Transfer of part of an undertaking to an affiliated company abroad prevented fair redundancy dismissal

January 10, 2011

Reliance cannot be placed on a redundancy dismissal by reason of closure of workplace where the part of the undertaking in which the employee works is transferred.

If an employment contract rules that German law is applicable, the question whether a transfer of undertakings has taken place has to be assessed pursuant to sec. 613a BGB.

This also applies, as in this case (See Resources), where a part of an undertaking is transferred to Switzerland.

The employer is an affiliated company of a Group seated in southern Baden.  The parent company also has a company in Switzerland.  On 1st January, 2009 a part of the company was transferred to Switzerland.  The substantial material and immaterial means of production were transferred to the new site situated only 60 Kilometres away from the existing location.  The claimant was given notice in two letters because of the closure of the company.  He refused to accept a new employment contract with the Swiss company.

The claim of the employee against unfair dismissal was successful.  The Federal Employment Court ruled that the employer may not justify the dismissal by referring to a closure of the company, since the part of the company the employee worked for was transferred to a Swiss company and not closed.  This is a transfer of undertaking that has to be assessed in accordance with German law which excludes a justification of the dismissal by reason of redundancy.  It was not decided by the Court what kind of claims the employee may have against the Swiss company.


Bundesarbeitsgericht, Urteil vom 26. Mai 2011 – 8 AZR 37/10

For further information or to discuss any of the issues raised, please contact Stefanie Andrelang on +49 89 242230-0.


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