Collective dismissals in Germany

A high level outline of the obligations that apply in relation to a collective dismissal procedure in Germany.

Introduction

If an employer is dismissing a number of employees at, or around, the same time, this may trigger obligations to inform and consult on a collective basis which do not apply when an individual employee is being dismissed.

Definition of a collective dismissal

Collective dismissal (Massenentlassung) procedures under the Dismissal Protection Act (DPA) are triggered if an employer intends to dismiss the following number of employees within 30 calendar days:

  • six or more employees in an undertaking with 21 to 59 employees 
  • 10% of employees or 26 or more employees in an undertaking with 60 to 499 employees, or 
  • 30 or more employees in undertakings with 500 or more employees.

The reason for the dismissals is irrelevant. It will include dismissals initiated by the employer, eg “urgent operational reasons”, dismissals on the grounds of misconduct or incapacity and resignations under termination agreements.

Procedure

The following is an outline of the procedure that an employer should follow in respect of the proposed dismissals. Further detail in respect of the separate steps can be found below:

  • review the number of employees it is intended to dismiss 
  • inform and consult works council (consultation procedure) either by formal consultation under the DPA or by way of a reconciliation of interest under the Works Constitution Act (WCA) 
  • notify the competent employment office (attaching the written notification to the works council under the consultation procedure and the works council's written statement (if there is one)) 
  • inform and consult works council on individual dismissals 
  • employment office decides on a waiting period following which terminations can be served, (in general one month after mass-redundancy notice was given to the competent employment office), and 
  • serve notice of termination on the employees.

Obligations to inform and consult works councils

Depending on the circumstances, in a collective dismissal situation a works council may have both co determination rights and rights to be informed and consulted.

In addition, where the thresholds set out above are reached, the works council will have information and consultation rights under the DPA.

The works council's rights apply simultaneously if the relevant thresholds have been reached. Complying with the extensive co determination process will not completely replace the process under the DPA. Provided that certain conditions are met it is, however, possible to combine the different consultation obligations into one process rather than a number of different processes.

Obligations to inform and consult other representatives of employees

Where a business is to be shut down, employees have the right to receive information from an economics committee. An economics committee must be established in companies with more than 100 employees. The role of the economics committee is to discuss economic matters with the management and to update the works council. The management is under a duty to provide the economics committee with timely information about economic matters and to outline its effects on personnel planning.

Obligations to notify public authorities

Employers must notify the Regional Labour Office of dismissals made within a period of 30 calendar days if the thresholds are reached.

Dismissal does not refer to the expiry of the notice period, but rather the act of giving notice of dismissal. This means that the Regional Labour Office must be notified before serving notice of dismissal.

The notification to the Regional Labour Office must be in writing and include certain legally specified information.

Once the Regional Labour Office has been duly notified, there is a one month waiting period for the dismissals to become effective. This can be extended to two months by the Regional Labour Office. Within this waiting period dismissals can only become effective with the express approval of the Regional Labour Office.

Dismissals must be made within 90 days of the end of the waiting period or the employer will have to file a new notification to the Regional Labour Office.

A failure to provide information to the Regional Labour Office or to comply with the various time limits may result in terminations being held invalid. This invalidity does not change, if the Regional Labour Office in its final statement does not object to such faults.

Further information on collective dismissals in Germany is available from our International Employment Issues microsite here.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.