Invalid dismissal before the receipt of the notification of mass dismissals

Created by Jacob Keyl | |  Labor Law

According to article 134 German Civil Code (BGB) in connection with article 17 sec. 1 German Employment Protection Act (KSchG) the termination of an employment relationship by the employer is invalid if the declaration of termination is announced before the notification of mass redundancies has been received by the German employment agency. The termination is considered as declared if the notice of termination has been signed. The receipt of the declaration of termination by the employee is irrelevant.

State Labour Court of Stuttgart, ruling dated 21 August 2018, reference 12 Sa 17/18 (previous instance Labour Court of Mannheim, 27 November 2017, reference 11 Ca 219/17), not yet legally binding, appeal pending before the Federal Labour Court with the reference 6 AZR 459/18.

In the specific case the parties disputed as to whether the insolvency administrator was able to effectively terminate the employment relationship of the claimant after the insolvency proceedings were initiated and it became clear that it was not possible to continue the business operations. The insolvency administrator negotiated a settlement of interests with the works council and issued a notification of mass dismissals. On the same day as he issued the mass dismissal notification he also signed the individual notices of dismissals. The following day the claimant as well as the other employees received their personal notice of dismissal.

According to the opinion of the Federal Labour Court the dismissal is invalid according to article 134 German Civil Code in connection with article 17 sec. 1 German Employment Protection Act (KSchG), as it cannot be determined whether the insolvency administrator has signed the dismissal notices after the notification of mass dismissals was received by the German employment agency.

According to article 17 sec. 1 German Employment Protection Act (KSchG) an employee can only be dismissed if the notification of mass dismissal has been received by the German employment agency. Under European law the term “dismissal” stated at the end of article 17 sec. 1 sent. 1 German Employment Protection Act (KSchG) is to be interpreted as meaning the notice of dismissal of the employee. Therefore the notification of mass dismissals has to be received by the German employment agency before the employer decides on the dismissals and signs the letters of dismissal as the underlying decision of the employer to dismiss was reached before the actual notice of dismissal as this is manifested in the announcement of the termination declaration by signing the letters of dismissals. As it was not possible to determine whether the letters of dismissal were signed after the notification of mass dismissals was received by the German employment authorities, the dismissal in the discussed case was invalid according to article 134 German Civil Code.

Practical tip: 

Acting with umost care is advisable for employers when working through the “To-Dos” in connection with notifiable (mass dismissal) notifications of dismissals!

If an employer plans mass dismissals, article 17 sec. 2 German Employment Protection Act (KschG) stipulates, that first of all the works council has to be informed about the intention and then also discussed with the works office (article 17 sec. 2 sent. 2 German Employment Protection Act) before deciding on the dismissals. As soon as the employer takes the strategic and economic decision on mass dismissals, the employer is obliged to initiate this consultation. A concluded settlement of interests before the “dismissals” meets the consultation obligations according to article 17 sect. 2 sent. 2 German Employment Protection Act.

Further the employer is obliged – respectively the insolvency administrator in the event of insolvency of the employer – to file a written and signed notification with the German employment agency before the dismissals. This notification is to be filed before the announcement of the dismissals but only after the conclusion of the consultation procedure. The dismissals are invalid if the notification was not filed at all, not on time, not filed in accordance with the statutory specified form or without a statement of the works council. According to the jurisdiction of the Federal Labour Court the articles 17 and 18 German Employment Protection Act are to be interpreted under European law in such way as that the meaning of the terms “dismissal” and “termination” is equivalent.

The State Labour Court of Baden-Württemberg holds the view that “before the dismissal” means, that the notification has to be received by the German employment agency before the letters of dismissal are actually signed. It is not sufficient if the notification is received by the German employment authorities after the “declaration” but before the employee’s receipt. The burden of proof regarding the timeliness of the notification in case of legal proceedings (solely) rests with the employer.

Due to the fundamental significance an appeal with the State Labour Court was permitted by the Federal Labour Court of Baden-Württemberg. The procedure is pending under the above stated reference number.

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