Notice of dismissal – take care (managing directors count as employees)!
> August 2015
The European Court of Justice (ECJ) is always good for a surprise. Now in its decision of 9 July 2015 (ref. C-229/14-“Balkaya”) it has redefined the method of counting the affected employees in relation the obligation of notification for so-called mass dismissals.
Background:According to § 17 Employment Protection Act (KSchG), employers who run small businesses (20 - 60 employees) may only dismiss more than 5 employees at once if the State Employment Agency (Agentur für Arbeit / AfA) has been previously notified. Previously, notification before the date of dismissal was sufficient. Since 2005 the ECJ has required that the notification of dismissal (to the AfA) must be issued before the declaration of dismissal is made. Whether this ruling actually improved the protection against mass dismissals is questionable.
Now the ECJ has ruled that the managing directors and even interns are to be included in the number of employees to be dismissed. This although § 17 para. 5 KSchG specifically stipulates that the managing directors of GmbH (limited companies) are not to be taken into account.
The explanation of the ECJ is that this is designed to ensure a comparable protection of employee rights in the various member states of the EU. This argument is not particularly convincing as under § 14 KSchG, as previously, managing directors do not enjoy any protection against dismissal. Possibly, we should be prepared for this regulation to become obsolete at some stage in the future.
Conclusion:
If more than 5 employees are dismissed – in larger companies (60 – 500 employees) more than 10% or more than 25 employees, the AfA must be previously notified of the dismissals. In determining the number of persons to be dismissed, managing directors who are not co-proprietors of the company are also to be included, as are interns.
