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Short-time work may be introduced through dismissals for altered conditions

Submitted by Firm:

Judgment of the Labour Court of Stuttgart of 22 October 2020 in Case 11 Ca 2950/20

Where there is no other means of unilaterally introducing short-time work and employees have refused to reach a mutual agreement, the employer can, if necessary, introduce the short-term work by way of an (extra) ordinary termination of employment for altered conditions.

Facts of the case

The employee worked for a temporary agency and was responsible, among others, for the kindergartens and daycare centres. Because all childcare centres were closed, the employer wanted to introduce short-time work by the end of the year. The employee refused to agree to the introduction of short-time work. Accordingly, the employer issued a notice of extraordinary termination of employment for altered conditions, alternatively a notice for ordinary termination. The employee sought to prevent the change to their employment contract and brought an action before the Labour Court of Stuttgart.

The judgment

The Labour Court (Arbeitsgericht) held that the extraordinary termination for altered conditions for the introduction of short-time work was effective in law. According to the Court, the work stoppage, which is one of the requirements for a claim for short-time allowance (Kurzarbeitergeld, KUG), constituted material grounds for the termination. It would be particularly unreasonable for employers to respect notice periods when introducing short-term work in light of the short notice for restrictions due to the coronavirus

From a practical perspective, it is important to note that for the Court, the strict rules established by the Federal Labour Court (Bundesarbeitsgericht) concerning dismissals for a change of circumstances where there is a reduction in salary – i.e. the requirement of concrete imminent insolvency of the employer or an imminent plant closure – were not applicable in such cases. Until now, there was some division on the issue so that employers were often advised not to introduce short-term work by way of dismissals for altered conditions.

It is however necessary for the (extraordinary) dismissal for altered conditions to be proportionate. In this case, the Court found that the dismissals were proportionate, in particular because

  • An appropriate notice period (of more than three weeks) was met,
  • The short-time work was for a limited time and
  • All milder means had been exhausted (including the fact that the employer had previously tried to reach a mutual agreement on the introduction of short-time work).

Consequences for practice

This judgment of the Labour Court in Stuttgart is a great relief for all employers, in particular for those that cannot unilaterally order employees to go into short-time work without a collective bargaining agreement (works agreement, collective agreement) or a(n effective) provision in the employment contracts (so-called short-time work clause). Certainly, the decision may be strongly influenced by the corona crisis and may be reversed on appeal. However, this marks the first time that the courts have defined the conditions for extraordinary dismissal for altered conditions in order to introduce short-time work.

Our tips

If an employer wishes to introduce short-time work by way of the termination of employment for altered conditions (if necessary, without notice), the following issues, among others, must be observed:

  • First, the employer must try and amicably decide on a rule with employees;
  • The amendment offer must provide information on the time and scope of the reduction in work;
  • An appropriate period of notice must be observed (as a rule, three weeks);
  • The employer should introduce short-time work on the proviso that the specific employee fulfils the conditions for the short-time allowance;
  • If necessary, a social selection should be performed with the works council should be involved;
  • If necessary, a mass redundancy notification must be submitted.

Author: Dr Olga Morasch

Please note: Dr Olga Morasch wrote this article together with Ann-Kathrin Pongratz.