Mass dismissal notification procedure - sanction system under review

However, this serious legal consequence as part of the sanctions system developed by the BAG for violations in the notification procedure may not be in line with the system of mass dismissal protection as conveyed by the Mass Dismissal Directive (MERL). The BAG has therefore suspended a legal dispute until the ECJ has clarified the matter.

No mass dismissal notification as there are "normally" less than 21 employees

In the lawsuit suspended by the BAG (ruling of 11 May 2023 docket no. 6 AZR 157/22 (A)), the insolvency administrator had not issued a mass dismissal notice. They did not consider this to be necessary as there were no more than 20 employees at the time of the dismissals. However, in order to determine the number of employees required under Sec. 17 para. 1 of the German Unfair Dismissals Act (KSchG), neither the number of employees at a certain dare nor an average is relevant. Rather, is the decisive factor the number of employees that is characteristic of the ordinaryoperations of the plant in question. This was more than 20 employees. Thus, the insolvency administrator simply assessed the size of the plant incorrectly.

Violation of Sec. 17 para. 1 KSchG = invalidity of termination?

According to previous case law, a breach of the obligation to submit a mass dismissal notice automatically resulted in all reported dismissals being invalid. Now the BAG is questioning this system of sanctions it developed in light of the Advocate General's Opinion in another pending request for a preliminary ruling by the BAG (closing statement of the Advocate General of 30 March 2023, docket no. C-134/22). The issue there was the legal consequence of the invalidity of the affected terminations if the works council consultation was not forwarded by the employer to the employment agency.

Advocate General's findings: Directive does not provide individual protection

The Advocate General states that if one of the obligations provided for in the MERL is breached, the Member States are not obligated to link the invalidity of the termination to this. In addition, the directive provides collective and not individual protection.

Suspension of the proceedings

Against this background, the BAG is critical of the system of sanctions it has developed for violations of the regulations on mass dismissal notices. It is possibly not in line with the system of mass dismissal protection as conveyed by the MERL. The proceedings are to be suspended to determine, on the legal basis of the expected decision, the sanctions in the event of violations by the employer of its obligations under Sec. 17 paras. 1, 3 KSchG.

Caution when filing the mass dismissal notice

Whether there will actually be a turnaround in case law regarding the consequences as violations in the context of filing mass layoff notices is questionable. So far, the BAG has tended to increase the requirements for a correct an complete filing. In this respect, employers should continue to carefully plan and implement extensive staff reduction measures until the very end. This also includes paying particular attention to the preparation filing of the mass layoff notice.