Employment Law

Dismissals in Germany

Compared to New Zealand, dismissing employees for redundancy in Germany is a complicated process. That is not to say that re-structuring a business is easy and straightforward in New Zealand. The Employment Relations Act also requires prior consultation with the affected employees and a sound and commercially plausible business case (note that recent case law indicates that the Courts are prepared to question the employer in detail on that). But whereas in New Zealand the process is more or less flexible and subject only to good faith and fairness, the various German statutes require strict compliance with form and deadlines.

For instance, if the employer fails to discuss the details of the proposed restructuring with the affected employees, all subsequent dismissals are void and the employees have to be reinstated as a matter of law. In New Zealand, challenges to dismissal are a two step process. Firstly, the Authority/ Court has to determine whether the decision to dismiss was what a reasonable employer could have done in the circumstances. If the Court finds that a reasonable employer could not have dismissed the employee, only then will the Court consider whether re-instatement is an appropirate remedy and only if that remedy is sought by the employee.

So not only is re-instatement a discretionary remedy, the Court is also required to establish whether it would be reasonable to do so. That is a completely different approach to a fault-based re-instatement at law. But then, of course, we are talking a completely different ballgame here. We are talking about an industrial nation with +83
million people and a focus on heavy industries with huge workforces. Such an environment requires a different policy approach and different legislative instruments than a country where the majority of employees are employed by small to medium sized business and in service related industries. Its not that the law in Germany does not consider good-faith arguments. Its just that those arguments come into play at a much later stage in the process, i.e. when all formal requirements have been complied with.

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