Dismissal for operational reasons

Obligation to offer continued employment to part-time staff on fixed-term full-time jobs

(Federal Labor Court, decision dated March 26, 2015 – 2 AZR 417/14)

The plaintiff had been in the employment of the defendant since 2008, most recently as Head of “Public and Media Relations”, on a 75 % working time basis. The defendant took the decision to outsource this department and dismissed the plaintiff for operational reasons on December 18, 2012, with effect from January 31, 2013. At the same time the defendant filled a position in the “Social Media” division with another employee on a one-year fixed-term contract. At this point in time it was not clear whether this would be a permanent requirement.

The claim against the dismissal brought success at first. The Regional Labor Court admitted a period to respond to a pleading at the end of the court session. One day after the expiry of this period, the board ruled in a teleconference to reject the appeal.

The revision against the decision of the Higher Labor Court of Baden-Württemberg (decision dated May 07, 2014 – 21 Sa 67/13) was successful. The judgment was based a procedural error as, contrary to Sections 193 (1) and 194 of the German Code on Court Constitution (GVG), this decision was not delivered on the basis of private discussion and consultation of the judges. A teleconference cannot replace this consultation, it may only supplement it. But in individual cases a so called follow-up consultation in a teleconference could be permissible, but not in this case.

The Federal Labor Court does not dispute the decision in any material sense. The dismissal was contrary to the principle of proportionality because the defendant should have offered the plaintiff continued employment in the “Social Media” division position as a milder measure than a termination of her employment contract. An offer must be made even if the employer only intends to create a job on a temporary basis and to cover the temporary staffing need with an employee who can (continue to) be employed effectively on a fixed-term basis. The possibility to agree to a fixed term with the applicant does not represent a work-related profile of requirements that must be taken into consideration under the law against unfair termination.

If, at the time of dismissal, an objective reason exists in the sense of Section 14 (1) of the Act on Part-Time Work and Fixed-Term Employment Contracts (TzBfG), a permanent employment contract may be given a fixed term by means of a dismissal with the option of altered conditions of employment. If no objective reason exists, the pre-employment ban under Section 14 (2), Clause 2 of the TzBfG regularly prevents a fixed-term. This business concept whereby a non-fixed staffing need is covered by an employee who can (continue to) be employed effectively on a fixed-term basis is insignificant with regard to employees protected under Section 1 of the German Protection Against Dismissal Act (KSchG). If the fixed-term vacancy is later discarded, the employer may then terminate the employee who was initially further employed for operational reasons. The fact that the plaintiff was employed on a part-time basis, while the fixed term position was filled in full-time, does not refute the need for a dismissal with the option of altered conditions of employment.

Practical Recommendations:

Regardless of the procedural part, in which the Federal Labor Court concurred with the judgment of the Federal Court of Justice (decision dated April 21, 2015 – II ZR 255/13; dated November 29, 2013 – BLw 4/12), the Federal Labor Court, for the first time, adopted a position as to the as yet unanswered question of to what extent employees must be offered, if necessary by dismissal with the option of altered conditions of employment, employment opportunities only available for a fixed term in order to avoid a dismissal for operational reasons. This mean will mean a significant extension, namely to include fixed-term positions and positions with increased volume of work. Well-advised employers avoid errors in this respect.