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Social selection

When terminating employment for operational reasons on the basis of a list of names, the employer may, in the context of the social selection, base its decision on the tax card with regards to obligations to pay maintenance
(Federal Labour Court, decision dated 28.06.2012, ref. 6 AZR 682/10)

The Federal Labour Court has partly clarified the issue as to the basis on which the employer may determine the employee‘s obligations to pay maintenance when assessing social factors for redundancy.

Prior to issuing notice of termination of employment for operational reasons, the employer must, as is known, perform a social selection among “comparable” employees. The reason for this is that this is not a dismissal on personal grounds rather, the redundancy is due to the position being cut and, therefore, has nothing to do with the employees‘ personal performance. Notice of termination of employment for operational reasons can or must, therefore, on principle be given to the employee requiring the least protection in social terms.

The law cites four characteristics that must be taken into consideration when assessing social factors: The employee‘s age, length of service in the company, disability and any obligations to pay maintenance. The employer must include all these criteria, yet has certain latitude as regards their weighting, subject to the existence of a works council with rights of co-determination.

With regards to the obligation to pay maintenance, the extent to which the employer could rely on the details in the tax card e.g. regarding the number of children entitled to maintenance, was a matter of uncertainty in the past. In this regard, the Federal Labour Court has now acknowledged that the employer and works council may fall back on the details contained in the tax card, at least as far as the list of employees to be dismissed as prepared by a receiver and the works council is concerned. The dismissal is therefore not “grossly incorrect”, even if it subsequently transpires that the details were incorrect or incomplete and the employee concerned should have been entitled to greater social protection. The employer cannot always be expected to perform an in-depth check of whether the details were correct.

Practical recommendations

The ruling of the Federal Labour Court admittedly relates to the specific case of the preparation of a list of names in the context of bankruptcy proceedings and this is noteworthy in that the choice of employees must merely avoid being “grossly incorrect.” Compared to an ordinary social selection, this represents a less strict criterion. Nevertheless, the judgement is at least likely to send out an important signal for all kinds of termination of employment for operational reasons and will enable the employer to rely upon the details in the tax card, thus making time-consuming checks unnecessary. However, if it can be proven that the employer was aware that the details in the tax card were incorrect, it will not be deemed to enjoy protection of legitimate expectations in future either.

Dr. Axel von Einem
Lawyer and certified specialist
for labour and employment law
Dr. Axel von Einem

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