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Labour Law

Main features of the labour court proceedings

The "fight" for severance pay

I. (No) entitlement to a severance payment

An estimated 80 percent of labour court proceedings in Germany are dismissal protection claims. Most of these proceedings end with a so-called "settlement", i.e. an agreement between the parties. As a rule, the parties to labour court proceedings reach an agreement whereby the employer pays the employee a certain amount of money as "severance pay" and the employee leaves the employer's company/business.

However, there is no legal entitlement to a severance payment. This is a widespread misconception among employees.

The procedural objective of an action for protection against dismissal (special form of declaratory action) is to establish that the dismissal is invalid and that the employment relationship therefore continues. The aim of the action is not to order the employer to pay a certain amount of money. The consequence of a successful dismissal protection lawsuit is the continued employment of the employee.

After labour court proceedings have been conducted, this is usually not in the interests of the parties, as the relationship between the employer and the employee is often so broken that further cooperation appears to be de facto impossible.

In labour court practice, this dilemma is resolved in such a way that the parties agree that the employee will leave the company in return for a severance payment.

II. Time limit for action

Upon receipt of the written notice of dismissal, the three-week period for filing an action under Section 4 of the German Protection against Dismissal Act (KSchG) begins. If this deadline is missed, the employee affected loses their right to sue, meaning that the dismissal is treated as legally effective from the outset (Section 7 KSchG).

This period applies to all written notices of termination, even those that are not subject to the KSchG.

III. Scope of application of the KSchG

A dismissal can only be measured against the KSchG if it falls within its scope of application. If the dismissal does not fall within the scope of the KSchG, an action for unfair dismissal that is nevertheless brought can only be successful if it is invalid for reasons that lie outside the KSchG (e.g. dismissal without formality).

The KSchG is applicable if:

- the employment relationship of the affected party has existed in the same business or company for more than six months without interruption (Section 1 (1) KSchG);

- the employer is not a small business, i.e. regularly employs more than 10 employees (at least 10.25 employees), and

- the employee concerned is not self-employed (distinction from employee status) and is not an employee in a managerial position.

If all of the above premises are met, a written dismissal is invalid if it is socially unjustified. This is the case, among other things, if the dismissal is not due to reasons relating to the person or behaviour of the employee or to operational requirements (Section 1 (2) KSchG).

The employer must therefore demonstrate and prove a dismissal for personal, behavioural or operational reasons. If the employer succeeds in doing so, the employment relationship ends on the applicable termination date and the employee concerned is "left empty-handed".

IV. Further requirements for an effective cancellation

1. written form Section 623 BGB

According to Section 623 of the German Civil Code (BGB), notice of termination must be given in writing. This means that the document must be signed in person by the person authorised to give notice.

Terminations that:

  • via fax;
  • via e-mail;
  • via Whatsapp;
  • via SMS

    be communicated.

The written form requirement is also not met if the letter of termination is merely initialled. A paraphe does not fulfil the requirements of Section 623 BGB.

The letter of termination must also be issued by the person authorised to give notice. If, for example, the head of the HR department signs his or her own name, the letter of termination must contain an addendum (e.g.: i.V. or i. A.).

2. consultation of the works council

If a works council exists in the employer's business or company, it must be consulted before a dismissal is announced in accordance with Section 102 of the Works Constitution Act (BetrVG). If there is no works council, there is no obligation to consult it.

A notice of termination issued without consulting an existing works council is invalid (Section 102 (1) sentence 3 BetrVG). The consultation cannot be made up for later.

If the works council is consulted and objects to the employee's dismissal, the objection has no legal effect on the validity of the dismissal itself.

To clarify:

Irrespective of whether the works council objects to the dismissal or even agrees to the dismissal, the effectiveness of the dismissal does not depend on this.

3. approval of the integration office in the case of severe disability

If the employee concerned has a severe disability or is treated as a severely disabled person, Section 168 of the German Social Security Code - Ninth Book - (SGB IX) requires the approval of the Integration Office before a dismissal is announced.

In contrast to the consultation of the works council, the integration office must agree to an intended dismissal, as otherwise the dismissal is invalid in any case.

The consent requirement of Section 168 SGB IX is generally also relevant if the employer is not aware of the employee's severe disability.

4. no prohibition on dismissal under the Maternity Protection Act (MuSchG)

İlgili çalışanın işten çıkarıldığı sırada hamile olması ( Madde 17 Paragraf 1 No.1 MuSchG), düşük yapmış olması (Madde 17 Paragraf 1 No.2 MuSchG) veya kısa bir süre önce doğum yapmış olması (Madde 17 Paragraf 1 No.3 MuSchG) halinde işten çıkarma geçersizdir.

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