Consultation procedure


Consultation procedure ends in case the works council is unwilling to negotiate (Federal Labor Court, decision dated September 22, 2016 – 2 AZR 276/16)

If an employer intends to execute a mass layoff requiring notification, he must provide the works council with useful information and inform the works council in writing of the circumstances detailed in the statute. The employer and the works council are then to consider possibilities for avoiding or mitigating the collective dismissals. If such a consultation procedure is not carried out, any termination issued is invalid due to violation of a legal prohibition.

The Federal Labor Court has now decided that an employer is allowed to consider the consultation procedure as completed pursuant to sec. 17 para. 2 Protection Against Dismissal Act (KSchG), provided that the works council indicates no further willingness to negotiate.

After the only customer of the respondent cancelled all orders, the claimant initiated a consultation procedure after reconciliation of interests failed. Subsequently, operations were ceased, a notification for mass dismissal was issued, and all employees were dismissed. After several wrongful termination suits were successful in the first instance due to alleged violations in the consultation procedure, the respondent initiated a new consultation procedure. There were negotiations with the works council concerning a possible reopening of the company, which on the side of the respondent, however, could only be considered under the premise of a salary reduction. The works council showed no willingness to cooperate with corresponding measures. Subsequently, the respondent issued a renewed notification for mass dismissal and terminated the remaining employment relationships a second time out of precaution. The claimant took legal action against both terminations and demanded alternative compensation for detrimental effects. The Higher Labor Court (LAG) considered both dismissals invalid, the respondent’s appeal on points of law was partially successful. The Federal Labor Court decided that the first dismissal was invalid due to improper notification in the notification of mass layoffs concerning the status of negotiations with the works council. The second dismissal was considered valid by the Federal Labor Court, because the required consultation procedure was also properly carried out in observance of EU requirements. The works council was notified of all necessary information in order to be able to influence the respondent’s firm decision to close the company. In particular, the respondent was able to consider the consultation procedure as complete, as the works council failed to demonstrate any willingness to negotiate. The claimant also has no entitlement to compensation for detrimental effects. The claimant properly informed the works council of the intended company closure and invoked the conciliation committee when negotiations failed.

Practical recommendations:

Especially in connection with applicable European law, the law concerning collective dismissals is extremely difficult for employers. Worker representatives boast of their ability to successfully take action against any termination issued as part of a mass layoff due to incompliance with the provisions of the KSchG. The judgment of the Federal Labor Court is good news. The Federal Labor Court appropriately decided that the consultation procedure is ended if the works council does not demonstrate any further willingness to negotiate on measures for preventing or reducing collective dismissals. However, the employer should document this lack of willingness to negotiate as evidence.

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Tags: #Labour law, #Newsletter Employment Law 4/16

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