Dismissal for operational reasons
Redundancy for operational reasons – the social selection process, mistakes and your rights
A redundancy requires that the job has been permanently made redundant and that there is no possibility of continued employment. In practice, many redundancies fail due to errors in the selection process or a lack of valid business reasons. Our specialist employment lawyers in Augsburg will review your redundancy notice and negotiate the best possible severance package for you.
Conditions for redundancy
Under Section 1(2) of the German Employment Protection Act (KSchG), a redundancy for operational reasons is only valid if there are pressing operational requirements that preclude the employee’s continued employment. The employer must demonstrate three conditions: the loss of the job due to a business decision, the absence of any possibility of continued employment within the business or company, and a correct social selection process.
The business decision – such as a restructuring, site closure or rationalisation – is subject to only limited scrutiny by the labour courts. However, the court does examine whether the decision actually leads to the permanent loss of the specific job. A mere decline in turnover or a strained economic situation alone is not sufficient – the employer must demonstrate which specific organisational measures lead to the loss of the need for employment.
Before proceeding with a redundancy for operational reasons, the employer must also check whether continued employment is possible in another vacant post – including under amended terms (notice of change) and at a different location. We advise employees in Augsburg to carefully check whether the employer has exhausted all possibilities.
Social selection – the most common point of attack
When making a social selection, the employer must, in accordance with Section 1(3) of the German Employment Protection Act (KSchG), select, from among comparable employees, the one who will be least severely affected by the dismissal. Four criteria laid down by law must be taken into account: length of service, age, maintenance obligations and severe disability.
In practice, the social selection process is the most common source of error in redundancies for operational reasons. Typical errors include: incorrect formation of the comparison group (not all comparable employees are included), incorrect weighting of the social criteria, unjustified exclusion of employees as ‘key performers’, and insufficient documentation. At our Augsburg law firm, we regularly see that even a single error in the social selection process can render the entire dismissal invalid.
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Checking redundancy: Is your redundancy notice open to challenge?
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Common mistakes made by employers
Redundancies on operational grounds are more likely to be overturned by the employment tribunal than employers expect. The most common mistakes can be divided into two categories.
Errors relating to operational reasons
The employer must specify which business decision is leading to the loss of the job and when it will be implemented. Common weaknesses include: the decision had not yet been made at the time of the notice of termination; the organisational measure does not actually result in the loss of the job (e.g. the tasks are merely being redistributed); or there are vacant posts within the company to which the employee could have been transferred.
Errors in works council consultations and procedural matters
If there is a works council, it must be consulted prior to any dismissal in accordance with Section 102 of the Works Constitution Act (BetrVG). The consultation must be comprehensive – the employer must disclose the grounds for dismissal, the employees’ personal details and the criteria for selection. An incorrect or incomplete consultation renders the dismissal invalid. In the case of collective redundancies (involving 30 or more employees in companies with more than 500 staff), a notification of collective redundancy must also be submitted to the Employment Agency (Section 17 of the German Redundancy Protection Act).
Action for unfair dismissal and severance pay
Redundancy often provides a solid basis for bringing an action for unfair dismissal or negotiating a severance package. The three-week time limit for bringing an action under Section 4 of the German Unfair Dismissal Protection Act (KSchG) also applies here – do not miss this deadline.
Severance pay under Section 1a of the Employment Protection Act
In the case of redundancies, the employer may offer a severance payment in the notice of termination in accordance with Section 1a of the German Employment Protection Act (KSchG): 0.5 times the gross monthly salary for each year of service, provided the employee waives their right to bring an action for unfair dismissal. However, this offer represents only the minimum. By bringing an action for unfair dismissal, it is usually possible to negotiate a significantly higher severance payment – particularly if the dismissal is flawed.
Redundancy plan and settlement of interests
In the event of major restructuring, the works council negotiates a redundancy plan that sets out severance pay and other compensation. Receiving severance pay under the redundancy plan does not preclude an individual claim for unfair dismissal – on the contrary: bringing a claim often results in a higher severance payment than that provided for in the redundancy plan. Our specialist solicitors in Augsburg can advise you on whether it makes sense to bring a claim in addition to the redundancy plan.
Frequently asked questions about redundancy
Further information on employment law
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This information does not constitute legal advice in individual cases.
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