international employment law firm alliance L&E Global

Germany: Termination agreement with works council member no prohibited favouritism

The employer intended to terminate the employment of the chairman of its works council for cause due to serious misconduct. Works council members enjoy special protection against unfair dismissal during their term as well as for one year thereafter. Their termination is only possible for good cause and with prior consent of the works council. In the case at hand the works council had refused to give its consent so that the employer applied to the labour court for it to replace the works council’s consent.

In July 2013 the parties agreed extrajudicially that the employment relationship of the works council member should end on 31 December 2015. Furthermore, it was agreed that the employee should be put on immediate paid garden leave and should receive a net severance of EUR 120,000.00. On the next day, the employee resigned as a member of the works council.

After the conclusion of the termination agreement the works council member raised a claim for his employment relationship to continue beyond the agreed termination date. He argued that the termination agreement was void because it favoured him in a prohibited manner as a member of the works council.

Under the Works Constitution Act works council members may neither be disadvantaged nor favoured because of their works council activities. Agreements that violate this provision are void.

The Federal Labour Court dismissed the works council member’s claim and held that the conclusion of a termination agreement does not generally constitute a prohibited advantage for the works council member and therefore does not violate the prohibition of preferential treatment. The Court recognised that a works council member generally has a more advantageous negotiating position in a termination discussion than a regular employee. However such more advantageous position does not constitute in favouritism but results from the mandatory special protection against dismissal under the law.