Termination for operational reasons in labor law

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Termination for operational reasons

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Cancellation is not a nice thing, although unfortunately it is more common than we think. A Cancellation always stands for a negative relationship between employer and employee. Reasons for this are classified in three different categories. Personal reasons for termination, behavioral reasons for termination or operational reasons for termination. Operational reasons for termination Cancellation are therefore present if, for urgent and operational reasons, it is necessary that the employee can no longer be employed by the employer and operational reasons prevent this continued employment, cf. § 1 II KSchG.

The reasons themselves can be further differentiated into internal reasons or external reasons. External reasons are circumstances for which the employer is not directly responsible. In most cases, an internal reason is derived from an external reason. For example, a lack of orders or the rationalization of jobs are well-known reasons for termination for operational reasons.

Do reasons for termination for operational reasons have to be stated?

Duty to provide evidence of the reasons for termination for operational reasons

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Should the reasons for the operational Cancellation actually be for reasons outside the company, the employer must provide evidence to this effect in case of doubt. However, even in the case of an internal reason Cancellation the employer has a certain duty of proof with regard to an exemplary decline in orders or a slump in sales. The employer can provide such evidence by means of an evaluation, e.g. from its business management circumstances. It should be noted here that a certain reason given by the employer for its operationally-related Cancellation is also essential for the decrease in demand of its employees. In the context of the presentation of evidence, this is never to be interpreted to the disadvantage of the employee. 

The sole burden of proof in this case lies with the employer. Thus, the demonstrable connection between a decline in sales and the non-requirement of existing employees is difficult to establish, however, as mentioned, this must not be to the disadvantage of the employee.

It is not uncommon for an operational decision to result in the loss of jobs. This is particularly the case in the age of digitalization. For example, activities that required a qualified employee in his day are now performed by a computer. These decisions are made by an employer mostly in the case of economic thinking and cost optimization. 

This can be a simple reason that an employee is simply no longer needed. A reduced need for personnel is thus the consequence. However, it should again be noted here that the employer's desire to save on wage or salary costs alone is not a "business decision" that would justify a termination for operational reasons. Cancellation can justify. For such a decision to be present in the specific case, a certain construct must exist alongside the decision as to which measures will still be taken to implement the decision to save costs or which measures will still be specifically forthcoming. 

In doing so, the employer must also check whether he cannot transfer the employee to another job before dismissing him. This would be a milder means which the employee can be expected to accept. It is therefore preferable to direct dismissal for operational reasons. Even if such an intra-company transfer is not always possible, the employer must nevertheless prove that it has attempted to find a milder means for the employee to be dismissed. 

However, a transfer to the other job is linked to the fact that the employee must have the qualifications relating to the new job. Therefore, he/she is not entitled to a higher quality job. At the most, the employee is entitled to a job of equal or lesser value, provided that he/she has the same knowledge or professional qualifications. 

In summary, it can therefore be emphasized that the employer, before pronouncing the operational Cancellation must check whether the employee can continue to be employed in another job in the company's own or another company's business, or under changed working conditions (important: with the employee's consent) or after a new reasonable retraining or possible further training.

What is the case law of the Federal Labor Court on this?

Case law of the Federal Labor Court

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Looking at the case law of the Federal Labor Court, the legality of a termination for operational reasons is measured against a three-stage structure. This is the existence of an entrepreneurial decision that leads to the elimination of one or more jobs, possible reasons that stand in the way of continued employment (the lack of other employment opportunities) and the implementation of a proper social selection.

If several employees lose their jobs instead of one, the employer has the obligation to carry out a social selection. This is mandatory for the employer according to § 1 III KSchG and must follow certain steps in which it must carry out the social selection. The employer must initially determine the group of addressees who are eligible for a redundancy program. Cancellation would be eligible. This group of employees must be comparable with each other. Thus, these employees would even be interchangeable with each other in the best case. 

Therefore, only those workplaces are to be compared that are on one and the same level of the company hierarchy. In the second step, the employer must comply with the Dismissal Protection Act further note. 

This specifies the circumstances that the employer must take into account when making a social selection. In some cases, the length of service, age, maintenance obligations and severe disability of the employee are of importance. A consideration and weighing of these points may not be waived in any case. However, the employer is free to add further points to these existing ones and to add his own further criteria for social selection. However, it must be ensured that criteria are not added which make social selection unnecessary from the outset and that the criteria treat other employees too disadvantageously. 

The end result is one that allows the employer to specifically filter out an employee who is least in need of protection. However, the employer must consider whether exemptions from the § 1 III 2 KSchG exist that allow the employee to be excluded from the social selection. This is conceivable if the employee possesses knowledge and skills or provides services that are of high importance to the company or if continued employment is in the particular interest of the employer. This interest also exists if a certain personnel structure is to be maintained within the company. What is important in the case of operational Cancellation the consultation of the works council.

Even though there is no obligation to establish or exist a works council, employees are free to establish a works council. For this, only five employees must be employed in the company and three of them must be eligible for election. If a works council exists in the company, it must be consulted before an employee is dismissed for operational reasons. This is required in § 102 BetrVG recorded. When hearing the works council, the employer shall inform the works council of the reasons for termination. 

If this hearing has not taken place and the employee is nevertheless dismissed, a notice of termination for operational reasons issued in this manner shall be Cancellation ineffective. Even if consultation of the works council is mandatory, a possible decision of the works council against the Cancellation of the employee unfortunately did not notify the employer prior to pronouncement of the operational Cancellation. If the works council does not comment on the intention to terminate the employment contract within one week, this is automatically deemed to be consent. It should therefore be noted that it is not directly the "for" or "against" of the works council that is relevant, but the hearing of the termination itself.

At first glance, a works council hearing may seem pointless, but there are advantages. The primary purpose of the hearing is to give the works council a comprehensive picture of the employer's measures and to ensure that the employer does not act indiscriminately. This is also of importance if the works council is not in agreement with the employer. Cancellation in an orderly and timely manner and the employee additionally submits a Legal action against dismissal the employee has a right to continued employment. Thus, the employer must continue to employ the terminated employee under unchanged conditions until the legal dispute is resolved.

Burden of proof and presentation in labor law proceedings

Burden of proof and presentation

In the context of the litigation and the Termination process the employer has a graduated burden of presentation and proof. For the first time, it is sufficient if the employer conclusively demonstrates that it has made a business decision that makes it impossible to continue employing the employee. This argument can be substantiated, for example, by a statement or written decision by the management. Furthermore, the employer then has the obligation to prove that the necessary need for employees has actually decreased as a result of the operational implementation made. 

Subsequently, the employee must be able to explain conclusively why and to what extent he sees himself and a possibility in the company to be further employed. The explanation does not have to go into the smallest detail. It is therefore sufficient if he states the type of employment or indicates in which area or department he should and can be employed. Moreover, it is not necessary to name a direct vacant workplace. Should there thus be a conclusive subject matter of the dispute for the court, it follows from these first steps of presentation and evidence that the employer must provide a concrete presentation and evidence of the non-existence of the continued employment.

Determination of the workplace

Thereupon, the court concludes and finds that a previously existing job is not or just the same has been dissolved. What is problematic, on the other hand, is the fact that after a legal dispute and the intention to terminate the Employer the relationship between him and the employer may be very disrupted. The court then determines that the employee cannot reasonably be expected to continue the employment relationship. Finally, the court dissolves the existing employment relationship at the employee's request and obliges the employer to pay an appropriate severance payment. 

Likewise, upon the employer's request, the court shall terminate the employment relationship if there are reasons why the employer and the employee can no longer be expected to work together for the purposes of the business. An out-of-court agreement between employer and employee is also not inconceivable. For example, the employee could negotiate with the employer that, in the event of a compulsory Cancellation by the employer through a corresponding severance payment to the levying of a Legal action against dismissal waived. The least the employer can do for the employee Normally must offer is half a month's salary per year of the employee's employment. 

A period of more than six months shall be rounded up to a full year, cf. § 1 a KSchG. The right to severance pay in the event of termination for operational reasons may result from a customary right of the employees (if the employer always pays severance pay in the event of this type of termination), if the collective bargaining agreement so provides, the provision on severance pay has been regulated in the works agreement or the social plan provides for severance pay.

Example:
An employee has been employed by the employer for three years and eight months at the end of the notice period and has earned € 3,000.00 per month. The employer may also be entitled to a Christmas bonus of € 1,200.00 at the end of the year. This Christmas bonus can be calculated pro rata for the month, resulting in a monthly claim of € 3,100.00.
The remaining eight months are rounded up to one year, resulting in a claim for (4 * € 3,100.00) * 0.5 factor. The result is a severance payment of € 6,200.00. Of this severance pay, no contributions to pension, health or nursing care and unemployment insurance have to be paid, but the severance pay is classified as "extraordinary income according to § 34 EStG taxed.

The action for protection against dismissal

Procedure of a termination protection process

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Sf no severance payment has been made and a redundancy notice has been issued for operational reasons, the employee only has the option of defending himself against this. The employee must then, after three weeks at the latest, file a Legal action against dismissal filed with the labor court having subject-matter and local jurisdiction. This is recommended in any case if the employer has not offered a severance payment, because it is not the employee's fault that his or her job has been eliminated. 

The only thing to note is that the costs must be clarified beforehand. A settlement that is too low can often be offset by the costs of court and Lawyer be put in the shade. Because even if you win the instances before the labor court, you bear your costs for the Lawyer in a Labor dispute itself, cf. § 12 a ArbGG.

Bespecifics in relation to the Protection against dismissal also result for small businesses and Temporary employment agency. In the case of small companies, the Dismissal Protection Act only applies if the number of employees is at least ten. If the number of employees is less than this, the law does not apply and no social selection must have taken place before the termination for operational reasons is announced. Only in very few cases has the Federal Labor Court affirmed social selection in small companies. However, this is only the case if the social selection has not been carried out in a way that blatantly violates social concerns and the existing minimum level of social consideration. has

Ultimately, therefore, no general claim to the implementation of social selection in a small company can be asserted from this case law either. 

Not significantly less important is the consideration of employee leasing, because here the principles of social selection also apply to terminations of employees who are through a temporary employment agency in a others Company have been lent and are therefore on assignment with an external company or company are. This is due to the principle that social selection must be carried out on a company-specific basis. Thus, not only the employees who are not on duty but also the employees who are on duty belong to the company. 

Even in the case of a rental company, the employees to be included in the social selection are those who are objectively comparable with each other in view of the job. The only criterion for exclusion is if the employer has concluded a contractual agreement with the hirer that makes it impossible for the hirer to makes, to replace or exchange the employee from the employee leasing with an employee from the social selection who is more in need of protection.

EIn addition, higher requirements apply to employees on parental leave in the context of terminations for operational reasons. For example, an employee on parental leave can only be dismissed for operational reasons if there is no other possibility of reinstating the employee after the parental leave. In this context, it is not directly a matter of the point in time of the termination at which no job is available; rather, it is also a matter of the point in time of the return. Accordingly in the event of termination, the employer must ensure that there is no further employment opportunity until such time.

Formally, the termination for operational reasons has the requirement that the termination must be signed and the signatory was also authorized to do so. Employees who are listed in the commercial register as representatives of the company are entitled to give notice of termination. However, a personnel manager also counts. A deputy of the personnel manager can only sign the termination for operational reasons if he or she has been granted a specific power of attorney to do so. This power of attorney should be sent directly with the notice of termination in order to directly eliminate any possible formal misunderstandings regarding the termination. 

The termination for operational reasons itself may not be made verbally, but must be made in writing on paper. This is provided for in Section 623 of the German Civil Code (BGB). Termination by SMS, e-mail or fax is excluded. The period of notice for termination is based on the regulations for ordinary termination, should there be no regulation from the employment contract, collective bargaining agreement or the federal law yield. The statutory notice periods are the minimum requirements.

If an employee wishes to dismiss several employees in one fell swoop as part of a redundancy for operational reasons, he must submit a mass dismissal notification to the Employment Agency. If the employer forgets to do this, he risks that the dismissals issued may be invalid. The purpose of this notification to the Employment Agency is to be able to take measures in good time to place the affected employees in new jobs. The works council, if one exists, must also be involved in the procedure. included must be made. Employers are obliged to make this notification if there are more than 20 but fewer than 60 employees in the company and more than five of them are to be dismissed. 

Should there be more than 60 but less than 500 employees, at least 25 employees would have to be or else one tenth be laid off. If there are more than 500 employees, more than 30 employees would have to be laid off at the same time. At the same time, the meaning of: "Iwithin 30 calendar days". The obligation to give notice of mass redundancies is laid down in § 17 KSchG (Dismissal Protection Act).

As a result, therefore held become that the Result of a termination for operational reasons especially when considering the social selection will turn out to be very individual. In most cases, the employee will no longer have confidence in the employer and vice versa. A attorney Consultation is therefore indispensable and an important prerequisite for the assertion of personal interests, especially when filing an action for protection against dismissal.

Have you been terminated or received a severance agreement from your employer?

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