The multinational investment bank and financial services company, Goldman Sachs, is cutting 6.5% of its jobs worldwide. It is difficult to know at this stage how badly the German subsidiaries but overall, there should be job cuts of approximately 3,200 jobs. Such numbers of layoffs can be compared to those following the collapse of Lehman Brothers where the company cut approximately 10% of its workforce.
When there are such job losses, it is not uncommon for there to be legal issues with these actions. Under German employment law, employees have extensive rights regarding employment termination, and those impacted should seek legal advice should they believe that they have been mistreated.
At Schlun & Elseven Rechtsanwälte, our lawyers advise employers and employees on matters of German employment law. We advise clients on labour matters including employment contracts, notice periods, ordinary and extraordinary employment termination, and severance payment entitlements. If you require our legal assistance, please do not hesitate to contact us directly.
You can contact our law office anytime if you have a particular issue or legal question concerning German employment law. Our German employment lawyers can be contacted by phone and email and provide video conferencing options. For more legal information, please visit our German employment law homepage.
Lawful and Unlawful Employment Termination in Germany
At Schlun & Elseven Rechtsanwälte, our team will review the circumstances of the job termination. By evaluating the reasons for the termination, our lawyers will determine whether the employer had the required legal grounds to terminate the employment relationship.
Extraordinary terminations whereby employment can be terminated without notice are allowed under § 626 Paragraph 1 BGB. However, there are strong regulations in this area, with the employer having a reason that revolves around serious misconduct issues, such as refusal to work and criminal offences.
Determining whether a job termination was lawful or unlawful requires careful examination. Should it be the case that the employer did not have a valid reason for ending the employment contract or that the procedure was completed in violation of Germany’s employment laws, the employee will have a strong case for unfair dismissal. Employers cannot dismiss employees easily in Germany and need to follow the correct routes, whereby they provide notice and outline the reasons for the dismissal.
Our lawyers will also carefully examine the employment contract to determine whether there were specific clauses regarding dismissals.
Severance Payments in Germany
Severance payments are not required by law in all cases. Instead, they are typically within the employment contract in circumstances where the employer and employee reach a mutual agreement on the matter. Such severance payments consider the employee’s length of service and salary. They can be negotiated by the parties involved.
Within the framework of § 1a German Dismissal Protection Act, a claim for severance pay can arise under the following conditions:
- The employer dismisses the employee for operational reasons,
- The employer expressly points out in the letter of termination that the termination is based on urgent operational requirements and that the employee can claim a severance payment per §1a KSchG after the expiry of the three-week period for an action for protection against dismissal,
- The employee does not file an action for protection against dismissal until the expiry of the three-week period for filing a motion.
In this case, the employee will “automatically” receive a severance payment entitlement in the amount of half a month’s salary per year of employment, whereby working periods of more than 6 months will be rounded up to a full year.
In some circumstances, such as mass layoffs or company-wide restructuring, the German government may provide additional financial support to released employees. It may also be the case in particular industries that there are specific regulations and agreements on matters relating to severance payments.
Our legal team can advise you on all these issues and more.
Dismissal Based on Company Restructuring
Company restructuring is a ground that allows for employee dismissal in Germany; however, there are steps that the company needs to take to ensure its legality. This procedure is governed by the German Federal Employment Agency (Bundesagentur für Arbeit) and the German Works Constitution Act (Betriebsverfassungsgesetz), and therefore companies must act carefully.
When planning to dismiss employees for restructuring reasons, the company needs to consult with the works council and inform them of the planned restructuring. The company needs to outline the reasons for the dismissals, and the works council can provide their views regarding this action. During this time, they or the employee’s representatives can negotiate the dismissal terms and examine possible alternatives.
Companies must provide such employees with a detailed written notice regarding the intended action. This notice needs to include the reasons for the dismissal, the date of the dismissal, and the possibility of appeal. They also need to follow dismissal procedures laid out by German law. Such actions can include allowing the employees to appeal the decision, offering severance pay and other steps.
Dismissals based on company restructuring cannot involve discriminatory reasons based on the employee’s sexual orientation, race, gender, age, ethnicity or disability. Layoffs need to be conducted fairly and transparently.
At Schlun & Elseven Rechtsanwälte, our certified employment law specialists advise employers and employees about German law in the area of dismissals. If you require tailored legal advice, please do not hesitate to contact our team directly.
Employees in Germany who have been impacted by the recent firings at Goldman Sachs have several options available to them, and should be prepared to utilise them. By working with our employment team, we can determine whether they are entitled to severance pay or unemployment benefits. Furthermore, they may also have the option to file a claim for wrongful termination.
Schlun & Elseven Rechtsanwälte offers legal solutions across legal fields in Germany. Our certified specialists in employment law are ready to guide our clients through the different processes and advocate for their rights.