Dismissal due to business reasons in Germany

AutorAlenxander Stöhr
CargoAssistant Professor for Labor and Business Law at the European Academy of Labor, Goethe-Universiy Frankfurt am Main, Germany
IUSLabor 1/2018
Alexander Stöhr
Assistant Professor for Labor and Business Law at the European Academy of Labor,
Goethe-Universiy Frankfurt am Main, Germany
In Germany, dismissals due to business reasons (betriebsbedingte Kündigungen) are a
dominant issue in the labor courts. In 2016 there were 11.688 cases, representing 24,7
percent of all trials.
65 In view of the good economic situation, the number of dismissals
due to business reasons has been constant in the last years. Business reasons may be
regarded as the most honorable ground of dismissal for the affected employees since
they do not stem from their sphere. Dismissals due to business reasons contravene the
principle that emplyees do not bear the entrepreneurial risk, because they lose their job
if the conditions are satisfied under which the dismissal is valid.
1. How are the causes that justify a redundancy or a dismissal due to business
reasons defined?
In Germany, general protection against dismissal is only applicable if the employment
relationship lasted longer than six months (personal scope, § 1 Employment Protection
Legislation) and if more than ten employees are employed in the undertaking in
question (establishment -related scope). If the general protection against dismissal is
applicable, the dismissal has to be socially justified in order to be valid. The
employment protection legislation recognizes three grounds for dismissal: personal
capability, conduct and business reasons. According to § 1 (1) Employment Protection
Legislation, the dismissal is socially unjustified if it does not depend on urgent
requirements of the establishment which stand in the way of further employment. The
German Federal Court of Labor thus derived two requirements for the effectiveness of
the dismissal.
The first requirement is a measure whose transposition eliminates the employment
opportunity at the latest on expiry of the period of notice. The elimination of the
employment opportunity has to be assessed on the basis of a prognosis. The relevant
time for the prognosis is the receipt of the dismissal. The courts are not entitled to
examine the the business decision with regard to its necessity or its usefulness. This
65 Statistics provided by the DGB Rechtsschutz, which can be downloaded at
Statistiken/Statistiken_2016/DGBR-Arbeitsrecht-2016.pdf, accessed on 13 Marsh 201 8.

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