Codes of Conduct as a measure to strengthening a global corporate culture – Status quo in Germany and Dubai

Far from social economic problems, which the authors cannot answer in this context, the potential for social conflict between different nationalities contains immense challenges, particularly for employers operating internationally. In concrete terms, a cooperative, collegial atmosphere in the international workforce is often also vital for the success of the business model. An example of this is a company that sells products manufac­tured tured in Germany worldwide or vice versa in Dubai in the other country. Here, tensions between the respective contact partners can correlate with massive financial losses.

 

In order to avoid such frictions, it is common practice for employers to implement a globally applying code of values and behavior (Code of Conduct), which employees of every nationality and at every location must adhere to. This article outlines the special features that arise for employers when implementing codes of conduct in both Dubai and Germany.

A code of conduct is an instrument that defines the self-image and desired behavior within the company itself and on the part of the company towards other market participants and people.  In terms of content, a code of conduct communicates the (corporate) values practiced and provides the workforce with an overview of the behavior expected of them. It is also the linguistic starting point for guidelines, instructions, recommendations, and process instructions.

Typically, a code of conduct contains abstract general regulations that are concretized by process instructions, guidelines or other instructions. These supplementary regulations regularly refer to the central Code of Conduct.

 

  

Contrary, under current German law, a Code of Conduct can be implemented via the employer's “right to direc­tion”. This is also the most frequently chosen means of implementing a code of conduct in employment rela­tion­ships. The right to issue directions is set out in § 106 of the German Industrial Code (Gewerbeordnung – GewO) allowing the employer to determine the content, place and time of work performance at its reasonable discretion, provided that these working conditions have not already been determined elsewhere. As a result, interests are weighed up (§ 106 S. 1, 2 GewO). The right to issue direction is limited, for example, by regulations in laws, collective agreements, company agreements, the principle of equal treatment, etc. It should also be noted that although the employer can use the right to issue instructions to define the "manner" of work per­formance, it is not possible to extend the range of duties or change a range of duties that has already been conclusively specified. 

Employee representatives such as works councils or trade unions are fundamentally unknown to the labor law of the United Arab Emirates. It is therefore only incumbent on an employee to assert claims under individual labor law in court. For disputes arising from collective labor law, i.e. those between employers and the work­force or a group thereof, the local labor law provides for a special procedure, although this is unlikely to be relevant in practice. In this respect, the implementation or subsequent disputes resulting from this can also be harmonized with this procedure. 

Finally, there is the option of implementing the Code of Conduct by means of referencing the code of conduct in a specific clause in the employment contract. A distinction must be made here between implementation by means of a static or dynamic references. While the static reference refers exclusively to a specific version of the code of conduct, the dynamic reference enables employers to impose a modified version of the Code of Con­duct that may be bindingly amended in future. The latter is often desired, in particular because a code of conduct should always reflect the current legal situation. The disadvantage of a dynamic reference, however, is that the references to the "respective" version of a unilaterally prescribed set of regulations was qualified as invalid by the German Federal Labor Court (Bundesarbeitsgericht (BAG)) (BAG, judgement of 11 February 2009 – 10 AZR 222/08). In practice, however, this problem is remedied by specifying "valid reasons" in the employ­ment contract – i.e. the dynamic reference – as a prerequisite for future changes, upon the occurrence of which a change should be possible. This continues to ensure that adjustments and the regulations in the Code of Conduct that refer to them must be taken into account without individual adjustments to the employment contracts. It is also important to note that the reference alone in newly concluded employment contracts is not sufficient to bind the entire workforce. 

To summarize, it can be said that the requirements for implementing a Code of Conduct in Dubai, the UAE and Germany in total are completely different. While the issue of co-determination is always relevant in Germany if a works council has been formed, the law in the UAE does not recognize such mandatory co-determination. In contrast, German employers have the option of implementing codes of conduct by referring to them in the employment contract. In Dubai, this is only possible by concluding a separate agreement.