Personnel reductions despite short-time working – a follow-up

Personnel reductions despite short-time working – a follow-up

Personnel reductions despite short-time working – a follow-up

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.
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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.

Conclusion

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.

 

Read more about concrete practical tips on dismissal for operational reasons despite short-time work.