German Employment Law Update: Higher Labour Court Düsseldorf Finds Belated Right to Object to Employment Transfer

By and on February 18, 2016
Posted In Employment

The Higher Labour Court in Düsseldorf ruled on October 14, 2015, that even after the statutory one-month objection period in Section 613a(6) of the German Civil Code has expired, employees may object to the transfer of their employment based on an incomplete or inaccurate mandatory notification letter if it was reasonable for them to assume that they would have long-term employment with the acquiring entity (case number: 1 Sa 733/15).

Legal Background

If a business or part of a business transfers to another owner through a legal transaction, the new owner automatically assumes all rights and duties under the employment relationships existing at the time of transfer and thereby becomes the new employer (in accordance with Transfer of Undertakings (Protection of Employment) Regulations 2006, or “TUPE”). The previous employer, the new employer or both must inform employees affected by a transfer in writing prior to the transfer about the planned date of transfer; the reason for the transfer; the legal, economic and social consequences for employees; and the employees’ right of objection.

Employees may object in writing to the transfer of employment within one month after being notified of the transfer. A misleading, incomplete or incorrect notification does not trigger this objection period. In the case of a misleading, incomplete or incorrect notification, employees have an unlimited objection period. Complete and comprehensive notification provides employees with sufficient knowledge to decide whether to continue employment with the old or new employer (i.e., whether to object to the transfer of employment).

When employees object, their employment does not transfer to the acquiring entity, but remains with the previous employer. If the previous employer does not have any job openings, or if the business has been completely closed, the objecting employees will most likely face a dismissal for operational reasons.

Decision of the Higher Labour Court in Düsseldorf

In the present case, the plaintiff worked for a catering company in a concert hall. On September 12, 2014, she was informed that her employment was transferred to the acquiring entity and would continue unchanged. In addition, she was informed about her right to object, pursuant to Section 613a(6) of the German Civil Code. The plaintiff did not object within the one-month period and continued working for the acquiring entity. In spring 2015, the acquiring entity terminated her employment. The acquiring entity had taken over a temporary lease from the former employer, which subsequently expired. Consequently, the acquiring entity shut down the business. It was only after this shut-down that the plaintiff objected to the transfer of her employment to the acquiring entity. As a consequence, her former employer terminated her employment contract. The court considered whether the plaintiff could still object efficiently to the transfer of employment, in order to determine whether employment still existed with the former employer and, as a consequence, whether the former employer could terminate such employment. In the court’s opinion, the plaintiff effectively objected to the transfer of her employment because she was informed about an “unchanged continuation of the business.” Based on that information, the plaintiff could reasonably assume that the acquiring entity would employ her for the long term. The court held that for the acquiring entity’s notification letter to be comprehensive and trigger the one-month objection period, it should have clearly pointed out the future uncertainty of the business, such as whether the lease was on a fixed term.

This is yet another opinion that clearly demonstrates the near impossibility of meeting the requirements courts have established for comprehensive and complete employee notification after a business transfer. Thus, when drafting such notification letters it is of the utmost importance to be as detailed and accurate as possible. Unfortunately, this often leads to long notification letters with deep legal evaluations that may be difficult to understand for employees without legal education.

Bettina Holzberger
  Bettina Holzberger focuses her practice on labor and employment law. Her practice covers cross-border transaction work as well as traditional labor and employment matters. In the area of labor and employment law, she advises clients, inter alia, on the drafting of a broad range of contracts (including traditional employment contracts as well as bonus plans, service agreements for directors and officers, and termination and assignment agreements for employees as well as executives), often in an international context that requires coordinating the advice of foreign counsel.  Read Bettina Holzberger's full bio.

Dr. Sandra Urban-Crell
Dr. Sandra Urban-Crell has vast experience across the spectrum of labor and employment law, having handled everything from day-to-day practical advice tailored to her national and international clients’ operational and commercial needs, to complex multi-jurisdictional transactions from strategic planning through post-merger integration. She regularly advises on co-determination matters on the company and board levels, and on outsourcing and restructurings, including negotiations with employee representatives. Sandra is an experienced litigator and has particular knowledge of international assignments, service agreements for board members, managing directors and executive employees (including separation processes), and bonus and benefit plans. Read Dr. Sandra Urban-Crell's full bio.




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