Caution with the notification of mass dismissal!

Are other employee representatives to be involved in the consultation procedure in addition to the works council?

In its ruling of July 11th, 2019 (Case No. 21 Sa 2100/18), the Berlin-Brandenburg state labour court (LAG Berlin Brandenburg) declared the dismissal of a severely disabled employee for operational reasons as part of a mass dismissal in insolvency (Air Berlin) invalid, among other reasons, because the employer had involved the works council in the consultation procedure, but not the Body for Severely Disabled Employees.

In case the employer dismisses a large number of employees within 30 days, the employer must notify the Employment Agency accordingly before giving notice of termination according to sec. 17 para. 1 German Protection Against Dismissal Act (KSchG). Prior to this, he has to inform his works council of the planned dismissals, the reasons and other statutory facts. The works council must also be consulted on ways of avoiding or limiting the planned dismissals or mitigating their consequences (so-called consultation procedures).

According to the case law of the Federal Labour Court (BAG) an error in the conduct of the consultation or notification procedure shall invalidate all notices of termination given in this context.

In connection with the consultation procedure regulated in sec. 17 (2) KSchG, the law only refers to the information of and consultation with the works council.

In the above-mentioned decision, the LAG Berlin-Brandenburg holds, contrary to the clear wording of the law, that, in addition to the works council, other possible employee representatives, such as the Body for Severely Disabled Employees, should also be included in the consultation procedure. This is because it is an employee representative body which is to be involved according to the underlying European directive. Even if the national provision in sec. 17 (2) KSchG refers to a “works council”, this is to be understood as any employee representation to be set up under national law.

According to the European Directive (Directive EG98/59/EG of the Council of 20.07.1998), “employee representatives” are the employee representatives according to the legal provisions or practice of the member states. Since sec. 178 Para. 2 sentence 3 Volume 9 of the Social Insurance Code (SGB IX) now also provides that a notice of termination is invalid in respect of a severely disabled person unless the severely disabled person’s representative body has previously been consulted, it cannot be ruled out that the BAG or at the latest the European Court of Justice may come to the conclusion that in German law the term “employee representation” is to be understood further than only “the works council”. In this case, Directive EC 98/59/EC would be incorrectly implemented by sec. 17 (2) KSchG and thus to be corrected by the German legislature.

A German court may not simply interpret a national law in conformity with the Directive if the wording leaves no room for interpretation. Even if the LAG Berlin-Brandenburg wants to understand the statutory provision contrary to the clear wording and thus exceeds the limits of interpretation, the judgment at least creates legal uncertainty.

The decision of the LAG Berlin-Brandenburg is not yet legally binding, the appeal is admissible. Until the BAG reaches a decision on the question of whether other employee representatives in addition to the works council should be involved in the consultation process, employers should reconsider the previous practice of exclusively consulting the works council and, in view of the serious legal consequence of an error in the consultation process (invalidity of all dismissals), at least until this question has been finally clarified by the BAG or the European Court of Justice, as a precautionary measure also involve other bodies such as the severely disabled representatives in the consultation process.

It is questionable, however, whether the BAG will clarify the decisive legal question in the appeal proceedings at all. The LAG Berlin-Brandenburg also considered the mass dismissal notification to be wrong for other reasons. If the BAG takes the same view, it does not have to deal with the consultation procedure at all.

To be continued.

Carolin Schnigula                            Dr. Lorenz Mitterer

Lawyer                                                Lawyer-Partner

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