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Mass dismissal with continued employment

Terminations with changes to terms of employment (Änderungskündigungen) are redundancies in terms of sec. 17 of the German Dismissal Protection Act (Kündigungsschutzgesetz, KSchG) and may require the prior notification of the Employment Agency (Bundesagentur für Arbeit) according to a judgment of the Federal Labour Court (Bundesarbeitsgericht, BAG) dated February 20, 2014 (docket number: 2 AZR 346/12).

Sec. 17 KSchG provides, that employers who intend to lay off a certain number of employees during a 30 days’ period must notify the Employment Agency prior to the service of any termination notice letter. While this statutory requirement is tied up with the number of dismissals, the court ruled that the employer is also required to notify the Employment Agency if terminations with changes to terms of employment are intended, regardless of whether the employee decides to accept to continue the employment relationship under changed terms or to end the employment with the employer.

Consequently, employers who intend to terminate employees with changes to terms of employment need to consider whether the terminations exceed the thresholds of mass dismissals, even if they expect the employees to continue their employment relationships. The failure to notify the Employment Agency will render any mass dismissal invalid.