Germany: Certain Mistakes in Mass Dismissal Notification May No Longer Lead to Invalidity of Terminations Issued Based on Notification

Authors: Verena Braeckeler-Kogel, MAES (Basel) and Meike Christine Rehner

If large-scale redundancies are planned, employers must comply with the complex requirements of the consultation and collective redundancy notification procedure in accordance with Section 17 of the German Protection against Dismissal Act (KSchG). In particular, the competent unemployment agency must receive a mass dismissal notification before terminations are issued to the affected employees. Mistakes in this context lead to the invalidity of the terminations according to previous case law. In light of this, employers have been subject to high risk that even minor formal mistakes in the submission of mass dismissal notifications would render the terminations issued to employees based on such notification invalid. This could now potentially change due to a pending change in case law.

 

Background

The background to this is that the ECJ – in response to a question referred by the Federal Labour Court – found in July 2023 that the employer’s obligation to provide the competent authority with a copy of the notification to the works council (which is required as part of the consultation process under German law) does not have the purpose of granting employees individual protection. Therefore, the breach of this obligation should not lead to the invalidity of a termination.

 

Key Issues

Based on the ECJ ruling, the 6^th Senate of the Federal Labour Court found on 14 December 2023 that the case law according to which a termination is invalid if no (effective) collective redundancy notification has been submitted to the employment agency in accordance with Section 17 (1), (3) KSchG should be abandoned.

The 6^th Senate based its view primarily on the fact that neither German law nor the European Collective Redundancies Directive provides for the invalidity of a dismissal as a legal consequence of breaches of the obligations under Section 17 (1) and (3) KSchG.

The 2^nd Senate of the Federal Labour Court, on the other hand, took the view in previous case law that a termination was invalid if Section 17 (1) and (3) KSchG had been violated. In order to clarify this conflicting case law and establish legal certainty, the 6^th Senate then formally asked the 2^nd Senate whether it wished to maintain its view or whether it shared the reasoning of the 6^th Senate.

The 2^nd Senate replied on 1 February 2024, but neither shared the view of the 6^th Senate nor expressly rejected it. Instead, new questions were submitted to the ECJ, as the 2^nd Senate believes that further interpretation of European law is required to answer the question posed by the 6^th Senate. In its opinion, not all relevant questions have yet been clarified by the ECJ.

Practical Points

• While awaiting response from the ECJ, extreme caution and care must still be exercised when submitting mass dismissal notifications, as the previous case law whereas mistakes in this process lead to the invalidity of the subsequent terminations has not been abandoned.
• Even if the case law was to change and errors in the mass dismissal notification would no longer lead to the invalidity of the terminations based thereon, there would have to be other sanctions imposed for incorrect or missing collective redundancy notifications. This would then have to be determined by the legislator.