News - Germany

Germany - March 2010

Germany: No entitlement to statutory severance payment where employee files a claim for unfair dismissal

Where an employer offers a severance payment that is to be paid in certain circumstances where an employee refrains from filing a claim for unfair dismissal, it is not then obliged to pay the severance payment if the employee fails to refrain from filing a claim

Under German law, an employee wishing to challenge any dismissal must file a court claim within three weeks of the dismissal. Where an employee does not file such a claim within this three week time period the court will automatically rule that the dismissal was legally valid (according to § 7 KSchG) even if the dismissal was, in fact, unfair.

Under the provisions of § 1a KSchG, an employer may offer an employee a severance payment in circumstances where the employee is being dismissed due to redundancy.

§ 1a KSchG provides that the employee is entitled to a severance payment if he must allow a period of three weeks to elapse after receipt of the relevant termination notice from his employer (§ 4, 1 KSchG) before filing any claim with the Labour Court (which would ordinarily claim that the employment contract is not terminated by the dismissal).

The entitlement to a severance payment in line with § 1a KSchG is intended to offer an employee who is given notice, for reasons of redundancy, a financial incentive to refrain from filing a claim against unfair dismissal.  This, in turn, benefits the employer and protects it from potentially time consuming and costly legal arguments about the particular reason(s) for dismissal.  Furthermore, it removes any risk of the employer losing the legal dispute and finding itself in the situation where the employment contract with the dismissed employee continues to be in effect. In such circumstances, the employer would then have to pay the dismissed employee all wages which would have accrued to him during the period of the hearing of the claim (without having had any corresponding performance of duties from the employee).

Background

In this case, an employee had received a notice of termination, under which the employer intended to pay a severance payment in line with § 1a KSchG.

Initially, the employee allowed the stipulated three week period to elapse without filing a claim.  However, he changed his mind and subsequently filed a claim against the dismissal, arguing that he had received the notice of termination later than he, in fact, had. On the basis of this argument, the employee’s claim for  protection against dismissal would still meet the three week period set out in § 4 (1) KSchG.  However, the employee later abandoned his claim and his dismissal was found to be valid.

In an additional claim, the employee subsequently demanded the termination payment, to which he considered he was entitled under § 1a KSchG, from his former employer.  He argued that he had let the three week period elapse, as required.

The Federal Labour Court rejected the employee’s claim.  The Court found that it is not the wording of § 1a KSchG which was decisive but its purpose, which was to protect the employer against a legal claim for dismissal. In filing his claim, the employee had demonstrated that he did not accept the dismissal and, as such, the employer had been subjected to a legal claim, defeating the purpose of § 1a KSchG. In such circumstances, the employee was therefore no longer entitled to a termination payment from the employer.

BAG 20th August, 2009, Az.: 2 AZR 267/08

For further information or to discuss any of the issues raised, please contact Stefanie Andrelang (stefanie.andrelang@keller-menz.de) on +49 89 24 22 30 0.

This article was produced by, and re-produced with kind permission of, our correspondent firm in Germany, Keller Menz Rechtsanwälte.  www.keller-menz.de

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