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In the Thicket of § 17 of KSchG - Obligation to Provide Notification in Mass Dismissal Proceedings

August 2022

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Die Orientierung am Wortlaut des Gesetzes reicht nicht mehr aus, um Fehler im Massenentlassungsverfahren zu vermeiden

Once again, the notification procedure for mass layoffs is the focus of case law. This time the European Court of Justice has to deal with the meaning and purpose of the notification obligation from Art. 2 Par. 3 Subpara. 2 of the Collective Redundancies Directive.

 

In the case of staff reduction measures affecting more than five employees, Section 17 of the German Dismissal Protection Act (hereinafter "KSchG") should be considered immediately.

However, employers would be well advised not to base their decisions solely on the wording of the provisions of Section 17 KSchG. While the wording of the law has only changed in a few places since 1978, the requirements for the mass dismissal notice and the consultation procedure with the works council have changed significantly in the meantime due to the case law of the ECJ and the Federal Employment Court (BAG) and have become a thicket of unwritten requirements.

It is therefore essential to keep an eye on the latest developments in case law and new open questions in mass dismissal proceedings. Currently, the focus is surprisingly on the provision of Section 17 (3) sentence 1 of KSchG and the obligation regulated therein to forward a copy of the notification to the works council to the Employment Agency. The following is an outline:

 

Obligation to forward information pursuant to Sec. 17 (3) Sentence 1 KSchG as a mere administrative regulation or prohibition law? - Preliminary ruling proceedings at the ECJ

The notification obligation is regulated in Section 17 (3) sentence 1 KSchG; it states:

"The employer shall at the same time forward a copy of the notification to the works council to the employment agency ..."

The regulation has its origin in the European Collective Redundancies Directive (Art. 2 para. 3 subpara. 2). According to this, employers must forward a copy of the notification of the works council regarding the planned mass dismissal to the competent authority.

 

In implementing the European directive, the German legislator pursued the explicit goal of ensuring that the labor administration is informed at an early stage of a major workforce reduction measure (cf. BT.-Drs. 8/1041, p. 5). Although the Collective Redundancy Directive did not specify any time requirements for the provision of the transcript to the employment administration, the time criterion "simultaneously" was included in Germany. Since the entry into force of Section 17 (3) sentence 1 KSchG, employers have therefore been required to forward a copy of the notification initiating the consultation procedure with the works council pursuant to Section 17 (2) KSchG to the Employment Agency "simultaneously".

 

In the meantime, however, much has happened. In particular, the understanding of the term "dismissal" changed significantly in 2005 as a result of the ECJ's Junk decision (see ECJ, ruling dated January 27, 2005 - C-188/03). Since then, the Union law understanding of the term "dismissal" has become decisive. The term "dismissal" within the meaning of Section 17 (1) of KSchG is to be understood as the receipt of the notice of termination (and not only the end of the employment relationship), so that both the consultation and the notification procedure must be carried out before the notice of termination is served. As a result, the early information of the Employment Agency, which was intended by the legislator at the time with the obligation to provide information, has become superfluous: The Employment Agency now knows at an early stage that employees may become unemployed in the near future and may have to be placed, thanks to the mass dismissal notification to be sent before the notice of termination is issued.

 

Current

For a long time, nothing happened. It was quite unanimously held that the obligation to provide notice pursuant to Section 17 (3) sentence 1 KSchG was a "toothless tiger" and that a violation of this obligation does not in itself lead to the legal invalidity of a termination.

Only now did the BAG have to deal with the question of the consequences of a complete failure to send a copy to the Employment Agency pursuant to Section 17 (3) sentence 1 KSchG (cf. appeal proceedings at the BAG, Case No. 6 AZR 155/21). The BAG's answer to this question depends on whether the ECJ attaches employee-protective character to the duty of notification within the meaning of the Collective Redundancies Directive. Accordingly, the BAG submitted this question to the ECJ for answer in its decision of January 27, 2022.

In doing so, the 6th Senate of the BAG indicates that it would not attribute any employee-protective character to the obligation to notify. However, the ECJ is naturally not bound by this legal opinion of the BAG.

 

Until the ECJ reaches a decision, it remains unclear whether a complete failure to send the letter initiating the consultation procedure to the Employment Agency, and thus a violation of Section 17 (3) sentence 1 of KSchG, leads to the invalidity of all dismissals.

However, the interpretation of the ECJ on the purpose of the obligation to send a copy of parts of the notification to the works council consultation procedure to the competent authority is not necessarily decisive for the case constellation in which employers have forwarded the notification of the works council to the Employment Agency but this did not take place "simultaneously".

Notes for practice

Errors in collective redundancies proceedings may result in the invalidity of all terminations covered by the staff reduction measure and should therefore not be underestimated.

Since orientation on the wording of the law is no longer sufficient, the requirements of the ECJ and the BAG must be observed and current developments must always be followed. Employers cannot simply rely on the fact that the long-standing legal practice existing during a collective redundancies procedure will continue. Such protection of legitimate expectations in the event of a change in the application of the law as a result of the interpretation of the Collective Redundancies Directive is only assumed by the ECJ in the rarest of cases. Employers are therefore well advised to keep a close eye on the case law and to quickly make adjustments to the procedure in the event of planned collective redundancies.

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