• Staff reductions - Termination due to operational reasons despite short-time work?

    Staff reductions - Termination due to operational reasons despite short-time work?

    For many companies, staff cuts are unavoidable during the Corona crisis, when short-time work and government protective shielding measures are no longer sufficient. Is it possible to make redundancies during the current short-time work period? Which employment law pitfalls should be avoided?

    The corona crisis is increasingly affecting the employment market: According to a survey conducted by the Ifo Institute in Munich, companies in numerous sectors are planning to lay off employees or not renew fixed-term contracts. More and more companies that were previously able to prevent staff cuts thanks to short-time work and government protective shield measures are now starting to think specifically about layoffs. Against this background, we answer the most important questions about staff cuts in the crisis.

    Are dismissals permitted despite short-time work?

    There are no special provisions for dismissals for conduct and personal reasons during the current short-time working period. Employees can therefore be dismissed under the previous conditions if they violate their contractual obligations or if there is a personal reason for dismissal. The situation is different for terminations for operational reasons necessitated by the effects of the Corona crisis.

    A dismissal for operational reasons during short-time work is socially unacceptable if it is justified on the same grounds on which short-time work was ordered in the first place. In this case there is generally not the "urgent" operational necessity for a dismissal for operational reasons as required by §1, Subsection 2, Sentence 1, of the Dismissal Protection Act. In addition, a dismissal for operational reasons presupposes a permanent loss of work. However, this will not be the case when short-time work is ordered, as short-time work always requires only the temporary loss of work.

    A dismissal for operational reasons during short-time work therefore requires additional - beyond the reasons for short-time working - or even changed circumstances. This is the case, for example, if the situation of the company has deteriorated further since the announcement of short-time work and the employer now assumes a permanent - instead of, as initially, merely temporary - discontinuation of the workload. In addition, collective law requirements must also be observed: Company agreements and collective bargaining agreements may contain provisions that generally exclude dismissals for operational reasons during short-time work.

    What are the requirements for a dismissal for operational reasons?

    If the Dismissal Protection Act applies, a dismissal for operational reasons presupposes that there are urgent operational requirements which make it permanently impossible to continue the employment of the employee in the affected company. There are no special or facilitated conditions due to the corona pandemic:

    1. A business decision leads to a probable permanent loss of the need for employment.
    2. There is no possibility of continued employment throughout the company (!) for the employee whose job is cancelled.
    3. If there are comparable employees, a company-related (!) social selection is carried out.

    What should be considered if a comparatively large number of employees are to be dismissed?

    If more than 20 employees are employed in a company and more than 5 employees are to be dismissed within 30 days, it must be checked whether there is a mass dismissal that must be notified to the Federal Employment Agency.

    Depending on the number of employees, § 17 KSchG provides for the following graduation regarding the obligation to notify mass dismissal:

    Company size

    Number of redundancies within 30 calendar days

    Usually more than 20 and less than 60 employees

    More than 5 redundancies

    Usually at least 60 and less than 500 employees

    10% of regularly employed workers or more than 25 redundancies

    At least 500 employees

    At least 30 redundancies

    Termination agreements and employees' own terminations must be taken into account when determining the above-mentioned thresholds if they were "initiated" by the employer. An inducement by the employer exists if the employer makes it sufficiently clear to the employee that he/she will terminate the employment relationship (at the same time as the employee's notice of termination or the termination agreement is requested).

    What kind of special conditions must be considered when a works council exists?

    If a works council exists, participation rights must be observed in any case. Which co-determination and participation rights the works council has in particular depends on the scope of the concrete personnel reduction measure:

    • The works council must be consulted before each termination of employment in accordance with § 102 of the Works Constitution Act (BetrVG).
    • In the case of mass dismissals within the meaning of Section 17 (1) KschG, the works council must be fully involved (obligation to provide information and advice).
    • Insofar as the personnel reduction measure meets the requirements of a change in operations within the meaning of § 111 BetrVG, a reconciliation of interests and social plan obligation exists in principle.

    The works council has numerous possibilities to delay the negotiations - and thus the implementation of the personnel adjustment measure. Not least against this background, a thorough preparation of the planned measure is absolutely essential. 

  • Home office – not only an option in times of COVID-19

    Home office - not only an option in times of COVID-19

    Home office was already in vogue prior to the Corona crisis. Due to the current situation, the German minister of employment, Mr. Hubertus Heil, wants to legally establish the right to work from home. This right is planned to be valid also once the crisis is over. But what needs to be considered from a employment law perspective in order to introduce home office legally?

    In times of COVID-19 it is recommended to anyone who can work from home to do so, regardless of whether someone shows any symptoms or features of groups at-risk. In order to prevent a collapse of the health care system, it is highly important to keep the infection curve as flat as possible from the very beginning.

    Due to modern technology, such as laptops, broadband internet, cloud-based systems and more, barely anyone is still bound to a fixed workplace anymore. Even prior to the crisis, more and more employers started to give their employees the choice of where to work. The possibility of working from home makes a job more attractive and might increase the employee’s satisfaction. Apart from pandemics, home office can be an interesting option as it enhances flexibility, greater self-determination and work-life balance.

    Approximately 20% of employees in Germany are used to work remotely from home several times a month – home office became already popular before COVID-19 caused to re-think. However, anyone who is considering home office as an option must keep the legal and organizational framework in mind.

    1. Who decides whether employees may work from home or not?

    Currently, employees are not entitled to a mobile or home-based workplace. Ultimately, it is the employers who decide about how their employees are organized – even in times of a crisis. However, if home office is – to a certain extent - already granted or tolerated without the legal basis, the demand for home office might grow due to the so-called operational practice (“betriebliche Übung”).

    2. What has to be legally considered if employees take their work home?

    Employees who take home sensitive information, such as printouts, files or forwarded e-mails, risk to face employment law related sanctions - depending on the scale of sensitivity even their termination of employment. Therefore, employees are well advised to consult their employer in advance in order to determine whether and which company documents they are permitted to take home. Employers, on the other hand, should bear in mind that even a tacit acceptance of home office can cause an increase of demands to work from home. In case there are no rules, home office should only be an exception.

    3. Which conditions must be met for home office?

    Principally, the employee's working field must be considered as suitable for home office. Company schedules, external customer appointments or meetings still should have priority. If home office can be integrated properly into the company processes without any disturbances, work efficiency will not be affected and the employee’s performance at home can absolutely be as successful as in office. However, an absolute must is the availability of adequate and properly functioning hardware, such as a pre-set mobile device and a sufficiently fast internet connection. Hardware and software conditions must guarantee a secure connection to the corporate database and the communication network as well as a safe way for data backups.

    4. How to record the employee’s working hours?

    According to the decision of the European Court of Justice of 14 May 2019, working hours from home must be recorded accurately as well.

    The usual requirements, such as maximum working hours per day (maximum 10 hours), sufficient rest periods (at least 11 hours) and the ban on working on Sundays or public holidays have to be carefully attended to. A small hint: Compared to employees who work in the office, those who are working from home or on the move do work about four hours more per week on average.

    In addition to the Working Hours Act, the employer is also responsible for occupational safety measures, including risk assessment, protective measures, instructions and regulations for computer workstations – especially with regards to home office workplaces. The employees themselves are obliged to ensure the requirements for a safe workplace.

    5. Which measurements have to be followed to ensure data protection in times of GDPA

    The employer is obliged to take the required preventive measures to ensure the corporate data protection. Safe approaches include for example VPN connections for secure data transfers and the only use of software or files that are approved by the employer himself. Further, the employee has to ensure that no unauthorized person, including family members, have access to any mobile device in use. In addition, passwords must not be passed on and must be kept inaccessible to third parties. It is recommended to not install unsafe (social media) applications or services, such as WhatsApp on the work mobile, as this way confidential (contact) data might be revealed.

    Apart from the obligation to protect corporate data the employees themselves have also the right to protection of their own data and privacy. This means, that the employer may only control equipment and work performance in compliance with applicable data protection regulations.

    6. Does the works council have a voice in the topic of home office?

    The works council has no say when it comes to the decision for or against mobile working as such. However, the works council does have an influence in some factors, such as working hours, the use of technical equipment (not yet subject to co-determination), the prevention of work-related accidents or transfers. Therefore, the works council has to be involved in the planning process. The employer on the other hand is obliged to provide respective information to the works council which then has to ensure proper conditions of the (mobile) workplace.

    7. Who has to bear the costs of mobile equipment?

    In case the employee is allowed to work from home, the employer has to bear the respective costs This includes the costs for office and technical equipment as well as telecommunication costs. No matter if the employer is providing all necessary equipment, the employees are using their own devices (“BYOD - Bring your own device”) or both parties agree on a mixture of own and corporate equipment, a contractual basis of the conditions is essential.

  • Short-time work in times of the coronavirus

    Short-time work in times of the coronavirus

    Overview of short-time work and short-time compensation for employers and employees.

    While readers outside of Germany may not have heard of “short-time work” (Kurzarbeit), within Germany the use of this tried-and-tested tool is on the rise again. With the rapid spread of coronavirus now virtually paralyzing Germany, tens of thousands of employers are currently announcing they would switch employees to shorter work hours due to coronavirus outbreak in order to manage HR-costs and preserve jobs during the crisis. A large part of the employees’ lost income will be replaced by short-time work compensation (Kurzarbeitergeld) granted by the Federal Employment Agency if the workload is temporarily reduced due to the COVID-19 pandemic. This month the Bundestag rushed through legislation to expand the scheme and ease access to short-time work compensation taking effect retroactively as of 1 March 2020.

    What is short-time work?

    Short-time work is a temporary reduction in the regular working hours due to a considerable but temporary shortage of work. The working hours can be reduced partially or completely (so-called “zero short-time work”). Thus, the employees are temporarily partially or completely released from their obligation to perform their duties under the employment agreement and their remuneration is reduced accordingly.

    What is short-time work compensation?

    Short-time work compensation is granted by the Federal Employment Agency and is intended to mitigate the disadvantages suffered by employees as a result of the reduction in remuneration. The short-time work compensation amounts to 60% of the net pay difference for employees without a child and for employees with at least one child to 67% of the net pay difference. As of 1 March 2020, the Federal Employment Agency will fully refund employers’ social security contributions.

    How to introduce short-time work?

    The employer cannot unilaterally order short-time work unless this has been agreed in advance. Short-time work may be introduced on the basis of a collective bargaining agreement, a works agreement or an agreement with the employee. If the employment contract does not provide for the employer’s right to unilaterally order short-time work, the employer must first agree the envisaged short-time work with the employees concerned individually.

    What are the prerequisites and the procedure for short-time work compensation?

    Taking into account the legislative measures of March 13, 2020, short-time work compensation in connection with a temporary reduction of workload due to the COVID-19 pandemic will be granted if the following prerequisites are met:

    • Notification of short-time work to the local employment agency (first step). Employers should ensure to submit complete documents to prove that the prerequisites for short-time work are met.
    • At least 10% (previously 30%, as of 1 March 2020 only 10%) of the employees of the company are affected by a loss of working hours of at least 10%.
    • Positive working time accounts – if any - must be reduced to zero. As of 1 March 2020, employees are no longer required to build-up a negative balance in their working accounts.
    • Eligible employees: Only employee whose employment relationship is not terminated and who are subject to payment of social security contributions. As of 1 March 2020, temporary agency workers are also entitled to short-time work compensation.

    If the employment agency confirms that these prerequisites are met, the employer must - in a second step - apply for short-time work compensation within three months.


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