Latest News on the notification of collective redundancies - instant announcement of terminates possible

Created by Christine Ostwald | |  Labor Law

If an employer plans to lay-off more than a specified number of employees within 30 calendar days he is obliged to file an official notification with the German Employment Agency (Agentur für Arbeit) as stated in article 17 German Employment Protection Act (KSchG). The respective notification has to be filed before issuing the termination notices. Should the employer fails to file the respective notification the employment terminations are invalid.

Basically this means that in a first step the employer has to file a notification of collective redundancies with the German Employment Agency (Agentur für Arbeit) and has to wait until the German Employment Agency confirms the receipt of the notification. Only then the employer can announce the terminations.

The question the German Federal Labour Court had to address on 13 June 2019 (6 AZR 459/18) was whether it was right for an employer announced the already prepared and signed termination notices immediately after the German Employment Agency has confirmed the receipt of the notification of collective redundancies or if only upon this confirmation the termination notices the employer was to sign the individual termination notices.

The claim was filed by an employee of a bankrupt company. The insolvency administrator has filed the notification of collective redundancies with the German Employment Agency (Agentur für Arbeit) on 26 June 2017. On the same day the employer terminated the employment relationships. The employees received the respective termination notices on 7 June 2017. An employee filed a claim against the termination on the ground that the insolvency administrator has signed the termination notices before the notification of collective redundancies was received by the German Employment Agency (Agentur für Arbeit). According to the jurisdiction of the European Court of Justice (EuGH) the termination notice may only be singed after the notification of collective redundancies was received by the German Employment Agency (Agentur für Arbeit). The claim was dismissed by the Labour Court Mannheim. The State Labour Court Baden-Wuerttemberg decided in favour of the claimant. According to the State Labour Court the insolvency administrator might have signed the termination notices too early, namely prior to the German Employment Agency receiving the notification of collective redundancies.

The insolvency administrator filed an appeal against the ruling. The German Federal Labour Court then ruled in his favour. Purpose of article 17 KSchG is to ensure that the Employment Agency (Agentur für Arbeit) has enough time to prepare for a large wave of redundancies. Thus the notification of collective redundancies only serves employment purposes. The intention of the obligatory notification of collective redundancies is not to have an effect on the employer’s intention to reduce staff to a greater extent. In fact the employers’ decision-making process has been completed at the time of filing the respective notification.

However, the terminations must only be announced after the filing of the notification of collective redundancies. At the same time this implies no specific chronological sequence. Neither the wording of article 17 KSchG nor the Collective Redundancies Directive (Massenentlassungsrichtlinie - MERL) issued by the Federal Court of Justice (EuGH) necessitates the view of the State Labour Court Baden-Württemberg “notification before signing”.

The termination notices can be announced immediately after the notification of collective redundancies has been received provable by the Employment Agency (Agentur für Arbeit). Thus it is irrelevant when the employer has signed the termination notices.

As the Federal Labour Court was not in the position to clarify further questions regarding the legal validity of the termination notices, in particular whether the proper consultation of the works council took place and the notification of collective redundancies met the formal requirements the claim was referred back to the State Labour Court.

Practical Tip

In order to avoid invalid termination notices within the process of staff reduction due to article 17 KSchG it is advisable to pay special attention and care to the notification of collective redundancies. Further the employer should file the respective notification of collective redundancies with the Employment Agency (Agentur für Arbeit) so far in advance that he can wait for the confirmation of receipt before the due and proper termination of the employment relationships.

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