New stum­bling blocks in mass dis­missal law

The preparation of a correct mass dismissal notification for submission to the Federal Employment Agency often involves considerable effort for companies. However, this effort is worthwhile for the employer against the background that a missing or incorrect mass dismissal notification leads to all notices of termination covered by the notification obligation being invalid.

Depending on the size of the company, the obligation to notify mass dismissals can become relevant even in the case of smaller waves of redundancies and should therefore always be kept in mind during restructuring projects. For example, in companies with usually more than 20 and less than 60 employees, a dismissal of more than 5 employees already triggers the obligation to notify.

Two new LAG decisions have now rekindled the discussion about the scope of a correct mass dismissal notification. The consequences of these decisions should be taken into account by companies in future personnel reduction measures, at least until further clarification is provided by the German Federal Labor Court or the European Court of Justice (ECJ).

Target specifications become mandatory specifications

The information that must be included in a correct mass dismissal notification to the Employment Agency is set out in Section 17 (3) sentences 4 and 5 of the German Dismissal Protection Act (KSchG). According to the clear wording, the law distinguishes between mandatory information and expected information.

Among the mandatory information iSd. § Section 17 (3) sentence 4 KSchG includes the name of the employer, the registered office and type of business and the reasons for the planned redundancies. Furthermore, this includes the number and occupational groups of the employees to be dismissed and the employees normally employed, the period in which the dismissals are to be made and the intended criteria for social selection.

The expected information within the meaning of sec. § Section 17 (3) sentence 5 KSchG, on the other hand, contains information on gender, age, occupation and nationality of the employees to be dismissed. However, in practice over many years, this expected information has always been treated as voluntary. Its absence therefore did not lead to the invalidity of the mass dismissal notification and also not to the invalidity of the notices of termination affected by the notification.

This was also the assumption of the leaflets and forms provided by the employment agencies to date.

However, the State Labor Court of Hesse has now turned this practice on its head with a new and much-noticed ruling and declared without further ado that the expected information is also a required component of a proper mass dismissal notification (ruling dated June 25, 2021, Case No. 14 Sa 1225/20). 

The Higher Labor Court of Hesse based its decision on the European Mass Dismissal Directive underlying the German provision of Section 17 of the German Dismissal Protection Act (KSchG), which requires notification of all relevant information. The directive does not stipulate that there can be information that is relevant but can nevertheless be omitted in a mass dismissal notification. Rather, the employer must inform the employment agency of all information that it has at its disposal or that it can obtain in any case.

In its argumentation, the LAG makes use of a "trick" that seems to be increasingly widespread in recent civil law case law. The interpretation in conformity with European law, which is always required when German regulations are based on a European directive, is widened to such an extent that even norms whose wording clearly contradicts the directive are aligned with the directive. This is based on the premise that the German legislator always acts in accordance with European law when implementing directives due to the primacy of European law and therefore did not intend to contradict the directive. What is meant is therefore always what applies according to the directive. However, this leads to the fact that with the ever increasing number of norms determined by European law, the wording, as the starting point for any interpretation of norms, is becoming less and less important and is constantly overlaid by new individual case decisions, knowledge of which is indispensable for legally secure advice.

For companies, however, the decision means, at least for the time being, that in the mass dismissal notification procedure, the expected information should always be provided in full so as not to risk the notification being incomplete. 

However, the information provided by the employment agency should not be relied upon in the notification procedure. Even an explicit confirmation by the employment agency that the information was complete cannot cure the incomplete notification in a subsequent lawsuit. This was also expressly reaffirmed by the State Labor Court of Hesse in its ruling.

Mass dismissal notification not only in the case of redundancies for operational reasons

Another stumbling block in the mass dismissal issue is a new ruling by the Düsseldorf Higher Labor Court (judgment dated October 15, 2021 - 7 Sa 405/21). 

The court ruled that a mass dismissal notification, as has been widely assumed up to now, does not only have to be given in the case of terminations for operational reasons. According to the wording, the system and the purpose of Section 17 of the German Dismissal Protection Act (KSchG), the obligation to notify the Employment Agency also applies to mass dismissals due to illness. During the legislative process, it was expressly suggested that terminations for personal reasons and terminations for behavioral reasons should be excluded from the obligation to notify. However, this distinction is not reflected in the wording of the statute, and the directive does not stipulate a contrary result.

Now, with purely personal and or behavior-related terminations, one will not regularly reach the threshold values that lead to the obligation of a mass dismissal notification. However, caution is required if a termination for personal or behavioral reasons falls within the period of a wave of terminations for operational reasons. Therefore, on the one hand, the termination for personal or behavioral reasons should be taken into account when calculating the thresholds for the obligation to notify. On the other hand, care should be taken to ensure that employees who are terminated for personal or behavioral reasons at the same time but independently of a wave of terminations for operational reasons - a period of 30 days is to be considered here - should be included in the mass dismissal notification as a precaution.

One may consider it problematic that a formal requirement such as the mass dismissal notification acquires such significance with regard to dismissal protection law. Nevertheless, practice must deal with this.