The Federal Labour Court has made an important decision on severance pay in mergers with its ruling of July 23, 2026 (6 AZR 34/26). It clarified whether employees can still assert claims from a collective bargaining agreement after their employer has merged – and how disputed business transfers affect the amount of severance pay. This ruling is of great practical importance for employees in the automotive supply industry and other sectors with plant closures.
The Ruling at a Glance: What Was at Stake in 6 AZR 34/26?
The plaintiff was employed by a company that produced car headlights. The employer – a GmbH that later went into liquidation – closed the site on March 31, 2024. As early as June 2023, the company and IG Metall had concluded a collective bargaining agreement that promised employees severance pay. The plaintiff claimed this, but failed before the Labour Court and the Higher Labour Court. The BAG rejected her appeal.
The case is complex because several logistics service providers were operating at the plant before the site closure. These worked under works contracts but also used agency workers. On January 1, 2022, the employer brought the logistics in-house (insourcing). The parties disputed whether business transfers had occurred from the service providers to the employer – except for one undisputed case. This question was crucial for calculating employment continuity and thus the amount of severance pay.
Collective Bargaining Agreement: What Severance Pay Claims Does It Create?
A collective bargaining agreement is a contractual agreement between an employer and a trade union that compensates employees for adverse employment changes. Unlike a social plan, which is drawn up by the works council and employer, a collective bargaining agreement is a union contract and applies directly to the union’s members – or to all employees if specified.
In this case, the collective bargaining agreement provided for severance pay consisting of a base amount of €10,000 gross plus a component based on employment continuity. The personal scope of application included all employees at the site as well as certain agency workers who were members of IG Metall. The plaintiff fell within this scope in principle – but the dispute was about how long her employment continuity should be considered.
The collective bargaining agreement explicitly tied the amount of severance pay to the length of employment continuity with the company. This is where the dispute arose: the plaintiff wanted to include periods during which she was not directly employed by the defendant but by one of the external logistics service providers. She argued that the outsourcing and subsequent insourcing constituted a business transfer, meaning her entire employment period with the service provider should be counted.
Severance Pay in Mergers: Business Transfers and Their Consequences
The central legal question was: Does a business transfer occur when a company takes over tasks previously performed by external service providers? Under § 613a BGB, a business or business unit is transferred to the new owner in the event of a change in ownership – along with all rights and obligations arising from employment relationships. For severance pay in mergers, this means that if a business transfer occurs, employment continuity with the predecessor is counted.
The BAG rejected the plaintiff’s appeal, upholding the decision of the lower courts. The judges found that simply taking over tasks – in this case, the plant logistics – does not automatically trigger a business transfer. What matters is whether the economic unit preserves its identity. This includes the new owner taking over the essential material and human means of production and actually continuing the activity. In the specific case, this was not true for most logistics service providers, as the employer carried out the tasks with its own staff and equipment without taking over the service providers’ workforce.
Thus, the plaintiff could not claim continuous employment continuity from the time she joined one of the service providers. Her severance pay was only calculated based on the time she was actually employed by the defendant. The ruling shows that severance pay in mergers depends heavily on whether a business transfer has occurred – and this is often difficult to determine. Those in a similar situation should seek information about their rights in a layoff situation early on.
The Role of Works Contracts and Agency Work in Determining Business Transfers
In practice, companies often use works contracts to outsource tasks such as logistics, cleaning, or production to external service providers. The client often provides premises, machinery, and other production equipment, while the service provider provides the staff. If the contract is later terminated and the task is brought in-house, the question arises whether the service providers’ employees automatically transfer.
The BAG has already clarified in earlier decisions that a business transfer only occurs if the new owner continues the economic unit essentially unchanged. This includes not only taking over the task but also the workforce and production equipment required for it. If the client carries out the activity with its own staff and equipment, this identity is lacking. In this case, the use of agency workers did not change the assessment.
This is disappointing for employees: Those who have worked for years at the same site through a service provider do not automatically gain a claim to having this time counted by the subsequent employer. Only if a genuine business transfer – such as the takeover of staff – occurs are the periods added together. The ruling 6 AZR 34/26 confirms this restrictive approach. The question of business transfers is also often crucial for the validity of a layoff in a plant closure situation.
What This Ruling Means for Your Own Termination Situation
If you are affected by a plant closure or layoff, you should carefully check what claims you have from a collective bargaining agreement or social plan. The ruling shows that the amount of severance pay often depends on detailed factors – such as whether a business transfer has occurred or how your employment continuity should be calculated. Do not be swayed by blanket offers; instead, check your individual claims.
This is particularly true in the automotive supply industry, where insourcing and outsourcing measures are common. If you were employed through a service provider and then taken over by the parent company, a business transfer may or may not have occurred. Courts decide this based on the specific circumstances. An experienced employment law attorney can assess whether your employment periods should be added together based on the facts.
The ruling also matters for determining whether you fall within the scope of a collective bargaining agreement at all. Often, only union members are covered – or all employees, depending on the wording. Therefore, carefully check whether the collective bargaining agreement applies to you and what conditions it sets for severance pay. Those unsure whether a claim is worth pursuing should familiarize themselves with the typical reasons why a termination protection claim may fail.
How to Properly Secure Your Severance Pay Claims from a Collective Bargaining Agreement
If you want to claim severance pay from a collective bargaining agreement, you should note a few points. First, it is crucial to know the collective bargaining agreement in its current version. Collective bargaining agreements are often only concluded for specific sites or periods – check if your employment relationship falls under it.
Document all relevant facts: your start date, possible business transfers, changes to your employment contract, and the exact name of your employer. If your company has gone into liquidation or merged, obtain the relevant trade register extracts. The BAG ruling shows that the formal identity of the employer plays a major role – the plaintiff failed, among other things, because she could not prove the business transfers. In the case of severance pay in mergers, this proof is often the key to success.
Also, note the deadlines: Claims from a collective bargaining agreement generally expire within three months of the due date if the collective bargaining agreement provides for a time limit. Therefore, seek advice early if you receive a termination notice or an offer of a termination agreement. An employment law attorney can check whether the collective bargaining agreement contains more favorable provisions than the legal requirements.
RechtStark, as a litigation funder, can cover the costs of a termination protection or severance pay claim if your chances of success are good. We finance the proceedings and assume the cost risk – you do not need to pay anything upfront. Contact us if you are unsure whether a claim is worth pursuing.
Conclusion: Your Next Steps After a Layoff in a Plant Closure
The BAG ruling 6 AZR 34/26 makes it clear that severance pay claims from collective bargaining agreements do not automatically result in high amounts but depend on many details. The question of business transfers is often the crux – and courts set strict requirements. If you are affected by a plant closure, do not give up your claims but also do not overestimate them.
First, check whether a collective bargaining agreement exists for your site and whether you fall within its scope. Have the agreement drawn up by your employer or the trade union. Then clarify whether possible business transfers have occurred – for example, if you were previously employed by a service provider. An attorney can provide a realistic assessment based on the specific circumstances. Severance pay in mergers is not a given, but with careful preparation, you can significantly improve your chances.
If you receive a termination notice, you only have three weeks to file a termination protection claim. Do not miss this deadline! Even if you already have an offer of severance pay, a claim can often result in a higher amount. The ruling shows that courts carefully examine claims – but it also shows that employees can achieve success with careful preparation. Seek professional advice and assess the chances. RechtStark helps you minimize the process risk by covering the financing.
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.