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The clock is ticking

Submitted by Firm:

The two-week period of Section 626 (2) German Civil Code when giving extraordinary termination without notice and its challenges

When issuing an extraordinary termination - usually without a notice period - practice is again and again faced with the challenge of complying with the two-week period of § 626 (2) German Civil Code (Bürgerliches Gesetzbuch - BGB). In short, the basic rule is that a maximum of two weeks may elapse between the time that the person entitled to terminate the employment relationship becomes aware of the complete facts entitling that person to terminate the employment relationship and the time the notice of termination is received by the recipient - or, if the consent of a third party is required, the application is received by said third party instead. This creates some pressure in practice. However, this pressure can be reduced. The following article provides assistance.

Prompt investigation of the facts of the case

First of all, it is recommended that if there are initial indications of serious breaches of duty that could constitute good cause within the meaning of § 626 (1) German Civil Code, the preparation and investigation of the facts should take place below the level of those entitled to terminate the employment relationship.

This must not be done in such a way that the information reaches the level of those entitled to terminate the employment relationship only after a matter of weeks. Rather, the facts must be clarified with due urgency and then immediately communicated to the level of those entitled to terminate the employment contract. Otherwise, a fictitious acquisition of knowledge is assumed with the consequence that the two-week time limit will then begin. "Due urgency" means expeditiously, but without overexerting oneself.

Since the employer must fully investigate the facts with regard to both incriminating and exculpating circumstances, the two-week period does not begin with the first indications, but only after the facts have been fully clarified. In the case of a dismissal on suspicion, where the dismissal can be based on the existing urgent suspicion of a serious breach of duty, the employee must be confronted with the entire ascertained facts as the last measure of the investigation of the facts. The two-week period does not begin until the employee's statement has been received or a deadline for a statement has expired unsuccessfully. With this in mind, there is some leeway with regard to the individual investigative measures.

Involvement of the Works Council/ Representative Body for Severely Disabled Employees

During the two-week period, the works council must be involved in accordance with § 102 (1) or § 103 (1) of the German Works Constitution Act (Betriebsverfassungsgesetz - BetrVG). This is feasible since there is only a three-day period for the works council to comment on the extraordinary termination without notice.

In view of the fact that the works council hearing represents the anticipated defence to the action, since in principle only that which has been communicated to the works council is taken into account by the labour court in the legal dispute, the works council hearing must be prepared in detail and, for reasons of expediency, in parallel to the employee's ongoing hearing on suspicions, if any.

Until recently, there was almost unanimous agreement that the facts proving compliance with the two-week deadline must be communicated to the works council by the employer. In cases where compliance with this deadline had not been achieved or was at least in a critical range, the employer would have wished that the issue did not have to be "put on the table" so early and in such a documented manner. Here, the German Federal Labour Court (Bundesarbeitsgericht - BAG) unexpectedly turns out to be a help based on its judgment of 7 May 2020 (2 AZR 678/19), according to which no explanations regarding the compliance with the two-week period have to be made during the works council hearing. According to the BAG, the necessary content of the works council hearing is based on the meaning and purpose of the right to involvement, which is to enable the works council to influence the employer in a proper manner and, if necessary, in favour of the employee. The purpose was to enable the works council to assess the validity and weight of the grounds for dismissal, but not to anticipate a type of dismissal protection proceedings.

This completely new case law considerably facilitates the preparation of works council hearings and, in particular, improves the negotiating position, since the possible failure to comply with the two-week deadline does not have to be transparently disclosed before the notice of termination has been given and before a conciliation hearing has been held in the labour court. Disclosure must now only be made in the statement of defence or in the subsequent written pleading.

The above statements apply accordingly to the involvement of the representative body for severely disabled employees, which comes into consideration and is a prerequisite for the effectiveness of a dismissal pursuant to § 178 (2) No 3 of the German Social Security Code IX (Sozialgesetzbuch IX - SGB IX), where a severely disabled person or a person of equal status is affected and a representative body for severely disabled employees has been formed.

Situation in case of special protection against dismissal

If employees have special protection against dismissal, which means that either the works council must agree to the dismissal (in the case of works council members under § 103 (1) BetrVG or members of the representative body for severely disabled employees under § 179 (3) No 1 Social Security Code IX in conjunction with § 103 German Works Constitution Act) and/or a public body must declare the dismissal admissible/approve it (Integration Office in the case of severely disabled persons or persons with equal status to them (§ 168 Social Security Code IX)) or the respective competent body for expectant mothers in the protection period after birth (§ 17 German Maternity Protection Act (Mutterschutzgesetz - MuSchG)) or employees on parental leave (§ 18 German Parental Benefit and Parental Leave Act (Gesetz zum Elterngeld und zur Elternzeit - BEEG)), the respective application must be received by the competent body within the two-week period. In addition, if the works council refuses to give its consent or does not react, an application to the labour court for substitution of the consent pursuant to § 99 IV German Works Constitution Act must be submitted to the court within the two-week period.

“Disclosure must now only be made in the statement of defence or in the subsequent written pleading.”

Once all this has been achieved, there are still further potential pitfalls. In the event that the works council's consent is required, it is important to note that if the requirement for the works council's consent subsequently ceases to apply (e.g. because the works council member resigns from office), the extraordinary dismissal must then be declared immediately because otherwise non-compliance with the two-week period is assumed. In contrast, in the case of substitution of consent by the court, the notice of termination must be received within two weeks after the formal legal effect of the official decision.

Where an official declaration of admissibility/approval is required, on the other hand, if the period within which the authority has to make a decision has expired, the employer must immediately actively inquire whether the period has expired without a decision, or whether a positive decision has been made which is still in the post, with the consequence that the termination must be declared immediately. Here – and this is very important – it is not permissible to wait until a possible official decision reaches the employer by post at some point; according to the case law, this would not be an immediate reaction and despite a positive decision by the competent body, the two-week period would then be treated as having expired, with the effect that the extraordinary notice of termination would be invalid. In a situation where only an extraordinary termination without notice is possible, this would be extremely unpleasant.

Authors: Dr Thomas Barthel and Dr Roman Parafianowicz 

Please note, this article also appeared at the Labour Law Magazine, Issue 1/2021, page 10 (Part of Deutscher AnwaltSpiegel Publishing Group)