Regional Labour Court (LAG) Hamm, Ref.: 2 Sa 630/10, decision of 22.12.2010
Insolvency proceedings regularly present employees with major uncertainties. Changes to operations are often announced and redundancies made. But does insolvency automatically mean that long-serving employees can be dismissed without further ado? An important ruling by the Hamm Regional Labour Court (LAG) (2 Sa 630/10 of 22 December 2010) provides employees with clear answers to this question.
What had happened?
The plaintiff had worked for a company in the cold rolling industry for over 37 years. He was over 60 years old and could not be dismissed under a collective labour agreement (MTV) because he was over 55 years old and had worked for the company for more than ten years.
After the company ran into financial difficulties and insolvency proceedings were opened, the insolvency administrator decided to lay off numerous employees. The plaintiff was dismissed despite his special protection against dismissal under the collective agreement, which he defended against in court.
How did the court rule?
The Hamm Regional Labour Court found that the plaintiff's dismissal was invalid. Decisive point: Although the ordinary termination of an employee who cannot be dismissed under a collective agreement can theoretically become permissible after the opening of insolvency proceedings (Section 113 InsO), it had to be taken into account here that the plaintiff could already be dismissed without notice before the opening of insolvency proceedings on the basis of a valid collective agreement.
The court also emphasised that a dismissal is not automatically justified despite insolvency and despite a change in operations. The decisive factor is whether there really is no other reasonable job. It was precisely here that the employer was unable to sufficiently demonstrate that continued employment of the experienced employee was impossible.
Practical significance: What does this judgement mean for employees and employers?
For employees:
- Insolvency does not automatically mean dismissal. Any existing special protection against dismissal under collective agreements remains valid for the time being.
- Employers must clearly demonstrate that there is no other suitable job before an employee who cannot be dismissed with notice may be made redundant.
- In particular, older employees who have been with the company for a long time continue to enjoy a high level of protection against dismissal, which is not easily cancelled out even in times of insolvency.
For employers:
- Dismissals in the event of insolvency are not simplified across the board. Special provisions on protection against dismissal under collective agreements must be carefully observed.
- Social selection must be precisely justified and documented. Generalised assertions are not sufficient.
- In the event of operational changes, alternatives to dismissal should be thoroughly analysed and documented in order to be able to make decisions that will stand up in court.
Conclusion and recommendations for action
This judgement clearly shows that collectively agreed protection against dismissal is not automatically cancelled by insolvency. In the event of dismissal in insolvency proceedings, employees should have their special protection against dismissal reviewed and consider taking legal action if necessary. Employers must document their decisions carefully and comprehensibly in order to avoid successful dismissal protection claims.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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