1. When can you dismiss employees as part of a reorganization?
If the German Unfair Dismissal Protection Act (KSchG) applies, the employer must clearly demonstrate that economic or organisational reasons make the dismissal absolutely necessary.
Examples of urgent operational requirements include a decline in orders, a slump in sales, outsourcing or plant closures.
In addition, there must be no possibility of continued employment for the employee and a social selection must be carried out in accordance with the statutory criteria. Furthermore, other statutory provisions regarding notice periods, consultation with the works council (if applicable) or special dismissal protection regulations must be observed. You can read about what you should pay particular attention to in our article on reorganization.
2. How do you start preparing for reorganization?
Preparing for reorganization should begin with a thorough examination of operational requirements. Termination is only justified if it is based on an urgent operational requirement. Detailed documentation, especially for evidentiary purposes, can be helpful here. You can read about what specifically needs to be examined and which points in particular should be documented in our article on the legally compliant implementation of termination for operational reasons.
3. What are the legal requirements for a reorganization?
Dismissal on operational grounds may only ever be the employer’s last resort (ultima ratio principle) and is therefore subject to strict conditions.
If the employment relationship has existed in the same business or company without interruption for more than six months and the business usually employs more than 10 employees (excluding trainees), the general protection against dismissal applies to the employee.
In the event of dismissal for operational reasons, the employer must then clearly demonstrate that economic or organisational reasons make the dismissal absolutely necessary.
In addition to the existence of urgent operational requirements, there must be no other possibility of continued employment for the employee. Finally, before giving notice of termination for operational reasons, the employer must carry out the legally prescribed social selection process. The idea behind this is that some employees are particularly vulnerable. If no social selection takes place or if it is flawed, the notices of termination may be invalid. In the event that all employees are affected by a termination for operational reasons, the social selection process does not apply. Similarly, no social selection process needs to be carried out if there are no comparable employees. You can find out which legal criteria must be taken into account in the context of a social selection process and which other legal regulations must be observed in our article on the legally compliant implementation of redundancies for operational reasons. In addition, the article outlines alternative termination options in the form of a termination agreement or a termination with a severance payment offer.
4. How long does a reorganization take on average?
The duration of reorganization depends primarily on the individual case. The more extensive and complex the reorganization, the longer the reorganization process can take. In particular, it must be taken into account whether co-determination bodies such as works councils or other employee representatives are to be involved in the implementation. If a works council is involved, the employer may even have to initiate a reconciliation of interests and social plan procedure. Depending on the size of the company and the number of planned redundancies, the employer is also obliged to send a mass redundancy notification to the employment agency before giving notice of termination.
From the start of planning and decision-making to negotiations with employee representatives or employees themselves and the termination of employment relationships, it can take an average of a few months to half a year. We are happy to assist you in drawing up a timetable for your individual restructuring process.
5. How do you involve employee participation in a reorganization?
If there is a works council in the employer’s company, it has various options for acting and exercising its co-determination rights, depending on the type of reorganization and the underlying legal aspects. The employer must respect these information and participation rights of the works council during the reorganization process. The same applies to other employee representatives, such as staff councils.
We are happy to help you answer questions about when and how these co-determination bodies should be involved in the reorganization process.
6. How do you determine which functions are interchangeable?
A dismissal for operational reasons may be invalid if, among other things, there is another vacant, comparable position available for the employee concerned.
You should therefore definitely check whether it is possible to transfer the employee to another vacant position. A position is considered vacant if
• it is unoccupied at the time the notice of termination is received,
• it will become vacant with sufficient certainty by the end of the notice period,
• it is available immediately after the end of the notice period, or
• is already known at the time of termination that it will become vacant in the foreseeable future after the expiry of the notice period, provided that it is reasonable for the employer to bridge this period.
In addition, the question arises as to what requirements must be met by another employment opportunity. In this context, the employer must also examine whether reasonable retraining or further training measures would make it possible to continue employing the employee in another position. The employee is not entitled to higher-level employment, but the employer can and must, as a last resort, offer the employee continued employment under worse working conditions (known as the priority of change dismissal).
We would be happy to assist you in examining possible alternative employment opportunities in your company.
7. How do you let your employees know that you are going to reorganize?
Communication with employees about the planned reorganization should be as transparent as possible. For example, a staff meeting can be convened to explain the individual steps of the reorganization to employees in a way that is as plausible and comprehensible as possible. With regard to planned redundancies and transfers, it may also be useful to hold individual meetings with employees to discuss their personal situations and skills.
8. What costs do you need to take into account?
You may incur various costs as part of a reorganization process. These can include legal fees, ranging from professional legal advice to representation in possible unfair dismissal proceedings. The costs for legal advice can range from €500.00 to €1,000.00 (excluding VAT). In particular, it should be noted that in Germany, employers must always pay their own legal fees in unfair dismissal proceedings in the first instance, regardless of whether they win or lose (see Section 12a ArbGG).
To reduce this litigation cost risk, you have the option of concluding termination agreements with your employees. To motivate employees to conclude such an agreement, you can offer them, for example, leave of absence with continued payment of their salary, severance payments or professional help with career reorientation (so-called outplacement). Finally, after termination of the employment relationship, you may be confronted with further claims from employees, such as holiday compensation claims, bonus payments and severance payments after the conclusion of any unfair dismissal proceedings.
We would be happy to advise you on the question of what cost risk you may face in the context of your individual restructuring plans.
9. How do you deal with groups of employees with special protection against dismissal in the event of reorganization?
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In addition to general protection against dismissal, some groups of employees also enjoy special protection against dismissal. These include pregnant women, mothers, parents on parental leave, works council members and employees with severe disabilities.
There is often a misconception in the world of work that these groups of people cannot be dismissed per se. In fact, however, special protection against dismissal does not mean that dismissal is completely impossible. In exceptional cases, dismissal may be permissible. However, employers must comply with strict requirements for a dismissal to be effective.
Our legal advice will show you the best way to enforce dismissal for operational reasons against employees with special protection against dismissal and what you need to bear in mind when dealing with the relevant authorities.
Strategic support for your restructuring
Our specialised team of lawyers supports you in every phase of your reorganization process and helps you to achieve your business goals in a legally compliant, fast and cost-effective manner. If you would like to learn more about our services, simply arrange a non-binding consultation so that we can develop a strategy for successful reorganization tailored specifically to your business.
