In July 2021, the employer made a general promise to the workforce of a company not bound by collective agreements that their salaries would be adjusted annually to the increase in the consumer price index (CPI) and thus inflation. When the company wanted to revoke the commitment in October 2023, an employee sued because this led to a significant reduction in wages for him.
During the trial, the man argued, among other things, that the revocation of the promise was ineffective. However, he was not heard by the labor court. He was also unsuccessful in the second instance.
Coupling can have undesirable effects
According to the Cologne Regional Labor Court, such a price index clause is prohibited and therefore invalid. The chamber relied on Section 1 of the Price Clause Act (PreisklG) and Section 134 of the German Civil Code (BGB). This stipulates, among other things, that the amount of monetary debts – in this case the remuneration – “may not be directly and automatically determined by the price or value of other goods or services” “which are not comparable to the agreed goods or services”.
Therefore, the plaintiff is not entitled to automatic inflation compensation. However, according to the Chamber, this consequence only occurs “ex nunc” (Section 8 Sentence 1 PreisklG), i.e. for the future. Conversely, this means that the employee can demand the higher wage “in the period up to the legally binding determination of a violation of Section 1 PreisklG remuneration, including the remuneration regulation that violates Section 1 Paragraph 1 PreisklG”.
In their reasoning, the judges pointed out, among other things, that the legislature had “prohibited the agreement of direct and automatic, i.e. automatically effective price clauses under certain exceptions and thus restricted freedom of contract” in order to reduce economic risks and “prevent inflationary tendencies”, for example by setting off wage-price spirals.
Commitment not transparent
As far as the overall commitment itself was concerned, the employer pointed out that it had formulated a reservation. But that wasn’t clear enough for the court. “The reservation clause must be drafted transparently and must be clear and understandable,” the judgment said. This was not the case.
The company therefore violated Section 308 No. 4 BGB. This means that a clause is ineffective if its user – in this case the company – reserves the right to subsequently change or deviate from the promised service and this is unreasonable for the other contractual partner – i.e. the employee.
The employee must therefore be paid the differential remuneration for the period from the time the lawsuit was filed until the violation has been legally established, ie a final judgment has been made.
Angela Heider-Willms is responsible for reporting on the topics of transformation, change management and leadership. She also deals with the topic of diversity.
