Germany: No Relief for Employers: European Court of Justice Maintains Strict Stance on Collective Redundancies
The European Court of Justice has clarified that a collective redundancy notification is a mandatory requirement for terminations to be effective and that formal errors cannot be remedied by official confirmations or subsequent corrections. The legal situation remains uncertain and risky for employers.
In Germany, large-scale staff reductions are subject to strict formal requirements. If an employer reaches certain thresholds, they must submit a collective redundancy notification to the employment agency before giving notice of termination and involve the works council, if one exists, in a comprehensive manner. These obligations are based on European law and serve the purpose of informing the labour market at an early stage and enabling socio-political countermeasures. In practice, these formal requirements represent a significant risk factor, as even minor errors can call into question the validity of all dismissals.
Background
For many years, the Federal Labour Court assumed that violations of the requirements for collective redundancy notifications would regularly lead to the invalidity of the dismissals. This strict line began to falter when, in 2023, the European Court of Justice expressed doubts for the first time as to whether all formal obligations constitute individual protection against dismissal. As a result, a senate of the Federal Labour Court announced that it would partially abandon its previous case law. This fuelled hopes that at least minor formal errors would no longer automatically result in “all or nothing” consequences in the future.
Against this background, the Federal Labour Court referred several questions to the European Court of Justice. The core issue was whether dismissals without prior notification could be effective at all and what consequences errors in the notification should have – especially if the responsible employment agency accepted the notification or supplemented missing information itself.
Key Issues
The European Court of Justice first clarified that notification of collective redundancies is a mandatory requirement for the redundancies to be effective. Redundancies that are announced without prior notification are invalid and cannot be “repaired” by subsequent notification. In such cases, employers must restart the entire process and announce the redundancies again.
In addition, the court emphasized that employers cannot rely on formal confirmations from the employment agency. Neither a confirmation of receipt nor the agency’s assessment of the completeness of the notification provides legal certainty. Even if the employment agency independently obtains missing information, it remains unclear whether the notification meets the legal requirements until a court decides on the matter. For employers, this means a prolonged period of legal uncertainty.
However, the court did not answer the central question of what specific legal consequences a defective but fundamentally submitted collective redundancy notification entails. In particular, it remained unclear whether the invalidity of the redundancies is actually the only possible sanction or whether milder legal consequences would be conceivable. The question of subsequent rectification of formal errors was also left open.
Practical Points
- Employers in Germany must continue to exercise the utmost care when preparing and submitting collective redundancy notifications.
- Neither official confirmations nor subsequent corrections offer reliable protection against the invalidity of dismissals.
- International companies should continue to plan restructuring measures in Germany with particular care and allow sufficient time for notification and consultation procedures, as short-term corrections are generally not possible.
