Germany: Dismissal For Health Reasons - Pitfalls Surrounding The Works Council Hearing

The dismissal of an employee for health reasons requires careful preparation and the observance of specific formalities if, in the case of an action against unlawful dismissal, the employer wants to prevail in court. If the company has a works council, the council must hold a hearing as prescribed in Section 102 Para. 1 S. 1 of the German Works Constitution Act (Betriebsverfassungsgesetz ; BetrVG) before notice of dismissal may be given. And if, as is often the case, this hearing is carried out incompletely or inaccurately, the notice is deemed to be ineffective, and the terminated employee is entitled to reinstatement.

This article gives an overview of the necessary elements of the works council hearing.

Timing of the Hearing

On the one hand, the hearing must take place before notice of dismissal is given to the employee. Unlike other declarations of intent, notice of dismissal is considered to have been given not upon its receipt by the employee being dismissed, but as soon as the written notice of dismissal has left the employer's sphere of influence. However, if the works council's hearing takes place after notice of termination has been sent to the employee, the dismissal will be considered ineffective, according to Section 102 Para. 1 S. 3 BetrVG.

On the other hand, at the time of the hearing, the employer must have already made the decision to dismiss the employee; merely considering the possibility is not sufficient. Therefore, a hearing for dismissal that is held when an employee's incapacity to work is foreseen but not yet a reality would be insufficient, since the actual situation permitting the dismissal has not yet occurred.

Form of the Hearing

The law does not prescribe a particular form for the hearing. However, for the purpose of proof, a written hearing is recommended. Moreover, receipt of the hearing letter should be confirmed in writing by the chairman of the works council, since only the employer obligated to furnish proof of a proper hearing in dismissal proceedings is able to document the hearing and the expiration of the term of the hearing.

Content of the Hearing

Section 102 BetrVG stipulates that the employer must inform the works council about the employee to be dismissed and the reasons for his or her dismissal.

The courts have substantiated these requirements. Accordingly, the works council must be informed of the following data regarding the employee: name; date of birth; period of employment; marital status; number of dependents (to the extent known); nationality; and any severe handicaps or equivalent status (again, to the extent known). In larger enterprises, the employee's personnel number and function must also be included.

The hearing is convened primarily to assess the reason for the dismissal. A general statement to the effect that notice of dismissal is to be given because of absences due to illness is not sufficient. Rather, the employer must also inform the works council of all the facts on which it intends to base the dismissal.

In the case of permanently ill employees where it is certain that they will not become capable of working again, submitting a medical certificate or the declaratory decree by the social insurance agency is sufficient. Moreover, in the case of employees who are not permanently ill, the employer must not only document the absences accrued so far, but also state why it is acting on the assumption that illnesses are to be expected in the future as well (i.e., provide the reason for the negative forecast).

In the case of dismissal due to frequent short-term illnesses, the employer must list chronologically each day of absence since the commencement of the employment period, as well as each separate illness (to the extent known). Furthermore, the employer must explain the extent to which the employee's illnesses led to operational disruptions. If the dismissal is to be based on sick-pay costs, it is necessary to document when additional costs were accrued because the employee's absences necessitated overtime work by colleagues or the hiring of substitutes. Furthermore, the hearing must specify whether the dismissal is to be given with or without notice and when it shall become effective.

According to the principle of subjective determination, it is sufficient for the employer to disclose to the works council the reasons that, from the employer's point of view, form the basis for the dismissal, even if these reasons do not ultimately support the dismissal. Deliberately incomplete and/ or incorrect depictions will deem the hearing (and thus the dismissal) to be ineffective, as will deliberate concealment of circumstances that would have exonerated the employee, e.g., a medical certificate that predicts a quick recovery. If the employee in question is subject to special protection against dismissal pursuant to Section 15 of the German Protection Against Dismissal Act (Kündigungsschutzgesetz ; KSchG) (as would be the case in the termination of a works council member for cause), the works council must not only be heard but also expressly approve of the dismissal (pursuant to Section 103 BetrVG). If approval is not granted by the works council, there is a possibility that it may be granted judicially.

Period for Comment

The period for the works council's comment in the case of dismissal with notice pursuant to Section 102 Para. 2 S. 1 BetrVG is one week from receipt of the hearing information. A request for comment, however, is not necessary. If the employer substantially amends its assertion within this period, the period commences anew. If the works council conclusively comments on the intended dismissal within this period, the period ends at that time. For a comment to be considered conclusive, it must clearly indicate that the works council does not want any further discussion of the case. When in doubt, the employer should wait for the oneweek period to lapse.

Response of the Works Council

The works council may respond in a number of ways:

• The works council may expressly declare its approval of the intended dismissal. If this is the case, the hearing is considered to have been completed prior to the expiration of the time limit, pursuant to Section 102 Para. 2 S. 1 BetrVG.
• The works council may remain silent with regard to the hearing. In such a case, the hearing does not end until the legal term of preclusion has ended. Approval of the dismissal is considered to have been granted after the time limit has lapsed, at which point the employer must provide notice, pursuant to Section 102 Para. 2 S. 2 BetrVG.
• The works council may give formal notice that it has chosen to refrain from commenting on the intended dismissal. In the case of a dismissal with notice, the fiction of approval would apply with this notification. The process is then complete, and the employer may give notice of dismissal after receipt of this information, i.e., before the one-week period has lapsed.
• Pursuant to Section 102 Para. 2 S. 1 BetrVG, the works council may express concerns regarding the dismissal. While expressing concerns—in contrast to lodging a formal objection—does not increase the likelihood that the dismissal will be overturned, it does encourage the employer to take the works council's concerns into consideration. However, if the expression of concerns takes the form of a conclusive comment, the process is complete and the employer may give notice of dismissal.
• The works council may formally object to the dismissal, Section 102 Para. 3 BetrVG. The objection need not be designated as such; it is sufficient if it is unmistakably clear from the works council's response that it has rejected the dismissal. The objection must be based on one of the reasons stated in Section 102 Para. 3 BetrVG. In the case of an objection, the employee, if he or she takes action against unlawful dismissal, has a right of reinstatement until a binding court decision regarding the action has been made, Section 102 Para. 5 BetrVG. The employer may counter the right of the employee to continue working by following the procedure described in Section 105 Para. 1 S. 2 BetrVG (filing a motion for an injunction before the court), according to the strict conditions stipulated therein.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.