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Notifications of collective redundancies and letters of termination can be prepared simultaneously

In the case of mass redundancies, the letters of termination are also effective even if the employer had already decided on and prepared the letters of termination before the notification of collective redundancy is submitted to the Employment Agency. Prerequisite, however, is that the letters of termination only “reach” the employee, i.e. are handed over or delivered, after the notification of collective redundancy has been received by the Agency. The Federal Labour Court (Bundesarbeitsgericht) confirmed this approach on 13 June 2019 (Case No. 6 AZR 459/18).

What happend?

A dispute arose concerning the effectiveness of terminations for operational reasons between an employee and the insolvency administrator, who was appointed to deal with the employer’s assets after the opening of insolvency proceedings. The insolvency administrator compiled a notification of collective redundancy, which was received by the Employment Agency on 26 June 2017, along with an enclosed copy of an agreed reconciliation of interests. The insolvency administrator also issued the letters of termination to the employees with the same date. The claimant received his letter of termination on 27 June 2017. In the action brought against unfair dismissal, the employee claimed that, according to the jurisprudence of the European Court of Justice, the insolvency administrator was required, to first make the declaration of mass redundancy before deciding to issue the notices of termination. Accordingly, letters of termination could only be signed after receipt of the notification of mass redundancy by the Employment Agency , as the signing of the letter declares the termination. The State Labour Court of Baden Wurttemberg followed this argumentation and, on the employee's appeal, reversed the judgment of the Labour Court, which had dismissed the action, thus allowing the employee’s claim against unfair dismissal (for information on the first instance see Kamppeter and Holzbauer in DER BETRIEB 2019, page 1333).

The judgment of the Court

The Federal Labour Court (BAG) annulled the judgment of the State Labour Court and referred the matter back to the lower instance. Currently, only the BAG’s press release is available, which, however, already clarifies that the notification procedure established in § 17(1), and (3) second to the fifth sentences of the Act against Unfair Dismissal (Kündigungsschutzgesetz, KSchG) serves to ensure that the Employment Agency is informed of the upcoming mass redundancies in good time, enabling the Agency to prepare for a larger number of employees and adjust its placement services accordingly. The mass redundancy notification must merely establish how many and which employees will be laid off. The Employment Agency should not and does not wish to influence the will of the employer when it comes to the redundancies – unlike the works council, which is involved as part of the consultation procedure. In line with the case law of the ECJ on Articles 3 and 4 of the Collective Redundancies Directive (Directive 98/59/EC), the Court clarifies that the letter of termination may only be issued – i.e. “reach” the employee – once the mass redundancy notification has been received by the competent Employment Agency. Based on the already established findings, the BAG was not able to pass a final judgement on the effectiveness of the letter of termination, which is why the procedure was referred back to the State Labour Court.

Consequences for practice

Fortunately, the BAG has eliminated another matter of legal uncertainty and found a solution that is practicable for all sides. The highest instance has now decided that the letters of termination may only “reach” employees (within the meaning of § 130 (1) German Civil Code) once the Employment Agency has received the mass redundancy notification. Conversely, it is irrelevant from a legal perspective, when the letter of termination is prepared and signed. This gives employers the possibility of preparing the mass redundancy notification and letters of termination in parallel. On the basis of the date of delivery, the employees can determine whether a letter of termination reached them before the mass redundancy notification was announced and thus – providing the other requirements for the letter of termination are observed – whether the notice is effective.

Practical tip

Letters of termination and the mass redundancy notification may now be prepared simultaneously. Where the redundancy requires notification under § 17 (1) Act against Unfair Dismissal (Kündigungsschutzgesetz, KSchG), the letters of termination may still only reach the employees after the Employment Agency has received the mass redundancy notification. If you are unable to personally deliver the letters of termination, the letters of termination should, for certainty, only be sent once the Employment Agency has received the mass redundancy notification.

If you have any questions related to this topic, please feel free to contact Sonja Müller (Lawyer).

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