What our clients value about LUTZ | ABEL
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LUTZ | ABEL's consultancy services are based on clear principles: Professional excellence, reliability and a high degree of personal engagement that characterizes our work. We strive to find the best solutions together with our clients and to contribute to the greatest possible creation of value. We see ourselves as our clients' partners and provide responsible and discrete advice.
We are available to you for everything from individual questions to long-term project support. We will provide reliable contact persons and assemble a team of lawyers and external tax advisors, auditors and additional experts based on your individual consultation needs - without losing sight of an appropriate cost-benefit ratio.
Our lawyers are experts in their fields and familiar with the challenges of your industry. You can always expect realistic assessments of situations and sound recommendations for action from us.
Legal Advice is a Matter of Trust
Our clients trust us because they know that we will actively and successfully represent their interests. We serve our clients with competence and passion, and support them with achieving their financial and entrepreneurial aims. Due to our size and focus, we can always assure fast, flexible and need-based availability of contact persons or multidisciplinary teams.
Our clients include businesses and entrepreneurs, shareholders and managers, private clients and cities and municipalities.
- Belgian start-up Magnax secures EUR 16 million in a series A financing round.
LUTZ | ABEL - in cooperation with Loyens & Loeff - advised Hirschvogel Ventures on a series A investment in the Belgian start-up Magnax. The young company specialises in the development and production of electric motors. The advisory team of Hirschvogel Ventures consisted of Jan-Phillip Kunz, LL.M. (LUTZ | ABEL Rechtsanwalts PartG mbB, VC/M&A, Munich) and Loyens & Loeff N.V., Brussels.
- The corona crisis continues to keep us on edge. Short-time work and government protective measures are often no longer sufficient to offset the economic effects due to the prolonged duration of the corona crisis.
Therefore, many companies now have to deal with the issue of personnel reductions in a concrete way. Against this background and the fact that a decision is to be made in September on whether the short-time working facilities associated with the Corona crisis will be retained in Germany beyond 31 December 2020, many employers are confronted with the question of whether short-time working and restructuring are mutually exclusive and what conditions and liability traps need to be paid particular attention to.
Problem: Terminations for operational reasons despite short-time working
The requirements and objectives of short-time work and redundancies for operational reasons are divergent. While the granting of short-time work requires a merely temporary loss of working hours and serves to secure jobs, operations-related terminations require a permanent loss of employment opportunities, which makes the permanent termination of employment relationships unavoidable. At first glance, this is difficult to reconcile.
From a legal point of view, it must therefore be noted that dismissals of employees on short-time work for operational reasons are socially unacceptable if they are justified by the same reason for which short-time work was ordered. In this case, a dismissal for operational reasons does not usually have the "urgent" operational requirement required under § 1 (Subsection 2, Sentence 1) of the German Dismissal Protection Act. Operations-related terminations during short-time work therefore require additional - beyond the reasons for short-time work - or 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 - loss of orders.
Taking this particular feature into account, short-time work and personnel reductions can be used as complementary means of successfully restructuring companies, which became necessary due to the Corona crisis and its economically sustainable effects - e.g. long-term decline in orders and crisis-related changes in processes. However, such an approach requires a well-thought-out concept and detailed documentation on the part of the employer.
Practical advice: In this starting position, dismissals by the employer must be carefully prepared.
- From a liability point of view, care must first be taken to ensure that no restrictions on dismissal are expressly promised or provided for in the underlying agreement (individual agreement, works agreement or collective agreement) when short-time working is introduced.
- It is unproblematic if short-time working is introduced in one company or department of a company, while another company or department is being restructured on the basis of an independent business decision. In this case, short-time work is used - to ease the economic burden on the company - only for those employees whose jobs are not to be cut. In other areas, which are clearly demarcated from this, a reduction in personnel can be implemented.
- The situation is more demanding from the point of view of employment law if short-time work was initially ordered in the company or department affected by short-time work and a restructuring with a reduction in personnel turns out to be necessary afterwards.
- In this constellation, extraordinary care must be taken to justify a permanent loss of working hours as of now, because according to law the introduction of short-time work indicates only a temporary lack of work.
- The restructuring concept must not be based on reasons which have already been used to justify the introduction of short-time working. Either new reasons or a restructuring concept completely detached from the causes of short-time work are required.
- If the employer takes the operational decision
- to close down a business or a certain part of a business or
- to carry out an operational change in the form of a substantial reduction in personnel (§ 17 KSchG),
the basis for the granting of short-time compensation ceases as soon as concrete implementation steps are taken, e.g. notice of termination, conclusion of reconciliation of interest agreements with final lists of names, etc.
Employment law challenges are being exacerbated by the economic impact of the ongoing corona crisis. The interaction of short-time work and dismissals for operational reasons requires careful preparation and documentation in the form of a restructuring concept in order to avoid possible liability traps.
Furthermore, specific follow-up questions are to be expected, in particular in connection with wage claims after a dismissal for operational reasons - is there now again a claim to the contractually agreed wage or do dismissed employees continue to receive only short-time working compensation?
We will be happy to keep you up to date on the coming developments. However, legal advice for individual cases is still recommended. We would be pleased to offer you our assistance and to inform you about your possibilities. Please do not hesitate to contact me.
- 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:
- A business decision leads to a probable permanent loss of the need for employment.
- There is no possibility of continued employment throughout the company (!) for the employee whose job is cancelled.
- 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:
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.