Have your redundancy dismissal reviewed

Requirements for a redundancy dismissal

Under § 1 Abs. 2 KSchG a redundancy dismissal is valid only where urgent operational requirements exist that preclude continued employment of the employee. The employer must prove three things: that the job has ceased to exist as a result of a management decision, that no possibility of continued employment exists within the establishment or the company, and that a correct social selection (Sozialauswahl) was carried out.

General dismissal protection requires employment of more than six months (§ 1 Abs. 1 KSchG). For employment relationships that began after 31 December 2003, the business must also as a rule employ more than ten employees (§ 23 Abs. 1 Satz 3 KSchG).

The labour courts review the management decision itself, for example a restructuring or a site closure, only to a limited extent. The Federal Labour Court explains in its judgment of 28 February 2023 (BAG, 2 AZR 227/22) that dismissal protection would otherwise partly run empty. What is examined is whether the decision causes the job to disappear on a permanent basis.

A fall in turnover alone does not support the dismissal. The employer must set out an organisational decision whose implementation, by the end of the notice period at the latest, leads to the probable permanent loss of the need for the role. This forecast must already be objectively justified at the time the dismissal is received.

Before the dismissal the employer must examine whether you can continue to be employed in another position within the company (§ 1 Abs. 2 Satz 2 KSchG). The same applies after reasonable retraining or further training measures and under changed working conditions (§ 1 Abs. 2 Satz 3 KSchG). It does not extend to other companies within the group.

Social selection under § 1 Abs. 3 KSchG

In the social selection the employer must, under § 1 Abs. 3 KSchG, choose among the comparable employees the one for whom the dismissal is least severe. Four statutory criteria must be taken into account: length of service, age, maintenance obligations and severe disability.

If the employer fails to take these criteria into account, or does not take them into account sufficiently, the dismissal is socially unjustified (§ 1 Abs. 3 Satz 1 KSchG).

The first point to examine is the comparison group. It is flawed if not all comparable employees are included, or if the employer excludes so-called “key performers” (Leistungsträger) without a legitimate operational interest (§ 1 Abs. 3 Satz 2 KSchG).

On request the employer must give you the reasons that led to the social selection made (§ 1 Abs. 3 Satz 1 KSchG). Only this information makes the selection reviewable. However, the employee must prove the facts that make the dismissal appear socially unjustified (§ 1 Abs. 3 Satz 3 KSchG).

Typical employer mistakes

Two further points of attack lie outside the social selection: the employer’s presentation of the operational grounds and the involvement of the works council under § 102 BetrVG.

Errors in the operational grounds

The employer must set out which management decision causes the job to disappear and when it is implemented. Where this decision coincides with the decision to dismiss, or comes close to it in time, the requirements for setting it out increase (BAG, Urteil vom 28. Februar 2023, 2 AZR 227/22). Otherwise it could be used as a pretext.

Further weak points: the measure does not actually eliminate the job because the tasks are merely redistributed. Or there are vacant positions within the company to which you could have been transferred.

Errors in works council consultation and formalities

Where a works council exists, the employer must consult it before every dismissal and disclose the grounds for dismissal to it (§ 102 Abs. 1 Satz 1 und 2 BetrVG). A dismissal issued without consultation is invalid (§ 102 Abs. 1 Satz 3 BetrVG).

Not every error in the consultation leads to invalidity. A deliberately incorrect or misleading briefing is sufficient for this, but an inadvertent misstatement is not, if the works council was aware of the correct circumstances (BAG, Urteil vom 28. Februar 2023, 2 AZR 194/22).

In the case of mass redundancies, a notification to the employment agency is additionally required, each time relating to a period of 30 calendar days (§ 17 Abs. 1 KSchG). Notification is required for more than 5 redundancies in businesses with more than 20 and fewer than 60 employees (§ 17 Abs. 1 Nr. 1 KSchG).

With at least 60 and fewer than 500 employees, the obligation applies from 10 percent of the workforce or more than 25 redundancies (§ 17 Abs. 1 Nr. 2 KSchG). From at least 500 employees, 30 redundancies are sufficient (§ 17 Abs. 1 Nr. 3 KSchG).

Unfair dismissal claim and severance pay

Anyone who wants to assert the invalidity of a dismissal must file a claim with the labour court within three weeks of receiving the written dismissal (§ 4 Satz 1 KSchG). After that, the dismissal is deemed to have been legally effective from the outset (§ 7 KSchG).

Severance under § 1a KSchG

In the dismissal letter the employer may offer you severance under § 1a KSchG. The entitlement arises when the notice period expires, if you let the claim deadline under § 4 Satz 1 KSchG pass. The amount is 0.5 months’ earnings per year of service. Periods of more than six months are rounded up to a full year (§ 1a Abs. 2 KSchG).

The Dismissal Protection Act does not provide any general statutory entitlement to a higher severance payment. Beyond that, severance is based on an agreement between the parties, for example in a court settlement.

If the labour court dissolves the employment relationship on application (§ 9 KSchG), it sets an amount of up to twelve months’ earnings. For employees who have reached the age of 50 with at least 15 years of service it is up to 15, and for those who have reached the age of 55 with at least 20 years up to 18 months’ earnings (§ 10 Abs. 1 und 2 KSchG).

Social plan and reconciliation of interests

In the case of a change to the business under § 111 BetrVG, the employer and the works council can conclude a reconciliation of interests (Interessenausgleich) and a social plan (Sozialplan). The social plan compensates for or mitigates the employees’ economic disadvantages and has the effect of a works agreement (§ 112 Abs. 1 BetrVG).

If no agreement is reached, the conciliation committee (Einigungsstelle) decides (§ 112 Abs. 4 BetrVG). The social plan does not rule out an unfair dismissal claim.

The position is different if you are named individually in the reconciliation of interests. In that case it is presumed that the dismissal is caused by urgent operational requirements, and the social selection can then only be reviewed for gross errors (§ 1 Abs. 5 Satz 1 und 2 KSchG). The presumption does not apply where the circumstances have changed materially since then.

Further information on employment law

These topics may also be of interest to you:

• Unfair dismissal claim
• Severance pay after dismissal
• Have your termination agreement reviewed