ECJ: Certain violations prior to collective redundancies do not grant individual protection

Today, the European Court of Justice (ECJ) decided (case no. C-134/22) that the employer’s obligation to provide the employment agency at an early stage of intended collective redundancies with a copy of at least certain sections of the written notification to be provided to the employee representatives (works council) for consultation purposes does not have the purpose of granting individual protection to the employees.

The copy is transferred for information and preparation purposes only and is supposed to give the employment agency the opportunity to prepare for mass redundancies. Consequently, a notice of termination is not invalid solely due to the employer’s failure to submit such copy.

Facts

On October 1, 2019, insolvency proceedings were opened against the employer’s assets and on January 17, 2020 it was decided to completely discontinue the employer’s business activities by no later than April 30, 2020 and to implement mass redundancies. On January 17, 2020, too, the procedure to consult the works council were initiated. Within the scope of such consultation, the works council was provided with the information stipulated in the directive on collective redundancies (reasons for planned redundancies, number and occupational groups of employees to be dismissed or of usually employed staff, period of redundancies, criteria for the selection of employees to be dismissed and criteria for severance payment calculations). The competent employment agency, however, had not been provided with a copy of such written notification. On February 22, 2022, the works council declared to see no chance of avoiding the intended redundancies. On January 23, 2020, the draft of such collective redundancies was communicated to the employment agency. Subsequently, the latter scheduled counseling appointments for most of the employees affected by the intended layoffs. The plaintiff employee was dismissed on January 28, 2020. In his action, he claimed that, contrary to Art. 17 (3) Sentence 1 KSchG (German Employment Protection Act), the responsible employment agency had not been provided with a copy of the notification to the works council dated January 17, 2020, although this was a prerequisite for the effectiveness of the dismissal.

The German Federal Labor Court (“BAG”) as the competent court of appeal considers the failure to submit the corresponding copy to be a violation of the German law transposing the EU Directive into national law. Neither the Directive nor national law, however, provided for an explicit sanction in case of such violation. Under these circumstances, the BAG expresses doubts as to whether the violation inevitably results in the dismissal’s ineffectiveness. In order to clarify whether the EU Directive’s relevant provisions are intended to grant individual protection to employees, the BAG referred the matter to the ECJ for a preliminary ruling.

ECJ denies individual protection

In its decision of July 13, 2023 (C-134/22; ECJ press release of July 13, 2023), the ECJ denied the question submitted to it: The employer’s obligation to inform the competent authorities at an early stage about intended collective redundancies does not have the purpose of granting individual protection to employees.

A transfer of such information would only enable the employment agency, among others, to get an overview of the reasons for the planned redundancies, the number and categories of employees to be dismissed and the period for which the redundancies are scheduled. It could not entirely rely upon the submitted information in order to prepare the measures within its jurisdiction in the event of a mass layoff. Furthermore, the employment agency had no active role in the consultation procedure with the works council. It was merely the addressee of a copy of certain elements of the communication in question, in contrast to its active role in later stages of the procedure. Moreover, the communication in question did not start a time limit to be observed by the employer, nor did it create an obligation for the employment agency.

The copy was transferred for information and preparation purposes only in order to enable the employment agency to effectively exercise its further powers, if necessary. The obligation to transfer the information was intended to allow the agency to assess, as far as possible, the negative consequences arising from the intended mass redundancies so that, once these redundancies are communicated at a later stage, it can efficiently find a solution for the problems arising from such dismissals. Due to this information transfer’s purpose and the fact that the communication takes place at a stage when the employer only intends to make collective redundancies, the competent authority is not supposed to deal with each employee’s individual situation but consider the intended collective redundancies in general.

The BAG is now very likely to reject the appeal in the present proceedings and will not declare the notice of termination invalid due to the failure to transmit the relevant copy. No further grounds for invalidity are known.

Conclusion

For the time being, employers can thus breathe a sigh of relief, since not every violation of the collective redundancy procedure’s strict requirements grants individual protection and thus leads to the invalidity of the dismissal.

It remains to be seen whether the BAG will now take the ECJ’s ruling as an opportunity to change its entire case law on collective redundancies. The BAG must decide whether it merely wishes to emulate EU law or even go beyond it. Various other proceedings on mass dismissals are currently pending before the BAG.