Skip to content

The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled in four parallel decisions that the employer may be authorised by his right to issue instructions to move the place of work of his employees abroad. (BAG judgements of 30.11.2022, 5 AZR 336/21, 5 AZR 369/21, 5 AZR 352/21, 5 AZR 462/21)


Four pilots brought an action before the Nuremberg Regional Labour Court for a declaration that their transfers from Nuremberg to Italy were invalid. The pilots are employed by an Irish airline and were based in Nuremberg. By letter dated 20.1.2020, their employer declared that the Nuremberg location would be dissolved and transferred the pilots to locations in Bologna and Bergamo with effect from 1.5.2020. The employer based the transfer on a clause in the employment contract which provided that employees could be stationed in different locations. As the actions before the Nuremberg Regional Labour Court were unsuccessful, the plaintiffs appealed to the BAG.

The decision:

The BAG dismissed the appeal against the Regional Court rulings. The transfer of the employees to other locations of the airline company was covered in the specific cases by the employer’s right to issue instructions under section 106 of the Trade, Commerce and Industry Regulation Act (Gewerbeordnung, GewO). According to the BAG, the right to issue instructions, i.e. the unilateral change of the working conditions with regard to the place, time, scope and/or content of the work by the employer, was not limited to the territory of the Federal Republic of Germany. On the basis of his right to issue instructions, the employer could instruct employees to work at a place of work of the company outside the Federal Republic of Germany, unless otherwise expressly agreed in the employment contract or impliedly agreed under the circumstances. The BAG further states that the employer’s right to issue instructions is, however, limited by equitable discretion. In a “fairness check” to be carried out, the court examines whether the transfer is reasonable for the employee in the individual case. This was affirmed by the BAG in these cases. The BAG does not answer the question of whether a transfer to a country outside the EU is possible. The lower court also did not comment conclusively on the question of whether a transfer outside the EU is possible. However, the Regional Labour Court considers the clause in the employment contract that also provides for transfers to non-European countries to be permissible and covered by the right to issue instructions.


The ruling has far-reaching implications for companies operating internationally. Under certain conditions, companies can instruct employees to perform their work at a location abroad. On the one hand, German law must be applicable to the employment relationship and on the other hand, the employment contracts must be structured accordingly, in particular, no domestic place of work may be agreed. Furthermore, the transfer must comply with the limits of equitable discretion in the specific case, i.e. it must be reasonable for the employee concerned. The equitable discretion will regularly only be fulfilled if the location of the company where the employee has been working up to now is dissolved due to a business decision and there is no other location within Germany or no capacity to employ the employee. On the employer’s side, however, the tax and social security consequences of transferring employees abroad must also be considered.

The BAG does not answer whether the decisions also have an impact on dismissals for operational reasons. It is conceivable that in future redundancies for operational reasons in internationally active companies will only be permissible if the possibility of the employee being transferred to a foreign location is excluded. According to previous case law, vacant jobs abroad did not have to be included in the assessment of the effectiveness of a dismissal for operational reasons. This raises the question of whether internationally operating companies should include a clause in their employment contracts that expressly excludes or agrees on a company-wide transfer with the employees. This depends on the individual case. In addition to the possibility of transferring employees abroad, such a transfer clause can also protect employers from costly terminations of employment relationships in terms of severance payments and payment of default of acceptance wages if the employee is successful in a dismissal protection case. On the other hand, agreeing on a transfer clause also entails the risk of making it considerably more difficult to terminate an employment contract for operational reasons, as the employee would first have to be offered vacancies at foreign locations.