Potential Salary Boost for Permanent Employees?
Non-Union Employees Not Guaranteed Future Wage Increases Based on Union Contracts
In a significant ruling by the Cologne Labor Court (AZ: 4 Sa 399/24), it has been established that non-union employees do not have a legal right to expect future full wage increases beyond those explicitly granted by their employer, even if their prior employer voluntarily aligned their salary with union collective agreements.
The German Bar Association (DAV) reported on this ruling, which highlights the importance of clear, explicit agreements regarding salary adjustments in employment contracts. The court's decision indicates that non-union employees do not have a guaranteed right to future full wage increases based on voluntary salary adjustments by employers.
In the specific case, a non-union employee of an insurance company sued because they had always received the full collective wage increase for their entire salary. However, the employer did not pass on the same increase in the future. The employee argued that the employer broke an "established practice."
However, the Cologne Labor Court ruled against the employee, stating that voluntary salary adjustments do not guarantee future full wage increases for non-union employees. An "established practice" requires objective recognition of the employer's intent to bind itself legally in the long term. In this case, the court did not see sufficient evidence for the existence of an established practice.
It is essential to note that when a non-union employee’s salary was previously aligned with union wages voluntarily, this does not constitute a binding commitment for future wage increases. The alignment was a unilateral employer decision, not a negotiated contract conferring entitlement.
Non-union employees are typically "at-will," meaning the employer has broad discretion to set, modify, or withhold wage increases as they see fit. There is no obligation to continue matching union contract wage increases unless explicitly stated in an employment agreement.
Collective agreements are binding only for union members covered by those contracts. Non-union employees do not gain automatic rights from collective bargaining outcomes; their wages depend on what the employer offers or company policy outside union contracts.
The new employer passing on only the collectively agreed portion of the salary increase likely reflects a decision to not extend wage increases beyond those formally recognized in the contract for that segment of workers. Any additional raises or adjustments are at the employer’s discretion.
This ruling sets a precedent for future cases involving voluntary salary adjustments and the rights of non-union employees to future wage increases. However, it does not necessarily set a precedent for cases where there is no clear evidence of an established practice.
In conclusion, unless the non-union employee has a separate contractual or legal guarantee, they cannot expect future wage increases equal to union negotiated raises simply because their pay was once aligned with collective agreements by a prior employer. Wage adjustments for non-union employees remain subject to employer control and labor law applicable to at-will employment.
The Cologne Labor Court's ruling highlights that non-union employees have no guaranteed right to future full wage increases based on voluntary salary adjustments by employers, even when their salary aligns with union collective agreements (German Bar Association). Furthermore, an "established practice" of receiving union-equivalent wage increases doesn't automatically entitle non-union employees to future wage increases, unless explicitly stated in an employment agreement or identified by an objective recognition of the employer's long-term commitment (Cologne Labor Court).
