payment for overtime.
GERMANY
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Case study
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Jennifer (J) is an employee of BigForce Corp., an US-headquartered multinational in the IT industry with substantial operations in Europe, in particular in France, Germany, Greece and Ireland/UK.
J has been employed in the sales department for around six years now but her managers were not always satisfied with her performance. Even worse, in the last months and week J’s performance was even more deteriorating. J has been put on a Performance Improvement Plan and was several times subject to disciplinary action, like meetings with her managers, written warning letters etc. But she shows no improvement.
On November 10, 2015, after her manager hears J shouting on the phone at an important customer of BigForce, the management really believes that the end of the road has been reached. J is terminated with immediate effect, although her employment contract stipulates a notice period of three months.
A week later, after J has left, court papers are served at BigForce’s office in your country: J has filed legal action against her dismissal. At the same time the management receives a call form J’s lawyer and is told there that J would be willing to settle – but only for an amount which „reflects the huge loss our client is suffering because of your obviously illegal termination“.
Now BigForce’s management calls you, their trusted ELA-laywer in your jurisdiction, and asks what to do next?
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GREECE
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Evaluation of the content of case with the Client:
•Check well founded of the claim
•Assess the evidence and the available witnesses
•For the claimed invalid termination, written warnings and disciplinary actions are crucial.
•Termination can take place with or without notice (at the employer’s discretion). The amount of legal severance for employee(s) having 4 to 6 years of seniority is an amount equal to 4 monthly salaries. Such amount irrespectively of the reason of termination must be paid to the employee in order for the termination to be valid on termination date.
Evaluation of the risks:
•The case is presented with a high degree of a successful outcome for Client.
•In case the supporting evidence (warnings, disciplinary procedure e.t.c) can be confirmed by witnesses as well, the Client should opt to litigate.
•An additional factor to such a direction is the indirect approach of the opponent for settlement, interpreted as weakness.
•General rule: Lower Courts are usually pro-employees, but Court of Appeals tend to reverse such decisions.
IRELAND
Jurisdictional considerations
•Does the employee have a claim in Ireland?•Has the employee taken a claim elsewhere?
Assessment of risk
•Does the employee have a legitimate complaint?
•What are the prospects of defending the claim? Having regard to the fact that J has been terminated with immediate effect it would appear that BigForce has not followed due process and accordingly J may have a legitimate complaint.
•If J does have a claim (and an arguable case) you might contact J's lawyer to settle. It would be unusual to do so early in the process as the initial procedural requirements for an employer are relatively straight forward and cost effective.
Procedural next steps
•If a valid claim, file a response for BigForce and wait for notification of hearing. •Once notification is received it may be the opportunity to settle the case.
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• Risk assessment of the case, to determine the chances of success of the employee and the financial risks :
- Balance between the evidence to support the dismissal and the argument and claims of the former employee;
- Determination of the minimum/average/maximum risks, based on our past experience and French labor law.
*The French labor law set the minimum amount of damages for employee(s) having at least 2 years of seniority, i.e. 6 month as a minimum;
* No maximum is set, this amount being freely set by the judge depending on the harm suffered by the employee, her seniority, the fact of having a new job.
NB: The bill of August 6th 2015 defined scales for the indemnity for unfair dismissal (minimum and caps) depending on the employee’s seniority and number of employees of the company) that would have been mandatory for the judge. These provisions have been removed by the French Constitutional Court. The principle of a non-compulsory benchmark is however introduced by this law, i.e. optional or upon the joint request of the parties.
• Hard-line stance: Given the strength of the case (performance improvement plan, warnings, meetings with managers, customer’s opinion) and the fact the she may be « greedy » (rf. « huge loss »), we would recommend to adopt a hard-line stance concerning the settlement option. Only on the basis of a low and reasonable offer, the company would be be willing to enter into discussions. In any case, the company is willing to defend the case in court and if the employee obtains something that will be after years (after both proceedings before the Industrial Tribunal and the Court of appeal).
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Risk assessment:
•Chances for employer to defend the termination in court?
•Termination for poor performance is accepted by German labor court.
•General legal prerequisite: Warning and time for improvement for the employee.
•Termination with immediate effect only in extraordinary cases, e.g. criminal offense or competing with employer in their business.
Hard-line stance:
•Jennifer is not long with BigForce Corp. – not very high « social protection ».
•Several warnings and PiP have not been successful.
•Termination with immediate effect probably weak; so, offer low, lump sum severance to settle out of court and save time and efforts of handling a court case.
GERMANY
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Questions?
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