A mass layoff without notice can be costly for employers: the Federal Labor Court has ruled that terminations without the required notice to the employment agency are invalid.
For affected employees this means a strong position – and often the chance to continue employment or negotiate a higher severance. In this article you will learn what a mass layoff is, what obligations employers have and how you as an employee should best act.
What is a mass layoff and when does it occur?
A mass layoff refers to a situation where an employer dismisses a certain number of employees within a short period. The exact thresholds are set by law and depend on the size of the business. The larger the workforce, the lower the threshold at which a mass layoff is considered to exist. Thus, even a few dismissals in a large company can trigger the notification obligation.
The regulation aims to prevent employers from overburdening the labour market and the employment agency through massive dismissals. It also serves to protect the affected employees, who should be informed early and given the opportunity to look for new jobs. For employers this means: they must notify the employment agency before issuing the dismissals and observe certain deadlines.
Important to know: the notification obligation exists regardless of whether the dismissals are socially justified or not. Even if the employer cites operational reasons, the mass layoff must be reported correctly. Otherwise, all affected dismissals risk being invalid.
Notification obligation to the employment agency: What employers must observe
Before a mass layoff the employer must submit a written notification to the employment agency. This notification must contain certain information, for example the number of affected employees, the reasons for the dismissals and the period in which the dismissals are to take place. Moreover, the employer must consult the works council beforehand, if one exists.
The notification must be made prior to the dismissals. This means: the employer may not first dismiss and then submit the notification later. The order is decisive. Violating this obligation renders the dismissals invalid – irrespective of whether the grounds for dismissal would otherwise be justified. A mass layoff without notice is a clear breach of statutory duties, which the courts consistently sanction.
In practice it happens repeatedly that employers forget the notification or submit it too late. Often the number of dismissals is miscalculated, so the threshold for a mass layoff is exceeded without the employer noticing. For employees this is an important point of attack when challenging the dismissal.
Mass Layoff Without Notice: What the Federal Labor Court ruling means for you
The Federal Labor Court has clarified in a recent decision the risks for employers. It stated clearly that a mass layoff without notice leads to the invalidity of the dismissals. This means: the dismissal is null and void from the outset, the employment relationship continues to exist legally. The employee retains the right to receive wages and can offer to perform work.
For employees this is a strong position. You can insist on continued employment and need not fear losing your job. At the same time it opens the possibility to negotiate a severance – many employers prefer to avoid a protracted legal dispute and therefore offer a severance.
Important: the invalidity of the dismissal does not arise automatically. The employee must become active and, within three weeks of receiving the dismissal, file a dismissal‑protection claim at the labour court. Only then can the invalidity be asserted. If the deadline is missed, the dismissal stands as valid, even if the notification was omitted.
Your rights as employee: objection, dismissal‑protection claim and continued employment
If you have received a dismissal in the context of a mass layoff, you should act quickly. The first deadline is the three‑week period for filing a dismissal‑protection claim. Within this time you must lodge the claim at the labour court; otherwise the dismissal is effective despite any possible error. A claim can also be filed if you are unsure whether the prerequisites are met – the court will then examine them.
Besides the claim you have the right to demand continued employment if the dismissal is invalid. This means: you may keep working and demand your salary. In practice a request for continued employment is often made to secure the claim. Your lawyer can assist you with this.
If you are uncertain how to proceed, it is advisable to consult a lawyer specialised in employment law. He or she will assess whether the dismissal is invalid and advise you on your options. The costs of a dismissal‑protection claim can, under certain circumstances, be covered by a litigation funder such as RechtStark, which examines the financing of the proceedings. Thus you do not have to bear the financial risk alone.
What role does severance play in this context?
If the dismissal is invalid, you are in principle entitled to continued employment. Many employees, however, do not necessarily wish to remain at their former workplace but prefer to negotiate a severance. This is legitimate and common in practice. The employer is often willing to pay a severance to avoid a legal dispute and to settle the separation amicably.
The amount of severance is not fixed by law but is a matter of negotiation. As a rule of thumb the formula often cited is half a month’s gross salary per year of service. This is, however, not an entitlement but merely a starting point for negotiations. In cases where the dismissal is clearly invalid, the severance may be higher because the employer has a strong interest in a swift resolution.
If you aim for a severance, you should seek good advice. A lawyer can estimate the prospects of success of a claim and what severance is realistic. You should also consider the tax and social‑security consequences of a severance. Further information on severance can be found in our Guide to Severance Pay.
Typical employer mistakes in mass layoffs – and how to recognise them
Employers frequently make errors in mass layoffs that can lead to the invalidity of the dismissals. The most common mistake is omitting or delaying the notification to the employment agency. A typical example is a mass layoff without notice, because many employers misjudge the thresholds or simply forget to file the notification. Other errors occur as well, for instance the failure to consult the works council or an incorrect calculation of the number of dismissals.
Another typical error is disregarding the social selection. In operational dismissals the employer must take social criteria into account – age, length of service, maintenance obligations and severe disability. If this is not done, the dismissal may likewise be invalid. Likewise, the proper briefing of the works council is mandatory – without its consultation the dismissal is invalid.
As an employee you can often spot these mistakes by scrutinising the dismissal. Ask yourself: Was the dismissal issued in writing? Was the works council involved? Is there a notification on file with the employment agency? If you have doubts, you should engage a lawyer. Even a glance at the dismissal itself can give clues: missing reasons or an implausible social selection point to an error.
How to protect yourself: first steps after receiving a dismissal in the context of a mass layoff
If you have received a dismissal and suspect that it concerns a mass layoff that lacked the required notice, you should act immediately.
Next you should gather all documents: the employment contract, the dismissal letter, any further correspondence from the employer, pay slips and proof of your length of service. These documents are needed for the claim and for the consultation with a lawyer. The more complete your file, the better the lawyer can assess your chances.
Then you should promptly arrange an appointment with a lawyer specialised in employment law. The lawyer will check whether the dismissal is invalid and advise you on your options. If you cannot afford the lawyer’s fees, a litigation funder such as RechtStark can take over the financing. RechtStark evaluates your case and, if the prospects are sufficient, covers the costs of the proceedings – you therefore do not have to assume any financial risk.
Do not hesitate to assert your rights. This clear violation of statutory obligations is consistently sanctioned by the courts, protecting employees in such cases. With the right support you can overturn an invalid dismissal and either continue in your job or negotiate an appropriate severance.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.