‘Wages in the event of default of acceptance’: How far does the companies’ right to information extend?

So-called ‘wages for default of acceptance’ can quickly become costly for companies. They are obliged to pay these to employees if the labour court, in proceedings concerning protection against unfair dismissal, finds that the dismissal was invalid – and this applies to the entire period since the supposed end of the employment relationship, even though no work was performed. Due to the often lengthy duration of proceedings concerning protection against unfair dismissal, substantial payment claims frequently arise over a period of months. Accordingly, “the objection of ‘wilfully failing to earn interim income” is becoming increasingly important, as it can reduce or even exclude claims for default-of-acceptance pay. But what information are companies entitled to request in order to substantiate this defence? The Federal Labour Court’s ruling clarifies the limits of the right to information and confirms the existing principles regarding the burden of proof and the burden of presentation.

Facts of the case

The decision concerns a dispute over default-of-acceptance payfollowing an invalid dismissal. The company argued that the dismissed employee had wilfully failed to earn income elsewhere. It therefore requested information regarding  placement proposals from the Employment Agency and the Job Centre, as well as details of job applications, application documents, interviews and other job-seeking efforts. The Giessen Labour Court (judgement of 27 March 2024 – 2 Ca 269/23) dismissed the claims for information. The Hessian Regional Labour Court (judgement of 25 September 2024 – 18 SLa 467/24) merely required the dismissed employee to provide information regarding job placement offers from the Employment Agency and the Job Centre, including details of the role, working hours, place of work and remuneration.

The decision

The Federal Labour Court (BAG) quashed the judgement on procedural grounds and referred the case back to the court of appeal. At the same time, it clarified the scope of the right to information: it extends exclusively to the circumstances which companies must present in order to trigger the so-called secondary burden of proof on the dismissed employee (see below for further details). Companies may request information regarding job placement proposals from the Employment Agency and the Job Centre, including details of the nature of the work, working hours, place of work and remuneration. However, they may not request information regarding job applications or other efforts made on the employee’s own initiative..
The Federal Labour Court (BAG) thus confirms its previous case law on the burden of presentation and the burden of proof: companies must first set out which specific and reasonable employment opportunities were available to the dismissed employee during the period of default of acceptance. To this end, they may draw on job placement proposals from the Employment Agency or the Job Centre and request the relevant information. Only once companies have met this burden of proof must the employee explain how they dealt with the specific job offers. There is, however, no prior right to information.

Consequences for practice

The ruling limits the right to information but confirms that employees may not ignore reasonable employment opportunities without consequences.

Companies must demonstrate specific and reasonable employment opportunities in order to substantiate the objection of wilfully failing to earn interim income. A “wilful failure” occurs when a person whose employment has been terminated deliberately fails to take up a reasonable employment opportunity and thereby avoidably fails to earn an income. What constitutes a “reasonable” opportunity depends on the circumstances of the individual case, the principle of good faith and the constitutionally protected freedom to choose one’s occupation. Significant deteriorations in working conditions are, in principle, unacceptable. There is no general obligation to actively seek employment. However, if employment opportunities are not taken up withouta comprehensible reason, the employee must explain how they have dealt with the job offers.

Practical tip

During ongoing proceedings for protection against unfair dismissal, companies should regularly provide suitable job offers and encourage the employee to apply. This can reduce the risk of default-of-acceptance pay, whilst also documenting that reasonable employment opportunities have been presented. When selecting offers, particular consideration should be given to the dismissed person’s role, work experience, training and qualifications. The vacancies should be current andvacant, and should include details of the role, place of work, working hours and remuneration. As a guideline, a commuting time of up to one hour and 15 minutes each way may be used. Companies should carefully document job advertisements and requests to apply. This makes it easier to substantiate the objection that the employee wilfully failed to earn interim income in the event of a dispute.

This article has been authored by Isabelle Trefzger, incoming attorney at Eversheds Sutherland.