Regional Labour Court Düsseldorf, Judgement of 13.09.2022, Ref. 3 Sa 831/21
Severance payments from social compensation plans are often taken for granted by employees as soon as a company is closed or shut down. However, practice shows that the entitlement to a redundancy payment is linked to clear conditions. One of these is that the employment relationship must actually end for operational reasons.
The ruling of the Düsseldorf Regional Labour Court of 13 September 2022 impressively illustrates how strictly courts examine this requirement and that even an objective closure of a business does not automatically lead to a severance payment claim.
Principles of the social compensation plan
A social plan serves to compensate or mitigate economic disadvantages suffered by employees as a result of a change in operations. However, it does not establish a general entitlement to severance pay for all departing employees. Rather, the decisive factor is whether the respective employee is covered by the personal and material scope of the social compensation plan.
Typically, social compensation plans require that the employment relationship ends for operational reasons as a result of a change in operations, such as a plant closure. Dismissals for other reasons - in particular dismissals for behavioural or personal reasons - are often expressly excluded from the scope of application.
In practice, it is precisely this demarcation that causes the majority of disputes.
The case decided before the LAG Düsseldorf
In the case decided by the Düsseldorf Regional Labour Court, the plaintiff sought a redundancy payment of over 124,000 euros. The background to the case was the closure of a theatre business for which a social compensation plan had been concluded.
The plaintiff had been employed for many years and, at first glance, fulfilled several requirements of the social plan. However, her employment relationship had already been terminated before the final closure of the company. cancelled was made. The employer had not dismissed the employee for operational reasons, but due to a strong suspicion of a property offence.
The plaintiff was of the opinion that her employment relationship had in fact ended due to the closure of the plant and that the reason for dismissal for behavioural reasons had only been pretextual in order to avoid a termination. Severance payment to be avoided.
This argument was unsuccessful.
Dismissal for operational reasons required as the main cause
The Düsseldorf Regional Labour Court clarified that an entitlement to social plan compensation only exists if the plant closure or another operational reason was the main reason for the termination of the employment relationship.
It is not sufficient that operational reasons „also played a role“ or were objectively present. The decisive factor is which reason for termination was decisive and was recognisably decisive for the employee.
If an employment relationship is terminated for behavioural or personal reasons, the employee is generally not covered by a social plan, even if the business is completely shut down a short time later.
Recognisability of the reason for termination for the employee
The court attached particular importance to the circumstances surrounding the dismissal. In the court's opinion, it was clear to the plaintiff that the dismissal was based on suspicion of a financial offence. This was evident from the conversation held immediately prior to the dismissal and from the employer's subsequent submission in the dismissal protection proceedings.
The fact that the letter of termination itself did not state a reason for termination was legally irrelevant. Nor could the plaintiff successfully invoke the fact that she was later given an employer's reference with a reference to termination for operational reasons. In the opinion of the court, such a reference does not justify a claim for severance pay if the reason for termination had previously been clearly communicated otherwise.
No „reinterpretation“ into a dismissal for operational reasons
The ruling makes it clear that a dismissal for behavioural or personal reasons cannot be subsequently „reinterpreted“ as a dismissal for operational reasons simply because it later transpires that the business will be closed anyway.
Even if the behaviour-related accusations were legally contestable, the decisive factor is the reason why the employer wanted to terminate the employment relationship and did so.
For the social compensation plan settlement, it is not important whether a dismissal for operational reasons would have been objectively possible or obvious, but whether it was actually pronounced and was the main cause of the termination.
Significance for practice
For employees, the decision shows that redundancy payments are not automatic. Anyone who is dismissed for other reasons before a plant closure can go away empty-handed - even if they have been with the company for many years and have a high calculated severance payment.
For employers, the judgement underlines the importance of clear and consistent reasons for dismissals. Although contradictory signals can be legally irrelevant, they regularly lead to lengthy and cost-intensive processes.
Conclusion on social plan compensation
The judgement of the Düsseldorf Regional Labour Court shows that redundancy plans are applied strictly according to their wording and purpose. A severance payment presupposes that the employment relationship ends precisely because of the operational change. If the relevant reason for termination lies in the person or behaviour of the employee, there is generally no entitlement - even in the event of complete closure of the business.
An early legal examination of the grounds for termination is therefore crucial when it comes to substantial severance claims.
Source: Düsseldorf Regional Labor Court
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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