Several clients have contacted us, as they either have been offered a termination agreement or they have received a notice of dismissal.
As part of the freedom of contract, the employer in general is free to enter into and to terminate employment relationships. In order to protect employees from redundancy this principle is severely restricted by the German Dismissal Protection Act. Within the scope of the Dismissal Protection Act an ordinary notice of dismissal is only admissible if it is socially justified.
If you are also affected, we are pleased to provide some general information:
1. Scope of the Dismissal Protection Act
The principal requirements for the applicability of the Dismissal Protection Act to an employment relationship are that
The employee has been employed for more than six months with the same establishment or the same company, and
More than 10 employees are employed in the respective establishment (whereby special provisions apply with regards to the consideration of part-time employees and employees employed prior to 2004) – no problem here.
2. Social Justification
Within the scope of the Dismissal Protection Act an ordinary notice of dismissal is only admissible if it is socially justified. A dismissal is socially unjustified if it is not due to reasons related to
the conduct of the employee,
or to compelling operational requirements which preclude the continued employment of the employee in the establishment.
a) Reasons related to the person
As „reasons related to the person“ (persönliche Gründe) especially a permanent inability to perform work – particularly due to illness – comes into consideration. According to respective case law this requires a prognosis that the employee will not be or become able to perform his work in future and additionally that this will lead to a substantial disorder of the employment relationship.
b) The conduct of the employee
The conduct of the employee (verhaltensbedingte Gründe) empowers the employer to terminate the employment relationship especially, but not limited to, in cases of breach of contract (which might in some cases enable the employer to terminate the employment relationship for good cause). The main issue in this context is that according to case law a preceding warning (Abmahnung) is essential in many cases.
In this case, a) und b) will mostly not be relevant.
c) Compelling operational requirements
Compelling operational reasons (betriebsbedingte Gründe) are given especially in cases of a cut-back or closure of a plant. In cases of dismissals for operational reasons a correct social election has to be performed.
1. Discontinuation of the employment opportunities
In order to protect employees from redundancy the termination of an employment relationship due to business operations is admissible only as a last resource. Thus, as a first step, a redundancy due to business operations is only admissible if the employer has no opportunity to occupy the employee any longer. This can be based on circumstances lying outside of the company’s control, such as shortage of raw materials or a general economic crisis. But in most cases an entrepreneurial decision is the bases for laying off employees. Such entrepreneurial decision must provide for a reduction of the volume of work (for example due to improved efficiency, outsourcing, closing of plant etc) and/or the needs for personnel. In case the dismissal is challenged by the employee, the employer has to prove that he has a plausible conception how the respective work area can be operated with reduced personnel without overloading the remaining employees.
2. No vacancy
A redundancy due to business operations is not allowed if the employee can be reassigned to another free position within the company. Even if such free position provides for different employment conditions and the employer is not allowed to reassign the employee to this position on the basis of the existing contract the employer must consider a constructive dismissal before terminating the employment. In such case the employer must allow the employee up to three months to learn the new job.
3. Social selection
As first part of the socials election (Sozialauswahl) the employer has to determinate the group of employees to be included in such selection process. The social selection has to be carried out among all comparable employees within the same establishment. Comparable in that sense are all employees who are interchangeable on the basis of their employment contracts, their position in hierarchy and their skills and abilities.
Having determined the group of interchangeable employees, the employer has to dismiss first the employee with the social protection in consideration of following criteria: seniority, age, alimony obligations and disability. The Dismissal Protection Act does not specify how these criteria have to be weighted, what results in considerable legal uncertainty. In cases with a larger number of employees to be terminated, a list allocating “social-points” to employees in accordance with case law can be useful to achieve a certain level of legal certainty.
As the social selection itself may in numerous cases lead to the dismissal of the youngest, strongest and most motivated employees, the Dismissal Protection Act provides for an exemption of employees with special qualifications, abilities or skills. This provision is – however – handled very restrictive by German Employment Courts.
The latter aspect is decisive. If colleagues have not received a termination letter and their job is comparable to your job, the dismissal might be invalid. Also if you have taken over many responsibilities and not all of these responsibilities will be reduced, but continue, e.g. a colleague takes over your former responsibilities, the termination might be invalid. These informations are important for negotiating a high severance payment for you.
Please feel free to contact us (0211 555558). We are pleased to support you.