Germany: Staff Reductions - Termination Due To Operational Reasons Despite Short-time Work?

For many companies, staff cuts are unavoidable during the Corona crisis, when short-time work and government protective shielding measures are no longer sufficient. Is it possible to make redundancies during the current short-time work period? Which employment law pitfalls should be avoided?

The corona crisis is increasingly affecting the employment market: According to a survey conducted by the Ifo Institute in Munich, companies in numerous sectors are planning to lay off employees or not renew fixed-term contracts. More and more companies that were previously able to prevent staff cuts thanks to short-time work and government protective shield measures are now starting to think specifically about layoffs. Against this background, we answer the most important questions about staff cuts in the crisis.

Are dismissals permitted despite short-time work?

There are no special provisions for dismissals for conduct and personal reasons during the current short-time working period. Employees can therefore be dismissed under the previous conditions if they violate their contractual obligations or if there is a personal reason for dismissal. The situation is different for terminations for operational reasons necessitated by the effects of the Corona crisis.

A dismissal for operational reasons during short-time work is socially unacceptable if it is justified on the same grounds on which short-time work was ordered in the first place. In this case there is generally not the "urgent" operational necessity for a dismissal for operational reasons as required by §1, Subsection 2, Sentence 1, of the Dismissal Protection Act. In addition, a dismissal for operational reasons presupposes a permanent loss of work. However, this will not be the case when short-time work is ordered, as short-time work always requires only the temporary loss of work.

A dismissal for operational reasons during short-time work therefore requires additional - beyond the reasons for short-time working - or even changed circumstances. This is the case, for example, if the situation of the company has deteriorated further since the announcement of short-time work and the employer now assumes a permanent - instead of, as initially, merely temporary - discontinuation of the workload. In addition, collective law requirements must also be observed: Company agreements and collective bargaining agreements may contain provisions that generally exclude dismissals for operational reasons during short-time work.

What are the requirements for a dismissal for operational reasons?

If the Dismissal Protection Act applies, a dismissal for operational reasons presupposes that there are urgent operational requirements which make it permanently impossible to continue the employment of the employee in the affected company. There are no special or facilitated conditions due to the corona pandemic:

1. A business decision leads to a probable permanent loss of the need for employment.
2. There is no possibility of continued employment throughout the company (!) for the employee whose job is cancelled.
3. If there are comparable employees, a company-related (!) social selection is carried out.

What should be considered if a comparatively large number of employees are to be dismissed?

If more than 20 employees are employed in a company and more than 5 employees are to be dismissed within 30 days, it must be checked whether there is a mass dismissal that must be notified to the Federal Employment Agency.

Depending on the number of employees, § 17 KSchG provides for the following graduation regarding the obligation to notify mass dismissal:

Termination agreements and employees' own terminations must be taken into account when determining the above-mentioned thresholds if they were "initiated" by the employer. An inducement by the employer exists if the employer makes it sufficiently clear to the employee that he/she will terminate the employment relationship (at the same time as the employee's notice of termination or the termination agreement is requested).

What kind of special conditions must be considered when a works council exists?

If a works council exists, participation rights must be observed in any case. Which co-determination and participation rights the works council has in particular depends on the scope of the concrete personnel reduction measure:

• The works council must be consulted before each termination of employment in accordance with § 102 of the Works Constitution Act (BetrVG).
• In the case of mass dismissals within the meaning of Section 17 (1) KschG, the works council must be fully involved (obligation to provide information and advice).
• Insofar as the personnel reduction measure meets the requirements of a change in operations within the meaning of § 111 BetrVG, a reconciliation of interests and social plan obligation exists in principle.

The works council has numerous possibilities to delay the negotiations - and thus the implementation of the personnel adjustment measure. Not least against this background, a thorough preparation of the planned measure is absolutely essential.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.