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BAG on collective redundancies and consultation process

01-06-2017 10:33 AM CET | Politics, Law & Society

Press release from: GRP Rainer LLP

If the works council no longer indicates a willingness to continue negotiations to prevent collective redundancies, the employer can consider the consultation process pursuant to sec 17(2) of the Kündigungsschutzgesetz (KSchG) [German Employment Protection Act] to have come to an end.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: According to employment law, the employer is obligated to consult the works council before collective redundancies take place. If the works council no longer indicates a willingness to continue to negotiation on measures to prevent or limit collective redundancies, the employer can consider the consultation process pursuant to sec 17(2) of the KSchG to have come to an end. That was the verdict of the Bundesarbeitsgericht (BAG), Germany’s Federal Labour Court, in its ruling of September 22 (Az.: 2 AZR 276/16).

In the instant case before the BAG, the defendant had rendered services at an airport. It only had one client, which terminated all orders with effect from the end of March 2015. Following the failure of an internal attempt to balance interests, the defendant initiated a consultation process pursuant to sec 17(2) of the KSchG. In January, the decision was made to suspend business operations at the end of March. This was followed by notice of collective redundancies and the termination of all employment contracts. Several months later, another consultation process and discussions with the works council began regarding the possibility of resuming business operations. However, the employer felt that this would only be possible following a reduction in wages and salaries. The works council was apparently unwilling to allow this to happen. Consequently, notice of collective redundancies was reissued and the remaining employment contracts terminated.

Th BAG held that the first notice of collective redundancies had been ineffective, because the state of the discussions with the works council had not been accurately reflected in the notice of collective redundancies. The second notice of redundancies, on the other hand, had indeed been effective. The Court ruled that the consultation process had been conducted properly, including with regards to the relevant requirements under European Union law. It went on to say that the works council had received all of the necessary information and had the opportunity to influence the decision. Due to the fact that the works council did not indicate a willingness to continue negotiating, the negotiations could be seen as having failed. The Court stated that the works council was then properly informed about the intention to suspend business operations and the conciliation board was contacted after the negotiations failed.

When it comes to matters pertaining to dismissals as well as other issues relating to employment law, employers can turn to lawyers who are versed in the field of employment law.

GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact Michael Rainer
Lawyer, Managing Partner

GRP Rainer LLP
Augustinerstraße 10
50667 Cologne

Phone: +49 221-27 22 75-0

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