Termination for operational reasons
Termination for operational reasons / Betriebsbedingte Kündigung
September 23, 2020
Within the scope of application of section 1 of the Dismissal Protection Act (KschG), a dismissal may be justified as a dismissal for operational reasons. This is the case if the dismissal is based on urgent operational requirements, i.e. if it is "operational", if these operational requirements prevent the continued employment of the employee and if the social criteria were complied. Dismissal for operational reasons is understood to mean the classic "loss" of the job.
The conditions for dismissal for urgent operational reasons
Dismissal for operational reasons is subject to extensive requirements. The employer must prepare his/her decision very thoroughly and keep the legal requirements in mind at all times in order to prevent a legal vulnerability. For the employee this means that it is always advisable to have a dismissal for operational reasons legally reviewed. If the dismissal for operational reasons is ineffective, the employee can take legal action against the dismissal.
The business decision
A key element of operational redundancies is a business decision that leads to the loss of an employment opportunity. This business decision can be based on or respond to both internal reasons, such as restructuring measures, as also external reasons, such as the loss of orders. The entrepreneurial decision brings the concept for the operational organisation in the future.
In the event of a dispute the labour court does not review the meaningfulness of the business decision, though the business decision cannot be obviously unobjective, unreasonable or arbitrary. However, there are narrow limits to the court's review in this case, as the organisation of the business is basically a matter of the employer.
"Urgent" operational requirements
According to the wording, the business decision must also be based on "urgent" operational requirements. Operational requirements which are suitable to justify a dismissal are actual developments which lead to a real surplus of employees. The meaning of urgency is, however, very limited in practice because, in the opinion of the Federal Labour Court, urgency can only be understood to mean that the dismissal or job reduction must be "ultima-ratio". Therefore, the characteristic of urgency represents a manifestation of the principle of proportionality. In this respect, the operational requirements are already urgent if it’s not possible for the employer to meet the operational situation existing at the time by other measures of a technical, organizational or economic nature other than by termination. The condition of urgency is thus fulfilled if the termination is the necessary consequence of the operational requirements.
Permanent loss of employment
It is also necessary that the job is permanently ceased. The entrepreneurial decision is causal for the loss of the job/jobs. It is not necessary that the ceased job is identical to the actual job of the person who has been dismissed. Which employee is affected by the loss of the employment requirement is a question of the social selection which the employer must conduct. As the operational requirements which prevent the continued employment of the dismissed employee must be urgent, i.e. the dismissal must be unavoidable in the interest of the company, the employer must first exhaust all possibilities which have been and exist with the aim of avoiding dismissals , e.g. making working hours more flexible to avoid dismissals in times of lower workloads.
Negative forecast
In addition, a negative forecast must be made regarding the employment needs of the dismissed employee: The employment requirement for the employee must cease at the end of the period of notice at the latest. The employment requirement must therefore not, as is often assumed, have already ceased to exist when the notice of termination is given.
Proportionality/possibility of continued employment
The principle of proportionality is particularly important when examining the justification for dismissal for operational reasons. In particular, a dismissal is disproportionate and thus socially unjustified if the employer could continue to employ the employee in another position. Dismissal is only proportionate if it is a suitable way of responding to operational events.
Free workplace
This requires that there must be a vacant job in the same establishment or company which the employee can fulfill. It is also important to ask whether the employee could comply with the free position after retraining or further training. However, there is no entitlement to a "free" position being created either by dismissing another employee or by creating new workplaces.
Comparability of workplaces
When the employer is looking for "vacant workplaces", a comparison of workplaces must be made. A workplace is comparable if the employer can continue to employ the employee on the basis of his/her right of direction without changing the employment contract - for this purpose, the job description of the employee in the employment contract is particularly important. However, a dismissal with notice of change, i.e. a change in the working conditions, is usually a milder means than a dismissal, so that a comparability of the workplaces can be guaranteed via this “detour”- this is expressly clarified in section 1, (2), Sentence 3, KSchG.
When offering vacancies, the employer must already consider the selection according to social criteria, but more about this in the next paragraph.
Social selection
In the case of dismissals for operational reasons, the employer must carry out a social selection process in accordance with section 1 (3) of the KschG. The employer must therefore take certain circumstances into account when selecting the employee to be dismissed for urgent operational reasons. The law specifies the duration of service, age, possible maintenance obligations and possible severe disabilities. However, the social selection does not require any specific action on the part of the employer, but only a selection which is "right" in the end. The employer can also dismiss the "right" employee "at random", i.e. without taking the social selection into account, without this leading to the dismissal being socially unacceptable.
- Comparison group
First of all, the employer has to determine the group of persons relevant to the selection. To do this, the employer must bundle employees who are comparable within the company. Comparable employees are those who are interchangeable.
- Determination and weighing of the relevant social data
In the second step, the four social data already mentioned (duration of service, age, possible maintenance obligations and possible severe disability) of the comparable employees must be determined and weighed against each other. The social data must be taken into account by the employer "sufficiently”. However, the employer is not bound to a specific assessment of the social data. In weighting the social data, he/she therefore has a margin of discretion.
- Possibility of removing employees from the social selection
In a third step, certain employees can then be removed from the social selection process in accordance with section 1 (3) Sentence 2, KSchG. According to the wording of the law, these are employees whose continued employment is in the legitimate interest of the company, in particular because their knowledge, skills and performance ensure a balanced personnel structure in the company,.
Right of re-employment in the event of dismissal for operational reasons
For the question of whether urgent operational requirements make a workplace redundant the objective circumstances at the time of receipt of the notice of termination are relevant. But what happens if new facts arise between the date of receipt of the notice of termination and the date of termination which make continued employment possible? This is not relevant to the question of the validity of the termination. However, it can lead to a claim for reinstatement. The possibility of continued employment must arise before the end of the notice period. If the possibility of continued employment only arises after the expiry of the period of notice, the Federal Labour Court has denied a claim to reinstatement.
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