Dismissal for operational reasons - prerequisites, case law and options for action

One dismissal for operational reasons is often a shock for employees. However, it is only effective if the employer fulfils certain legal requirements. Mistakes are common here - and they can lead to a dismissal being invalid. This article shows when a dismissal for operational reasons is permissible, what case law exists in this regard and how those affected should react correctly.

1 When is a dismissal for operational reasons permissible?

The prerequisites for dismissal for operational reasons in accordance with Section 1 (2) of the Dismissal Protection Act (KSchG) are urgent operational requirements, that stand in the way of continued employment. Typical cases include

• Decline in orders or loss of sales,

• Closure of departments or operating sites,

• Rationalisations, Restructuring or Outsourcing,

• or a Company closure.

The workplace of the employee concerned must permanently cancelled - simply reallocating tasks to other employees is not enough. The Federal Labour Court (BAG, judgement of 17 June 1999 - 2 AZR 141/99) has clarified that a dismissal is not socially justified simply because the employer makes a business decision. Rather, this decision must actually lead to a discontinuation of the employment requirement.

👉 In-depth article on this: Dismissal for operational reasons - what Continental employees need to know now

2. entrepreneurial decision and judicial review

In principle, the following applies entrepreneurial decision is respected by the courts. It is not assessed on expediency, but only on Arbitrary freedom checked. Nevertheless, the employer must be able to prove that this decision will actually be implemented. The BAG (judgement of 27 September 2012 - 2 AZR 516/11) ruled that a merely „pretended“ restructuring does not justify dismissal.

Practical example: If a company terminates the employment of an employee due to the alleged loss of tasks, but then assigns these tasks to freelancers, the termination is invalid.

Even in times of Short-time work caution is advised: Short-time working and redundancies for operational reasons are not automatically mutually exclusive - but they often contradict each other in terms of content. A precise examination is crucial here.

👉 See our article on this: Does short-time working rule out the possibility of dismissals for operational reasons?

3. priority of continued employment - the obligation to examine alternative jobs

Even if there are operational reasons, a termination of employment is only the last resort. The employer must check whether the employee is on a free workplace can continue to be employed - even in a different department or at a different location. Under certain circumstances Change notice reasonable.

The BAG (judgement of 29 March 2007 - 2 AZR 31/06) clarified that the dismissal is socially unjustified if the employer has not examined a reasonable option for continued employment.

👉 More on this in the article: Termination with notice of change in labour law - opportunities, risks and case law for employees and employers

4. social selection - typical mistakes of the employer

If several employees are employed on a comparable basis, the employer must Social selection in accordance with Section 1 (3) KSchG. Four criteria must be taken into account:

1. Length of service with the company,

2. Age,

3. Maintenance obligations,

4. Severe disability.

Errors in the social selection often lead to the invalidity of the dismissal. For example, the Federal Labour Court ruled (judgement of 6 November 2008 - 2 AZR 523/07) that an insufficiently documented selection decision violates the requirement of social justification.

Practical errors often arise when employers exclude certain employees as „top performers“ from the social selection process without providing sufficient justification.

5. collective redundancies - special formal requirements

Section 17 KSchG applies to larger waves of redundancies - for example in the course of site closures or rationalisation. This states that the employer must give notice of the intended redundancies notify the employment agency in advance.

Errors in this procedure often lead to Invalidity of all cancellations. The BAG (judgement of 19 May 2022 - 2 AZR 467/21) emphasised that the mass dismissal notification must be formally correct. Even incomplete information or a lack of notification to the works council can jeopardise the entire procedure.

👉 Currently affected? Then also read: Wave of redundancies at Monacor in Bremen - what affected employees can do now

6. deadlines, compensation and correct response strategy

Important: A Action for unfair dismissal must be completed within three weeks after receipt of the dismissal must be submitted to the labour court (Section 4 KSchG). The dismissal is then deemed to be effective - even if it is objectively incorrect.

Although there is no statutory entitlement to a settlement, many proceedings end with a settlement. court settlement. The chances of a fair compensation increase significantly if the employer fears legal risks - for example due to incomplete documentation or incorrect social selection.

👉 Read more: Dismissal - how high is the severance payment?

The BAG (judgement of 13 December 2007 - 2 AZR 818/06) has clarified that the prospect of a severance payment is particularly realistic if the employer has made mistakes in the social selection or the continued employment review.

Conclusion

A termination for operational reasons is only effective if it is based on a comprehensible entrepreneurial decision, the workplace actually cancelled, there is no possibility of continued employment and the Correct social selection was carried out.

In practice, many dismissals fail on these points - and employees have a good chance of successfully defending themselves or at least negotiating an attractive severance payment.

If you require labour law support or further information, we will be happy to assist you at our offices in Sulingen, Bremen, Osnabrück or online available.

❓ FAQ

1 When is a dismissal for operational reasons effective?
A dismissal for operational reasons is only effective if there are urgent operational requirements, the job is actually no longer available and no further employment is possible. In addition, a correct social selection must be made.

2. can a company be dismissed for operational reasons during short-time working?
Yes, theoretically yes. In practice, however, short-time working and dismissal for operational reasons often contradict each other. Employers have to give very precise reasons as to why a job has been permanently lost despite short-time working.
👉 Does short-time working rule out the possibility of dismissals for operational reasons?

3. what role does social selection play in a dismissal for operational reasons?
The social selection decides, who is terminated. Employers must take into account criteria such as age, length of service, maintenance obligations and severe disability. Mistakes here make many dismissals invalid.

4. am I entitled to a severance payment in the event of dismissal for operational reasons?
There is usually no statutory entitlement. In many cases, however, a severance payment can be negotiated - especially if the dismissal is incorrect or the employer wishes to avoid the risk of litigation.
👉 Dismissal - how high is the severance payment?

5. how long do I have to take legal action against a cancellation?
The action for protection against dismissal must be filed within three weeks after receipt of the dismissal at the labour court (Section 4 KSchG). Once this period has expired, the dismissal is deemed to be effective.