Mass dismissals - Invalidity of all dismissals in case of breach of the notification duty?
If an employer plans mass dismissals, he must inform existing works councils in writing in good time, in particular about the reasons for the planned dismissals, the period of the intended dismissals and the intended criteria for the selection of the employees to be dismissed (so-called consultation procedure, Art. 17 (2) KSchG (German Employment Protection Act)).
Pursuant to Art. 17 (3) sentence 1 KSchG, the employer must simultaneously forward a copy of this written notification to the Employment Agency. An employer’s failure to provide this information to the Employment Agency raises the question as to whether such failure leads to the invalidity of all notices of termination issued.
In its decision of January 27, 2022 (6 AZR 155/21 (A)), the German Federal Labor Court has now referred the matter to the ECJ for a preliminary ruling in connection with the question of which sanction a violation of Art. 17 (3) sentence 1 KSchG entails.
This is based on the following facts:
The defendant is the insolvency administrator in the insolvency proceedings opened on October 1, 2019 against the insolvency debtor’s assets. The plaintiff had been employed by the insolvency debtor since 1981.
On January 17, 2020, it was decided to completely discontinue the insolvency debtor’s business operations as of April 30, 2020. In this context, it was intended to dismiss all of the 195 employees employed at such time. As a result of the closure decision, negotiations were conducted with the insolvency debtor’s existing works council about the conclusion of a reconciliation of interests and a social plan. In connection with the reconciliation of interests procedure, the consultation procedure required in the event of a mass dismissal was also conducted in accordance with Art. 17 (2) KSchG.
Contrary to Art. 17 (3) Sentence 1 KSchG, however, the competent Employment Agency was not simultaneously provided with a copy of the notification initiating the consultation procedure and addressed to the works council pursuant to Art. 17 (2) KSchG.
By letter dated January 23, 2020, a mass dismissal notice was issued, the receipt of which was confirmed by the Employment Agency on January 27, 2020. On January 28, 2020, the plaintiff received notice of termination of his employment relationship effective April 30, 2020. The Employment Agency immediately scheduled counseling sessions for 153 employees of the insolvency debtor for January 28/29, 2020.
In his action, the plaintiff asserted the termination’s invalidity. According to the plaintiff, the failure to provide the Employment Agency with the notification addressed to the works council pursuant to Art. 17 (2) KSchG violated Art. 17 (3) Sentence 1 KSchG, Art. 2 (3) subsection 2 of the EC Directive on Collective Redundancies. These provisions not only contained a secondary obligation without sanction, but also constituted a prerequisite for the termination’s effectiveness. The notification duty is intended to ensure that the Employment Agency is informed about the impending dismissals as early as possible in order to be able to organize its placement efforts accordingly. It therefore has an employee-protecting character.
The lower courts dismissed the action.
Conclusion
With its submission, the Federal Labor Court first wants the ECJ to clarify the interpretation of Art. 2 (3) subsection 2 of the EC Directive on Collective Redundancies with regard to the competent authority’s notification within the scope of the consultation procedure.
According to previous case law, the failure to forward the written notification to the Employment Agency does not constitute a violation which would render the termination invalid. It is merely a matter of informing the Employment Agency as the competent authority, which is based on labor market policy considerations, and not a regulation serving the protection of employees.
Until a final decision has been reached, employers should always send the written notification to the works council simultaneously to the competent Employment Agency in order to avoid potential disadvantages.
Irrespective of the issue in question, employers must pay meticulous attention to the mass dismissal procedure’s formal requirements in the context of mass dismissals. This is due to the fact that, from an employer's point of view, the mass dismissal procedure is already linked to many formal requirements, non-compliance with which might lead to an invalidity of all dismissals.
