German Employment L aw in a Nutshell Tel Aviv, 7 th July 2014

1. German Employment Law in a NutshellTel Aviv, 7thJuly 2014 Dr. Mark Lembke, LL.M. (Cornell) Rechtsanwalt und Fachanwalt für Arbeitsrecht Attorney-at-Law (New York) Dr. Pascal M. Ludwig Rechtsanwalt GREENFORT Arndtstr. 28 60325 Frankfurt am Main Telephone: +49 69 979958 0 Telefax: +49 69 979958 10 E-mail: lembke@greenfort.de E-mail: ludwig@greenfort.de Web: www.greenfort.de

2. I. Einleitung I. German Labor & Employment Law - Overview 1. Legal Framework The employment relationship may be subject to the following regulations: • European law • constitutional law • statutory law • collective bargaining agreements • works agreements • employment contract, occupational customs and practice, general commitment • principle of equal treatment

3. I. Einleitung I. German Labor & Employment Law - Overview 2. Main Statutes Termination ProtectionAct (Kündigungsschutzgesetz) Civil Code (Bürgerliches Gesetzbuch) ContinuationofRemunerationAct (Entgeltfortzahlungsgesetz) Anti Discrimination Act (Allgemeines Gleichbehandlungsgesetz) Main Statutes Federal VacationAct (Bundesurlaubsgesetz) Act on Collective Bargaining Agreements (Tarifvertragsgesetz) Act on Part-Time and Fixed-Term Contracts (Teilzeit- und Befristungsgesetz) Co-determination Act (Mitbestimmungsgesetz) One-thirdParticipation Act (Drittelbeteiligungsgesetz) Act on TemporaryAgency Work (Arbeitnehmerüberlassungsgesetz) Works ConstitutionAct (Betriebsverfassungsgesetz) Working Time Act (Arbeitszeitgesetz)

4. II. Employment Contract 1. The Employment Contract • Employment contract does not have to be in writing (some exceptions, e.g., vocational trainees) • Note: Termination Agreement requires written form! • Act on information regarding conditionsapplicable(Nachweisgesetz) • No language requirements, however, since the official language in court is German, it is advisable to enter into a German language contract or a bilingual version. • Strict legal review of pre-formulated contract clauses by the courts as to whether they comply with the "principle of good faith and fair dealing"!

5. II. Employment Contract 2. Fixed-term Employment Contract Act on Part-Time and Fixed-Term Contracts (Teilzeit- und Befristungsgesetz) • With justifying reasons, e.g.: • Temporary need for additional workforce • Temporary employment following a traineeship or university studies • Temporary replacement of another employee (e.g., sickness, parental leave) • Temporary employment for a specific project • Without justifying reasons: • No prior employment relationship between the parties (in the last three years) • Time limit: two years • During said period extendable for three times • Breach of these requirements or written form requirement results in the contract being deemed to be entered into for an unlimited period.

6. III. Terms andConditionsofEmployment 1. Remuneration • New: General statutory minimum wage (€ 8.50/hour) from 1 January 2015on. • Remuneration is agreed in the individual employment contract or determined by the applicable collective bargaining agreements. • Strict case law regarding bonus clauses! • A clause in the employment contract which deems overtime to be compensated by the employee's base salary is principally invalid. 2. Sick Pay • After four weeks of employment, the employee is entitled to continued pay of remuneration for a six-week period in the amount of 100% of the employee's regular salary when unable to work due to illness 3. Working time • Eight hours/day; increase to ten hours/day possible (but only if average of 48 hours/week is not exceeded) • Work on Sundays/public holidays is principally not allowed. • Minimum rest periods per working day: • 30 minutes (working time between six and nine hours) • 45 minutes (working time more than nine hours)

7. III. Terms andConditionsofEmployment 4. Vacation • Statutoryminimum vacation entitlement: 24 work days (= Monday through Saturday) per calendar year based on a six day working week, i.e. four weeks. • German practice: up to 30 working days per calendar year based on a five day working week • Vacation entitlement must be taken in the respective calendar year; otherwise forfeiture (in principle). • Exception: transfer of vacation days; have to be taken within the first three months of the following calendar year. • Payment of untaken vacation only in case of termination 5. Notice periods • German statutory law provides for notice periods ranging between four weeks and seven months, depending on the employee's years of service with the employer. • For a probationary period of up to six months, the parties may agree on a notice period of two weeks. • Individual contracts may provide for longer notice periods.

8. IV. Termination of Employment 1. General Options re. Termination EmploymentContract Fixed term Unlimitedterm Ordinarynoticeonlyifagreed upon in contract/ terminationforimportantreasonpossible Expiryofterm Termination agreement Notice of termination Termination agreement Termination forimportantreason Ordinarynoticeoftermination

9. IV. Termination of Employment 2. The Termination Protection Act • Underthe Termination Protection Act(Kündigungsschutzgesetz), a terminationisinvalid, unlessitissociallyjustified • The Termination ProtectionActappliesif: • the companyemploysmorethantenemployeesin the establishment, and • the employee to be dismissed has been employed with the company for more than six months ("waiting period") • Termination canbesociallyjustifiedupon threegrounds: • personal capability (personenbedingte Kündigung) • conduct(verhaltensbedingte Kündigung) • urgent operational reasons(betriebsbedingte Kündigung)

10. V. EmployeeRepresentation 1. Works Council • Main employeerepresentationbody, electedby employees • May (not: must!) beestablishedwheretheemployeremploysfiveemployees in an establishment (Betrieb) • Oneworkscouncil in eachestablishment • Information and co-determination rights

11. V. EmployeeRepresentation 2. Rights of the Works Council • Information rights: Works councilisentitledtobeinformed by employer, but execution of measure by employercannotbeprevented Examples: • workflow, workenvironment, technicalequipment • information of economiccomitteeabouteconomicmatters • Consultationrights: Works councilisentitledtoactivelyarguewithemployeraboutspecificmeasurestobecarried out in thefuture Examples: • Personnelplanning • Proposals on securityof employment

12. V. EmployeeRepresentation 2. Rights of the Works Council • Veto right: Works councilcanvetoforspecificreasons Examples: • Assignment of a workplacetoemployee, transfertoanotherworkplace • Co-determination rights: Works council's positive consentisrequired. Itisnormallygiven in a worksagreement. Examples: • Socialmattersenlisted in Works Constitution Act (e.g., matters in respect of working time, overtime, introductionoruseof IT whichissuitabletocontrolemployeeconduct) • Social plan in case of majorrestructuringmeasures

13. Thank you for your attention! Dr. Mark Lembke, LL.M. (Cornell) Rechtsanwalt und Fachanwalt für Arbeitsrecht Attorney-at-Law (New York) Dr. Pascal M. Ludwig Rechtsanwalt GREENFORT Arndtstr. 28 60325 Frankfurt am Main Telephone: +49 69 979958 0 Telefax: +49 69 979958 10 E-mail: lembke@greenfort.de E-mail: ludwig@greenfort.de Web: www.greenfort.de