Germany Update: Errors in Mass Redundancy Notices – ECJ Provides Relief

The dismissal of several employees must be reported to the Employment Agency when specified thresholds are exceeded. Dismissals may already be invalid due to the lack of “target” information in the associated mass dismissal notification. We have already highlighted this in our blog post of 26.11.2021. However, the European Court of Justice (ECJ) has now provided relief. Errors in the transmission to the Employment Agency do not lead to the invalidity of the dismissals (ECJ, judgment of 13.07.2023 – C-134/22).

Background

The employer must notify the Employment Agency of the intended dismissal of several employees as part of a collective dismissal notification (notification procedure). This applies if the intended redundancies exceed quantitatively defined thresholds.
Furthermore, he must involve the works council before the dismissals (consultation procedure). The aim of the consultation process is to consult with the works council on whether redundancies can be avoided or whether the consequences can be mitigated.
According to the previous case law of the Federal Labor Court (BAG), violations by the employer of the obligations incumbent on him in connection with collective redundancies can lead to the nullity of the dismissals.

Circumstance

After the opening of insolvency proceedings against the assets of a GmbH, it was decided to cease its business activities by 30.04.2020 at the latest. In the course of this, mass redundancies were to take place.
The company initiated the consultation process and provided the works council with the information set out in the Collective Redundancies Directive. However, no copy of this written notice was sent to the competent employment agency.
Subsequently, the works council stated that it saw no way to avoid the intended redundancies. Only now did the GmbH notify the Employment Agency of the draft of the mass dismissal. The Employment Agency scheduled counselling appointments for most of the employees affected by the intended redundancies, including the later plaintiff.

In the proceedings before the German labour courts, the plaintiff sought a declaration that his dismissal was invalid. It relied on the fact that a copy of the notification to the works council had not been sent to the competent employment agency in good time. In his opinion, however, this is a prerequisite for the effectiveness of the dismissal.
The BAG found that neither the relevant EU directive nor the national German law provided for an express legal consequence in the event of such a violation. The BAG had doubts as to whether this violation necessarily leads to the nullity of a dismissal and referred the matter to the ECJ.

Decision

The invalidity of a dismissal is to be assumed if the failure to transmit the copy to the Employment Agency also protects the individual interests of the employees.
The ECJ does not see this individual-protecting effect in the obligation to transmit. The obligation to transmit data is not intended to guarantee individual protection of individual employees. Rather, the background to this obligation is that it is possible for the competent authorities to take action, e.g. provide an overview of the reasons for the planned redundancies, the number of employees to be made redundant and the period of the redundancies. The obligation to transmit does not set in motion a time limit to be observed by the employer, nor does it create an obligation for the competent authority. The transmission shall be made for information and preparatory purposes only, in order to enable the Authority to effectively exercise its other powers, where appropriate.

Practical advice

The decision of the ECJ is to be welcomed. At this stage of the procedure, the Employment Agency has no way of guaranteeing individual protection for the benefit of the employees concerned. Consequently, the effectiveness of the termination should not be made dependent on errors at this stage. The ruling reduces the risks for employers in the formally very complex mass dismissal procedure.

The BAG’s handling of this decision remains open. In particular, whether or to what extent the BAG will in future take the view that the Collective Redundancies Directive provides individual legal protection at all. Further referrals by the BAG to the ECJ cannot be ruled out on this issue. So it is too early for the great relief. Employers are still well advised to carefully prepare mass redundancy notifications. Only the BAG’s handling of this decision by the ECJ will show more details.

By MELCHERS, Germany, a Transatlantic Law International Affiliated Firm.

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