November 29, 2017
Authored by: Michael Magotsch
Collective redundancies and the complex issue of relevant dismissal thresholds for notification of the German Federal Employment Agency (“Bundesanstalt für Arbeit” or “the Agency”) were already addressed in an earlier June post this year.
On November 16, 2017, the Federal Labor Court of Germany (“BAG” or “the Court”) submitted a case (BAG – 2 AZR 90/17) to the European Court of Justice(“ECJ”) which dealt with so-called leased employees. The question was whether, and under what requirements, leased employees or temporary workers need to be taken into account when applying the thresholds for mass dismissal filings in accordance with Sec. 17 I (1) Nr. 2 Kündigungsschutzgesetz/ KSchG (the German Act against Unfair Dismissal). Because this German Sec. 17 KSchG is based on the European Council Directive 98/95/EC, the Court had no choice but to submit this question to the ECJ. Until the ECJ has ruled – which may easily take up to two years – this important question will remain unanswered with serious and immediate practical consequences.
Ironically, in the specific case pending before the Court, the employer took the position that a number of leased employees, who were temporarily assigned to their companies, should be accounted for under the threshold. Under this calculation, less than the 10% threshold would have been affected and, consequently, no filing requirements with the Agency would have been due.
To complicate decisions for HR managers in Germany in crucial and difficult situations, the Court decided in other factual circumstances that regularly employed temporary workers would have to be taken into account when determining thresholds. Two examples of when temporary workers must be included in calculating respective thresholds are: (1) in works council election proceedings under the German Shop Constitution Act/ BetrVG, and (2) in employee participation proceedings in Supervisory Board elections under the German Co-determination Act (Mitbestimmungsgesetz/ MitbestG).
Companies are well advised to be extra careful when planning reductions in force or mass dismissals in Germany,particularly when leased employees are assigned to their facilities.
Bryan Cave LLP has a team of knowledgeable lawyers and other professionals prepared to help employers assess their obligations when undertaking mass dismissal filings in Germany. If you or your organization would like more information on the German Act against Unfair Dismissal or any other employment issue, please contact an attorney in the Labor and Employment practice group.