Mass dismissal: Employer has to notify the Employment Agency prior to the delivery of the termination notice to the individual employees

On 13 June 2019, the Federal Labour Court (docket number 6 AZR 459/18) ruled that a mass dismissal notification can be effectively filed even if the employer has already taken the decision to terminate the employment relationships at the time of its receipt by the Employment Agency. In the event of mass dismissals and subject to the fulfillment of all other statutory requirements, terminations, however, would only be effective if the employer notified the Employment Agency prior to the delivery of the termination letters to the individual employees.

The parties were in dispute as to whether the defendant was able to effectively terminate the employment relationship with the claimant. The notification of mass dismissal was received by the Employment Agency on 26 June 2017. The defendant terminated the employment relationship of the parties, along with all other employment relationships, by termination notice dated 26 June 2017. The termination notice itself was delivered to the plaintiff on 27 June 2017.

In the event of mass dismissals the employer has to notify the Employment Agency prior to giving notice to the individual. Otherwise, the dismissal would be null and void. For this purpose, it is sufficient if the notice is delivered to the individual after the mass dismissal notification has been received by the Employment Agency; thus, the time at which the termination notice was signed shall not be decisive.

According to its press release the Federal Labour Court ruled that the notification procedure pursuant to sec. 17 para. 1, 3 German Dismissal Protection Act (Kündigungsschutzgesetz, KSchG) only serves employment policy objectives. The notification obligation must be strictly separated from the consultation procedure with the works council pursuant to sec. 17 para. 2 KSchG (if any). The Employment Agency should be informed in good time of an upcoming mass dismissal in order to prepare its placement efforts. This requires that it is clear how many and which employees will be terminated. This ruling is also in line with the case law of the European Court of Justice on Art. 3 and 4 of Directive 98/59/EC (Mass Dismissal Directive), so that no referral was required.

Last year, the previous decision of the State Labour Court of Baden-Württemberg (docket number 12 Sa 17/18) caused some confusion. It took the view that the employer must not sign the termination notice prior to notifying the Employment Agency. It is gratifying that the Federal Labour Court has now created clarity.