Germany: Operations 4.0 – Protection Against Dismissal In "International Companies"?

Last Updated: 4 September 2019
Article by Sabrina Hochbrückner
Most Read Contributor in Germany, October 2019

Today's working world is in a constant state of flux, and it is changing more rapidly than ever.

The Senior Vice President is working in New York, your peer with whom you are collaborating on a new project has his office in London, and the business partner at the other end of the line is more than 12,000 kilometers away at his Hong Kong office. Matrix structures in companies are common practice nowadays. Work organization no longer reflects the corporate structure, but rather covers it like a virtual coat. Work organizations are frequently divided into two dimensions across countries and companies, such as into functional (manufacturing, purchasing, sales) and product areas (country markets, products, customers).

These and other developments in the digital working world open up numerous new possibilities while at the same time leading to difficulties in implementation and to legal problems that previously remained unconsidered.

1. Threshold of Section 23 Protection Against Dismissal Act for the application of the Protection Against Dismissal Act

Particularly in disputes relating to termination of employment, the question may quickly arise as to whether the London-based peer may be assigned to the operations in Germany as an employee or whether the office abroad represents a separate unit. Pursuant to Section 23 Protection Against Dismissal Act, the application of the Protection Against Dismissal Act requires more than 10 employees to be employed in the relevant operations. Thus, the application of the special protection provisions of the Protection Against Dismissal Act may be governed by the question as to whether, in operations with 9 employees in Germany, employees working in foreign offices such as in Madrid or London, may also be attributed to the operations in Germany.

Difficulties are already arising from the fact that there is no "generally applicable" definition of the term "operations." Operations are basically defined as the organizational unit within which the employer and its employees consistently pursue certain work-related purposes by using technical and immaterial means exceeding the satisfaction of the company's own needs. A corresponding organizational unit, which is distributed across several countries, may basically meet the characteristics of this definition. According to previous opinion, however, the strict protection against dismissal does not apply, however, if the threshold value is not already reached by the number of domestic employees, but only taking into account the employees in the foreign part of the operations. Thus (in principle) the following applies: "What happens outside Germany is of no interest for the applicability of the Protection Against Dismissal Act."

There are now an increasing number of procedures, however, in which attempts are made to modify the currently still familiar concept of operations to take account of the changed working world. It is argued, for example, that the Protection Against Dismissal Act must be applied to "virtual matrix operations" or "international companies" – employees are collaborating in a defined organizational unit, but team members are scattered throughout the world – if the team comprises more than 10 employees.

According to previous jurisdiction of the Federal Labor Court, such argumentation structures are not applicable, since the Protection Against Dismissal Act only applies within Germany and it is therefore irrelevant as to whether and to what extent foreign structures sometimes exert influence on operations based in Germany. This is welcome, but above all also true, as long as the Protection Against Dismissal Act continues to exist in its current form.

2. Potential continued employment to avoid dismissal

Jurisdiction also applies these principles to the issue of whether vacancies which may even be available at the same employer, but in a foreign country, need to be offered within the scope of operational dismissals.

Jurisdiction answers this question fairly clearly: potential continued employment generally does not refer to vacancies in operations of the employer located abroad. Something else may apply, for example, if the employer is obligated under the employment contract to continue employing the employee in foreign operations of the company to avoid termination of employment.

Conclusion:

In the light of changes in the working world, it remains to be seen whether jurisdiction will adapt the interpretation of the concept of operations in the future. At present, however, employees who are employed abroad are not to be taken into account either in the threshold value pursuant to Section 23 Protection Against Dismissal Act or in the search for potential continued employment for employees to avoid dismissal. Relevant developments should certainly be kept in mind, though.

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.

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