Redundancy dismissal: when it is valid and what you can do now

What is a redundancy dismissal?

The employer gives a redundancy dismissal because urgent operational requirements prevent your continued employment (Sec. 1 (2) sentence 1 KSchG), for example in the case of job cuts, closure of a department or restructuring.

Type of dismissal	Reason lies with	Formal warning needed?	Social selection needed?	Example
For operational reasons	the business	no	yes (Sec. 1 (3) KSchG)	department is closed
Conduct-related	the employee's conduct	usually yes	no	repeated unexcused absence
Personal reasons	the employee as a person	usually no	no	long illness with a negative prognosis

The examination below only applies if the Protection Against Dismissal Act (Kündigungsschutzgesetz, KSchG) applies: more than 6 months without interruption in the business or company (Sec. 1 (1) KSchG) and normally more than 10 employees (Sec. 23 (1) KSchG). The quick check is in our guide on the unfair dismissal claim; small businesses are covered below under special cases.

Requirements: the 4 stages of examination

1. Operational requirement and business decision

It starts with a decision by the employer that causes your job to cease to exist, triggered for example by a permanent decline in orders or by the decision to close a department. The court does not examine whether the decision is economically wise, but it does examine whether it is actually implemented and is not obviously unfounded or arbitrary. The employer must prove the facts (Sec. 1 (2) sentence 4 KSchG).

2. Urgency: are there milder means?

The dismissal must be the last resort. If the surplus can be absorbed by reducing overtime, a transfer or a dismissal with an offer of altered terms (Änderungskündigung), it is not urgent.

3. No vacant position

If there is a vacant position in the business or in another business of the company in which you could work, the dismissal is socially unjustified (Sec. 1 (2) KSchG). This also applies if continued employment is only possible after reasonable retraining or further training or on altered terms and you agree to this (Sec. 1 (2) sentence 3 KSchG).

4. Social selection

If not all comparable positions cease to exist, the employer must carry out a social selection; see below.

Typical reasons: is that enough for a dismissal?

The table gives an initial classification; the circumstances are decisive.

Reason	Usually sufficient?	What matters
Closure of the business	yes	closure has been seriously decided and is being implemented, no transfer of business
Closure of a department or branch	yes, if implemented	social selection beyond the department across the whole business, vacant positions elsewhere
Permanent decline in orders	only if	the decline is provable and permanently leads to less work precisely in your area
Short-term drop in sales	usually no	a temporary decline is not enough
Outsourcing to an external company	yes, if implemented	the work is actually contracted out, no transfer of business under Sec. 613a BGB
Restructuring, removal of a management level	only if	work really ceases and is not simply redistributed to others who then work overtime
Rationalisation, digitalisation	yes, if implemented	the new technology actually replaces the work
Cutting wage costs	on its own no	a wish to save money without work ceasing is not a reason for dismissal
Replacement by agency workers or freelancers	usually no	the same work remains in the business
Short-time work in progress	usually no	short-time work points to a temporary shortage; dismissal only if the work permanently ceases
Insolvency of the employer	insolvency alone no	an operational reason is still needed; see special cases

Social selection: who has to go first?

The dismissal should affect the person for whom it is least severe. If the social selection is missing or defective, the dismissal is socially unjustified (Sec. 1 (3) sentence 1 KSchG).

Comparison group: who is interchangeable?

Only employees who could take over your work after a short induction period and to whose position the employer could transfer you without amending the contract are compared. The comparison is made at the same hierarchical level and within the business, not across the whole company.

The four criteria

The law names four factors exhaustively (Sec. 1 (3) sentence 1 KSchG):

1. Length of service
2. Age
3. Maintenance obligations, for example towards children or a spouse
4. Severe disability

The law does not prescribe a fixed weighting. If it is laid down in a collective agreement or a works agreement under Sec. 95 BetrVG, the court only examines it for gross errors (Sec. 1 (4) KSchG). Such selection guidelines require the consent of the works council (Sec. 95 (1) BetrVG).

Points system with an example calculation

A points system makes the selection comprehensible. The following scheme has been chosen freely and is for illustration only; it is not a statutory scheme or one prescribed by the courts:

• 2 points per full year of service
• 1 point per full year of age
• 5 points per dependent child, 4 points for a dependent spouse
• 10 points for severe disability

Example (entirely fictitious, using the scheme above): In a retailer's warehouse, one of four comparable positions ceases to exist:

Person	Age	Years of service	Maintenance	Severe disability	Points
Ayla	29	3	none	no	6 + 29 = 35
Bernd	54	22	wife	no	44 + 54 + 4 = 102
Carina	38	9	2 children	no	18 + 38 + 10 = 66
Dennis	45	6	wife, 1 child	yes	12 + 45 + 4 + 5 + 10 = 76

Under this scheme, Ayla would be dismissed first and Bernd last. However, the employer only has to take the criteria into account "sufficiently" and has some discretion. For Dennis, it would also need the consent of the Integration Office (Integrationsamt, the authority responsible for severely disabled employees) (Sec. 168 SGB IX).

Who may be excluded from the social selection

The employer may exclude employees from the selection whose continued employment is in the legitimate interest of the business, in particular because of their knowledge, skills and performance or to secure a balanced staff structure (Sec. 1 (3) sentence 2 KSchG). It must be able to justify this. Anyone who cannot be dismissed with ordinary notice, such as works council members (Sec. 15 KSchG), does not belong in the comparison group.

List of names and reconciliation of interests

If, in the case of a change to the business, the dismissed employees are named in a reconciliation of interests (Interessenausgleich), it is presumed that the dismissal is for operational reasons, and the social selection is only examined for gross errors (Sec. 1 (5) KSchG). This does not apply if the situation has changed substantially afterwards.

Your right to information: requesting the reasons for the social selection

You must prove in court that the social selection is defective (Sec. 1 (3) sentence 3 KSchG). So that you can do this, the employer must tell you on request the reasons that led to its selection (Sec. 1 (3) sentence 1 half-sentence 2 KSchG). The request does not stop the deadline for the claim. So do not wait for the answer before filing the claim.

When is a redundancy dismissal invalid?

Checklist: is my redundancy dismissal invalid?

1. Form: The dismissal was not given in writing with an original signature, for example by email (Sec. 623 BGB).
2. Works council: It was not consulted or not consulted properly (Sec. 102 (1) sentence 3 BetrVG).
3. Collective redundancy: A required notification to the employment agency is missing or defective (Sec. 17 KSchG).
4. Special protection against dismissal: pregnancy, parental leave, severe disability or works council office without the necessary consent or declaration of admissibility.
5. No loss of the job: Your job does not in fact cease to exist; the work is merely redistributed or filled again.
6. Vacant position: There was a vacant, suitable position in the company.
7. Social selection: Comparable colleagues with less need for protection were not dismissed.
8. Transfer of business: The dismissal is given because of the transfer to a new owner (Sec. 613a (4) BGB).
9. Position advertised again: This speaks against the job ceasing to exist. If the reason for dismissal ceases to apply during the notice period, there may be a right to re-employment.

You must assert each of these errors by filing a claim within the 3 weeks, otherwise the dismissal is deemed valid (Sec. 4, 7 KSchG).

Notice period for a redundancy dismissal

The normal period from the law, the employment contract or a collective agreement applies; under Sec. 622 (2) BGB, depending on length of service, up to 7 months to the end of the month. The table and example calculations are in our guide on notice periods for employees. A summary dismissal for operational reasons is generally not possible, at most for employees who cannot be dismissed with ordinary notice, with a run-off period; see our guide on summary dismissal.

Severance for a redundancy dismissal

Is there an entitlement?

Only in these cases:

• Your employer offers severance under Sec. 1a KSchG in the dismissal, and you do not file a claim.
• A social plan (Sec. 112 BetrVG) or collective agreement provides for severance.
• The court dissolves the employment on application (Sec. 9, 10 KSchG).
• The employer deviates from a reconciliation of interests without compelling reason (compensation for disadvantages, Sec. 113 BetrVG).

Otherwise, severance is a matter of negotiation: the more vulnerable the dismissal, the better your position.

The offer under Sec. 1a KSchG: accept or file a claim?

The entitlement under Sec. 1a KSchG only arises if the dismissal expressly states that it is based on urgent operational requirements and that you will receive the severance if you let the deadline for the claim pass (Sec. 1a (1) sentence 2 KSchG). The amount is 0.5 monthly earnings per year of service; more than 6 months are rounded up to a full year (Sec. 1a (2) KSchG). It becomes due when the notice period expires (Sec. 1a (1) sentence 1 KSchG).

	Accept the offer (do not file a claim)	File a claim
Amount	fixed at 0.5 monthly earnings per year	open; a settlement may be higher, lower or without severance
Risk	none, if the requirements of Sec. 1a are met	the dismissal may be valid, then often less or nothing
Job	is gone	continued employment possible if you win
Unemployment benefit	no benefit suspension from mere acceptance	no benefit suspension because of the claim
Duration	money at the end of the notice period	several weeks to months

If the dismissal is challengeable, a settlement may exceed the Sec. 1a amount; if it is well founded, the safe offer is often better. Before the 3 weeks expire, have it reviewed whether more is possible, at a fixed price.

Severance in a settlement

In practice, half a gross monthly salary per year of service serves as a guide, the same factor as in Sec. 1a KSchG. Tables by years and salary are in our guide on severance pay by years of service, and what is left after tax in our guide on tax on severance pay.

Social plan

In the case of a change to the business, employer and works council can agree a social plan that compensates for the disadvantages, often with severance according to a formula (Sec. 112 (1) BetrVG); without agreement, the conciliation board (Einigungsstelle) decides (Sec. 112 (4) BetrVG). Ask the works council.

Dismissed for operational reasons: what to do now

1. Note the receipt: Record when you received the dismissal and keep the envelope. From then on, 3 weeks are running.
2. Do not sign anything: No termination or settlement agreement and no settlement receipt before your situation has been reviewed. Why is explained in our guide on the termination agreement.
3. Register as a jobseeker: within 3 days or at the latest 3 months before the end (Sec. 38 (1) SGB III), even if you file a claim.
4. Ask about the social selection: Request the reasons in writing (sample wording above).
5. Have the dismissal reviewed: reason, social selection, works council, form, notice period and severance offer.
6. File a claim within 3 weeks: The procedure and costs are explained in our guide on the unfair dismissal claim.
7. Clarify holiday and reference: Raise outstanding holiday and a reference at the same time; see remaining holiday on dismissal.

Unemployment benefit after a redundancy dismissal

A benefit suspension for giving up work only applies if you terminated the employment yourself or gave cause for the dismissal through conduct in breach of contract (Sec. 159 (1) sentence 2 no. 1 SGB III), so not with a genuine redundancy dismissal. Anyone who registers as a jobseeker too late, however, risks a benefit suspension (Sec. 159 (1) sentence 2 no. 9 SGB III).

Because of severance, unemployment benefit is only suspended if the employment ends before the ordinary notice period expires (Sec. 158 (1) SGB III), so not if the notice period is correct. With a termination agreement, there is a risk of a benefit suspension of up to 12 weeks without good cause (Sec. 159 (3) SGB III).

Special cases

Small business

If your employer normally employs 10 or fewer employees, general protection against dismissal does not apply (Sec. 23 (1) sentence 3 KSchG). Trainees are not counted; part-time staff with up to 20 hours a week count as 0.5 and with up to 30 hours a week as 0.75 (Sec. 23 (1) sentence 4 KSchG).

Example: 8 full-time staff, 4 part-time staff with 15 hours each and one with 25 hours give 8 + 2 + 0.75 = 10.75. That is more than 10, so the KSchG applies.

In a small business, the employer needs no operational reason and no social selection under Sec. 1 KSchG. However, the dismissal must not be arbitrary, contrary to good faith or discriminatory, and a minimum of social consideration is required. The 3-week deadline applies here too (Sec. 23 (1) sentences 2 and 3 KSchG). For employment relationships that began before 1 January 2004, the threshold of 5 may apply (Sec. 23 (1) sentence 2 KSchG).

Redundancy dismissal during illness

Sick leave does not protect against dismissal; the reason is examined as for healthy employees. What happens to your salary and sickness benefit is explained in our guide on dismissal during sick leave, and how long the employer pays during illness in our guide on sick pay.

Pregnancy, parental leave, severe disability, works council

• Pregnancy and up to 4 months after giving birth: dismissal is in principle not permitted, only exceptionally with a declaration of admissibility from the competent authority (Sec. 17 MuSchG).
• Parental leave: ban on dismissal from the request, at the earliest 8 weeks before the start of parental leave up to the child's 3rd birthday and at the earliest 14 weeks before the start of parental leave between the 3rd and 8th birthday, and during parental leave; exception only with a declaration of admissibility (Sec. 18 (1) BEEG).
• Severe disability: prior consent of the Integration Office (Sec. 168 SGB IX).
• Works council: If the business is closed, the dismissal is permitted at the earliest as of the date of closure (Sec. 15 (4) KSchG). If only a department is closed, the member must be taken over into another department if this is operationally possible (Sec. 15 (5) KSchG).

Insolvency of the employer

In insolvency, the insolvency administrator can give notice of at most 3 months to the end of the month, even if a longer period or protection from ordinary dismissal was agreed (Sec. 113 InsO). It still needs a reason for dismissal. With a reconciliation of interests with a list of names, the social selection is only examined according to length of service, age and maintenance obligations and only for gross errors (Sec. 125 (1) InsO).

Transfer of business

If the business or part of it is transferred to a new owner, a dismissal because of the transfer is invalid (Sec. 613a (4) BGB). The new owner takes over your employment. Dismissals for other reasons remain possible.

Collective redundancy

If the employer wants to dismiss many employees within 30 calendar days, it must notify the employment agency in advance and involve the works council (Sec. 17 KSchG). The thresholds:

Size of business (normally)	Notification required from
more than 20 and fewer than 60 employees	more than 5 dismissals
60 to fewer than 500 employees	10% of the workforce or more than 25 dismissals
500 employees or more	at least 30 dismissals

Termination agreements initiated by the employer also count (Sec. 17 (1) sentence 2 KSchG).

For employers: job cuts without errors of form

The employer bears the burden of proof for the reason. Preparation should include:

• Record the business decision in writing: what ceases to exist, from when and why.
• Check vacant positions across the whole company.
• Form the comparison group and document the social selection comprehensibly; selection guidelines only with the consent of the works council (Sec. 95 BetrVG).
• Consult the works council before every dismissal (Sec. 102 BetrVG); in the case of changes to the business, negotiate a reconciliation of interests and a social plan.
• Check the thresholds for notification of collective redundancies (Sec. 17 KSchG).
• A severance offer under Sec. 1a KSchG must contain the statutory notice in the letter of dismissal.

Dismissal looming or job cuts planned? Written advice from our employment lawyer explains social selection and how to proceed, at a fixed price.