Dismissal with the option of altered conditions of employment qualifies as notifiable “termination of employment” BAG, judgment dated 20.2.2014, 2 AZR 346/12

Dismissals with the option of altered conditions of employment must be taken into account when determining the number of “terminations” for the purpose of ascertaining the threshold levels as per Section 17 Protection Against Dismissal Act (KSchG). This applies irrespective of whether the employee dismissed rejects the offer or accepts it – even under reserve. 

An employee took legal action against the effectiveness of his final dismissal for operational reasons. The reason for the dismissal was restructuring of a company which did not regularly have more than 170 employees. Aside from the Claimant, a further 17 employees had simultaneously received notice of termination within the context of the personnel measures, two of which were “only” dismissals with the option of altered conditions of employment. The employer had not issued notification of a mass dismissal beforehand. In contrast to the LAG Munich in the preceding 2nd instance, the Federal Labour Court (BAG) allowed the legal action for unfair dismissal. The termination was ineffective, among other reasons due to the failure to issue notification of a mass dismissal, required as per Section 134 BGB (violation of a statutory prohibition).

Authoritative threshold levels for mass dismissals

Based on the authoritative company size (170 employees), the decisive aspect of the question of whether the authoritative threshold level as per Section 17 Subsection 1 KSchG (in this case: 10 percent of the persons employed) had been exceeded, was whether the dismissals with the option of altered conditions of employment were to be counted or not. During the proceedings, the Defendant employer had essentially explained the non-notification of the dismissals by claiming that the two employees, who had been dismissed with the option of altered conditions of employment, had accepted this – albeit under reserve of checking of the social justification as per Section 2 Subsection 1 KSchG. As these were therefore employed further and did not leave the company, there could be no talk of the “termination” of their employment.

Ending element of dismissal with the option of altered conditions of employment is decisive

The BAG did not accept this argumentation. Dismissal with the option of altered conditions of employment always comprises two declarations of intent, namely the notice of termination aimed at ending the employment relationship, and a parallel offer of continued employment. Given the obligatory ending element, any dismissal with the option of altered conditions of employment constitutes “genuine” termination. Whether or not this dismissal ultimately actually results in the employee’s departure from the company is not decisive – neither on the basis of the wording of Section 17 KSchG, nor under the provisions of the European Directive on Mass Dismissals. The regulation is linked solely to the intention of the employer to dismiss a specific number of employees. Dismissal with the option of altered conditions of employment includes this intention, because the employer must by all means reckon with the employee not accepting the offer of altered conditions (not even under reserve), with the result that final dismissal takes effect.

Consultation with the Works Council is also advisable concerning intended contract amendments

Additionally, the obligation to consult the Works Council prior to a mass dismissal, as provided for in Section 17 Subsection 2 Subsection 3 KSchG, is equally sensible in order to prevent possible departure of an employee as a result of dismissal with the option of altered conditions of employment. If the aim of the contract amendment is to reduce the weekly working hours, continuation of the contractual relationship could also even have negative consequences for the local labour market, as the employees would have to look for a secondary occupation.

Unanswered question remains

The BAG has not answered one question that was not relevant in the case decided, as the Claimant employee had received notice of “purely” final termination. The court left undecided the extent to which the employee affected by dismissal with the option of altered conditions of employment can invoke the failure to notify a mass dismissal, if he/she accepts the altered conditions of employment offered under reserve of confirmation of the social justification of the alterations. As general opinion is that the scope of the check within the context of the procedure under Section 2 KSchG is not limited, the conclusion of assuming the ineffectiveness of the dismissal with the option of altered conditions of employment then also appears natural.

Summary

As the absence of the necessary notification of mass dismissal can result in the ineffectiveness of all dismissals affected by this, utmost care is called for when calculating the threshold levels. In case of doubt, notification should be made as a precautionary measure. It should also be noted that, even if notification has been made, errors in the procedure as per Sections 17 et seq. KSchG usually result in the ineffectiveness of the dismissals in question. As a number of dismissals are always affected by this, caution is also called for in this respect.