German workplaces: what can businesses learn?

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The world of work is facing major upheaval, be it the result of Industry 4.0, digitalisation, demographic change or integration of diverse cultures in the workplace.

How are the business community and policymakers across Europe responding to these immense challenges?

Unlocking the potential of flexible working

Despite recent media headlines suggesting that tech giants such as Yahoo and IBM are turning their backs on ‘home office’ culture, the reality is that increasing numbers of employees will be doing some of their work from home in the future.

Even today, 40% of jobs in Germany could be done from home, according to studies by the German Institute for Economic Research. In fact, Germany is below the EU-average when it comes to the percentage of people working from home and risks falling behind France, the UK and Scandinavian countries.

It is a simple fact that workers now want more flexible working hours and locations and this creates tremendous untapped potential: people working from home clock up longer hours, averaging 46 hours a week and say they are happier with their jobs than their colleagues.

Generation Y is looking first and foremost for meaning in their work and a work-life balance that fits their personal needs. Traditional concepts of work, time, space and organisation need to be reinvented – we need a new definition of work –  ‘new work’ – in step with these innovations.

Redefining work place and time

Less clearly defined working locations and the blurring of work and free time present  multifaceted challenges for the labour laws of the future. In Germany, the provisions governing working hours are already seen as out of step with the times.

A statutory 48-hour week, maximum working hours of 10 hours per day, the ban on work on Sundays and public holidays and statutory periods of rest are no longer in tune with what is actually needed in many sectors: flexible working is impossible if rest periods are contravened by an employee simply answering or reading an e-mail outside of normal working hours.

Other European countries like the UK are more flexible on this score. The 1998 Working Time Regulation transposing the EU’s Working Time Directive 2003/88/EC sets out general average working hours of 48 hours a week for example. But the employee has the option of waiving this maximum through an opt-out declaration.

Brexit is unlikely to change these framework conditions. Many Acts based on EU law have already found their way into British employment contracts and corporate policies. Stripping employees and employers of these rights would be no easy feat.

The EU directive provides for the possibility of departing from the 48-hour week by mutual consent. This opens up the opportunity to make the rigid labour rules in Germany and other countries more attuned to social developments.

Of course, lawmakers have to create a clear framework that protects workers in this new age of work, but they will also have to give employees and employers the opportunity to decide their working conditions themselves within the scope of European law and to act as equal partners.

Working time accounts

There is already some movement in this direction within this somewhat out-dated system – in the form of working time accounts. These are designed to allow working hours to be aligned to the needs of people at different stages of their lives. The aim is to balance out the ‘rush hour’ of life, between the ages of 25 and 45.

These different types of working pattern can be implemented through long-term work accounts based on a free agreement between the employee and employer. This type of arrangement enjoys the support of trade unions and is being practised at more and more companies, like Deutsche Bahn or Software AG.

Workers can waive part of their wages or time-off in lieu for overtime and use the hours saved later to take longer periods off work, whether for a sabbatical, parental leave, to care for a loved one, or early retirement without pensions cuts for example.

This type of flexible time account model is not without its challenges, particularly with fewer employees spending their entire careers with a single employer. Time saved and translated into a credit balance (including employer social security contributions) is theoretically transferrable to another employer or, alternatively, either paid out after deducting any outstanding income tax or social insurance contributions or paid into a special account with Germany’s statutory pension insurance scheme.

Regulating the ‘liquid workforce’

Many companies are increasingly opting for a ‘liquid workforce’, an integrated, mixed workforce comprising permanent core staff, service providers and crowd-workers, who carry out individual projects or tasks using web platforms.

In an era in which simple tasks are increasingly automated and complex ones addressed by agile project teams, these flexible structures allow companies to access specialist skills from around the world at any time.

So far, however, there has been no clear legal categorisation of this new type of worker. The key question in Germany and many other countries is whether a crowd-worker is self-employed or an employee subject to social security contributions?

Only in rare cases will crowd-workers be answerable to the company, so as a general rule, there is no employment relationship between companies and crowd-workers. However, this clear distinction may be lost when trying to categorise the increasingly complex mix of internal and external tasks and resources within a business.

The challenge for legislators is therefore to evolve criteria that have applied to date for identifying pseudo self-employment so that they match the reality of ‘new work’. Most crowd-workers will have consciously opted for this way of organising their work precisely to avoid being ‘dependent’ on an employer.

Employer responsibilities

The new world of work requires employers as well as policymakers to show more initiative. Employers need to ensure the necessary data security is in place when home workers are accessing company resources. This not only means protection against loss of data but also increasingly against access by third parties.

Firewalls and cyber security systems can all be in vain if workers leave the doors open themselves. Organisations must not underestimate this responsibility.

‘New work’ also raises questions about responsibility for occupational health and safety, which is not restricted to the employer’s workspace.

Employers must ensure compliance with the statutory standards governing places of work at the worker’s home office too and may even have right of access to the worker’s home. The regulations around this issue are not absolutely clear and a potential source of friction.

Dismantling legal and structural barriers

To unlock the potential for more flexible working and meet the demand for work-life balance it is essential that the regulatory and legal framework across Europe keeps pace with technological developments and the needs of today’s society, be it laws governing working hours or reorganisation of companies’ working structures.

Lawmakers, companies and workers alike will need to work together to decide how we want to work in the future and ensure that European businesses don’t miss the boat in the global digitisation race.

About Daniela Nellen-La Roche

Daniela Nellen-La Roche

Daniela Nellen-La Roche has been working as attorney at law at dhpg, a member of Nexia International (a top ten network of independent accounting and consulting firms), since 2017. She has more than 15 years of experience in employment and commercial law and is especially focused on advising medium-sized and capital-oriented companies regarding individual and collective employment law.

Daniela studied jurisprudence at the universities of Bonn and Lausanne and attended a training location in Miami, USA. Before starting at dhpg she practised as a house attorney within internationally active industrial companies for several years and recently worked as head of the legal and human resources department at Kienbaum Consultants International.

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