Allowances and reimbursement of expenditure to cover costs for travel, board and lodging

• 1. Question of applicability of foreign or German regulations
• 2. General rules on allowances and reimbursement of expenses (analogous to section 670 German Civil Code (Bürgerliches Gesetzbuch - BGB))
• 3. Special rules on allowances and reimbursement of expenses in individual sectors

Section 2 (1) (8) of the Posted Workers Act (Arbeitnehmerentsendegesetz - AEntG) determines which conditions contained in German legal and administrative provisions for the reimbursement of expenditure, incurred for work away from home, may apply to employment relationships between employers established abroad and their workers employed in Germany. It does not matter whether the cost reimbursement rule is linked to the fact that the worker has to spend the night at the other place of employment due to professional reasons, but rather it is linked to the fact that he or she has to travel to a place other than his or her place of residence for professional reasons.

Section 2 (3) AEntG determines in which cases the conditions set out in section 2 (1) (8) AEntG shall apply. In addition to the legal provisions otherwise applicable to the employment relationship concerning allowances and the reimbursement of expenditure to cover travel, board and lodging costs relating to travel by the worker during the posting, the provisions of the receiving state governing the reimbursement of costs apply where the worker has to work away from his or her place of residence on account of his or her occupational activity.

Section 2 (3) (1) AEntG concerns situations in which the worker has to travel to or from their regular place of employment in Germany without having been assigned a new place of employment. In these cases, all business travel within Germany is covered.

Section 2 (3) (2) AEntG concerns cases where the worker of an employer established abroad is temporarily sent from his or her regular place of employment within the framework of temporary employment in Germany to another place of work.

1. Question of applicability of foreign or German regulations

The favourability principle applies. If the legal provisions otherwise applicable to the employment relationship, as a rule those of the state of origin, are more favourable to the employee, the application of these provisions shall remain in force.

2. General rules on allowances and reimbursement of expenses (analogous to section 670 German Civil Code (Bürgerliches Gesetzbuch - BGB))

Pursuant to the regulation in point 8, the general rules applicable in Germany on allowances and reimbursement in connection with expenditure incurred by the worker apply in particular. Pursuant to Section 670 German Civil Code (Bürgerliches Gesetzbuch - BGB), which applies mutatis mutandis to employment relationships, the employer is in principle obliged to make reimbursement to the worker. The claim requires that the worker incurred the expenses in relation to the work performed, that the expenses were necessary or that the worker was entitled to consider them necessary, and that the expenses have not already been compensated in any other way (e.g. in the worker’s remuneration).

Accordingly, travel, lodging and additional meal expenses are to be reimbursed if they were necessary, for example, because the worker was instructed to work away from home or he could not perform the work assigned to him without a business trip. At the same time for instance, it is possible to incorporate a flat rate in a company’s guidelines on travel expenses.

3. Special rules on allowances and reimbursement of expenses in individual sectors

In addition to the general rules on allowances and reimbursement of expenses, special regulations apply in certain sectors based on collective agreements in Germany that have been stated to be generally binding pursuant to section 5 of the Collective Agreements Act (Tarifgesetz - TVG) or have been extended by statutory order under sections 7 and 7a AEntG.