In a new verdict, the German Federal Labour Court has clarified the timing employers have to observe in case of a mass dismissal. A mass dismissal under German law occurs when a larger number of employees are dismissed at the same time. The minimum number of dismissals required in order to qualify as a mass dismissal vary depending on the size of the establishment and are provided in the German Protection Against Unfair Dismissal Act (Kündigungsschutzgesetz). When a mass dismissal takes places, the employer is obliged to notify the employment agency prior to the dismissal of the employees. Up to now, the case law deviated on the issues of when the employer may prepare and sign the termination notices and when these may be given to the employees. This has now been clarified by the German Federal Labour Court.
In the case at hand, the company where the plaintiff was employed went bankrupt in 2017. Thereupon, the insolvency administrator submitted a notice of mass dismissal to the competent employment agency. On the same day, the employer issued termination letters terminating the employment relationships with the plaintiff and 44 of his colleagues for operational reasons. Pursuant to the date on the termination letters, they had already been signed on behalf of the employer on the day before the notice of mass dismissal was submitted to the employment agency. The plaintiff filed a lawsuit against the dismissal and, referring to ECJ case law, argued that the employer was obliged to report the mass dismissal to the employment agency before finally deciding to dismiss the employees.
The German Federal Labour Court ruled that the employer can effectively submit a notice of mass dismissal to the employment agency, also in cases when he has already decided to dismiss the employees at the time of the submission. Notifications of mass dismissals to the employment agency serve employment policy purposes. The employment agency shall be informed about upcoming mass dismissals in order to prepare itself for the placement of a larger number of dismissed employees in the employment market. This requires the employer to inform the agency about how many and which employees are going to be dismissed. However, it is not the purpose of the notice of a mass dismissal to allow the employment agency to influence the employer’s decision to dismiss the employees. Therefore, this decision may already be made prior to submitting the notice of mass dismissal and the termination letters to be given to the employees may also be prepared. However, it is still advisable to not backdate termination letters to a date prior to the date the notice of mass dismissal is submitted.
Furthermore, the employer is still required to submit the notice of mass dismissals before the employees actually receive their notice of termination. Both the submission of the notice of mass dismissal and the delivery of the termination letter may take place on the same day though. It is strongly advisable for employers to request a written confirmation by the employment agency that the notice of mass dismissal was submitted. The letters of termination should only be issued to the employee once this confirmation has been received and the times the letters of termination were issued should be documented as well.