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It could always be worse – Tax evasion not only leads to criminal prosecution

On the 7 January 2014 the Labour Court of Kiel (Arbeitsgericht Kiel) ruled that tax evasion can justify an ordinary dismissal (docket number: 2 Ca 1793a /13) even when the employee’s line manager was informed about tax evasion or, even worse, initiated such activity.

The employee, a severely disabled person, worked for a long time as a cleaner, forewoman and site manager for the employer, a cleaning company. In at least one case, two colleagues, both marginally employed persons (Geringfügig Beschäftigte), billed her working time as their own working time and paid the salary afterwards to her. Once the cleaning company management became aware of this, they terminated her employment. At this point the employee claimed that her line manager was aware of her activities.

The Labour Court ruled, without taking evidence, that cases of tax evasion justifies an ordinary dismissal. The Court viewed that her intentionally breaking these laws was a severe breach of her duty to consider her employer`s interests (Rücksichtnahmepflicht). The Court considered that the severity of her breach of duty and her function as a role model outweighed her long period of service and her severe disability. It was also ruled that a warning was not necessary prior to termination of employment, the employee could not have assumed that either her or her line manager`s behaviour would have ever been acceptable by the company’s management.

The Labour Court admitted the appeal to the Regional Labour Court. It remains to be seen whether the Regional Labour Court will deem a hearing of evidence to be necessary. In case, that tax evasion had become common practice in the company, a weighing up of interests may not lead to a justified dismissal.