Redundancy Dismissal – What is it and how does it work?
Definition of redundancy dismissal
A redundancy dismissal (betriebsbedingte Kündigung) is one of the most common types of ordinary termination in Germany. It occurs when the employer terminates the employment relationship due to external operational reasons. Possible causes include rationalization, site relocation, digitalization, or economic pressure. Personal or behavioral reasons must not play a role in this type of dismissal.
🇬🇧 English: Betriebsbedingte Kündigung = "termination for operational reasons" or "redundancy dismissal".
Urgent operational requirements exist (e.g., elimination of jobs)
No alternative continued employment is possible
A social selection according to established criteria is conducted
The works council was properly consulted
The statutory or contractually agreed notice period was observed
Examination schema: Redundancy dismissal
Examination step
Content / Question
Business decision
Is there a business decision justifying dismissal? (external/internal)
Permanent elimination of position
Has the job been permanently eliminated (forecast principle)?
No milder means (ultima ratio)
Is there no possibility of continued employment or other milder means?
Urgency
Is the operational requirement truly urgent?
Social selection
Was the social selection carried out correctly?
Relevant group of persons
Were all comparable employees included?
Social aspects
Were length of service, age, maintenance obligations, severe disability taken into account?
Exceptions from social selection
Are there legitimate operational interests for exceptions?
Selection guidelines
Are there selection guidelines according to § 1 Abs. 4 KSchG?
Operational change
Is there an operational change according to § 1 Abs. 5 KSchG?
Process and typical sources of error
Flawed social selection, unclear documentation or disregard of the works council can lead to invalidity. The reasons for the dismissal must be documented in writing. Template: Sample template for redundancy dismissal.
Social selection (redundancy dismissal: social selection)
Comparable employees must be evaluated based on these criteria:
Length of service
Age
Maintenance obligations
Severe disability
Flawed selection can be challenged in an unfair dismissal claim.
Special features in small businesses and special dismissal protection
In small businesses, the restrictions of dismissal protection do not apply. Nevertheless, no dismissal may be unconscionable or discriminatory. Special dismissal protection applies e.g. for pregnant women and works council members.
Severance pay for redundancy dismissal (redundancy dismissal severance pay)
A statutory entitlement exists only if the employee waives an unfair dismissal claim and an offer is made in the dismissal letter (§ 1a KSchG - German Protection Against Dismissal Act). Rule of thumb: 0.5 monthly salaries per year of employment. Often the severance pay is individually negotiated.
Notice period for redundancy dismissal (redundancy dismissal notice period)
The notice period is based on the employment contract, collective agreement, or § 622 BGB. It depends on the length of service.
Redundancy dismissal and unemployment benefits
If reported to the employment agency in a timely manner, there is generally an entitlement to ALG I. Blocking periods do not occur since the dismissal is initiated by the employer.
Options for employees
Have the dismissal reviewed, secure documents, file a claim in time. Severance negotiations or mutually agreed termination are often possible.
Comparison: Types of dismissal in employment law
Type of dismissal
Requirements
Typical reasons
Special features / Notes
Redundancy dismissal
Urgent operational requirements, social selection, no continued employment possible
Lack of orders, restructuring, site closure
Entitlement to severance pay usually only with offer according to § 1a KSchG
Dismissal for personal reasons
Lack of suitability or capability, no continued employment possible
Illness, lack of work permit
Often longer absences, operational integration management recommended
Dismissal for behavioral reasons
Breach of duty, warning, no improvement
Tardiness, refusal to work
Prior warning usually required
Unfair dismissal claim: How can one defend against it?
File a claim within 3 weeks of receipt. Chances of success depend on documentation and social selection. Many proceedings end with severance settlements.
The dismissal process from a legal perspective
The dismissal is only valid if all formalities are observed (e.g., consultation, deadlines, written form and other requirements). The delivery of the dismissal letter must also be proven by the employer in the unfair dismissal process, provided that receipt has been effectively (substantially) disputed by the employee.
Strategic considerations for employers
Before dismissal, alternatives should be examined: transfer, short-time work, termination agreement. Careful documentation reduces legal risks.
§ 1a Severance pay entitlement for redundancy dismissal
(1) If the employer terminates the employment relationship due to urgent operational requirements pursuant to § 1 Abs. 2 Satz 1 and the employee does not file a claim for a declaration that the employment relationship has not been dissolved by the dismissal within the period specified in § 4 Satz 1, the employee shall be entitled to severance pay upon expiry of the notice period. The entitlement requires the employer to indicate in the notice of termination that the termination is based on urgent operational requirements and that the employee can claim the severance pay if the period for filing a claim expires.
(2) The amount of the severance pay shall be 0.5 monthly salaries for each year of the employment relationship. § 10 Abs. 3 applies accordingly. In determining the duration of the employment relationship, a period of more than six months shall be rounded up to a full year.
Overview: Requirements & special features of redundancy dismissal
Criterion
Explanation
Urgent operational requirements
Economic reasons, restructuring, elimination of jobs
Social selection
Selection according to length of service, age, maintenance obligations, severe disability
Consultation of the works council
Before any dismissal, the works council must be properly consulted
Severance pay
Statutory entitlement rare, often in settlement or according to § 1a KSchG
Deadline for legal action
Unfair dismissal claim must be filed within 3 weeks of receipt of the dismissal
Special dismissal protection
Applies e.g. for pregnant women, severely disabled persons, works council members
BAG, Judgment of 19.10.2017 – 8 AZR 845/15: No right to re-employment in small businesses
Employees in small businesses generally have no right to re-employment after a redundancy dismissal. The Federal Labor Court decided that the principles developed for the right to re-employment do not apply to small businesses (§ 23 Abs. 1 KSchG) since the Protection Against Dismissal Act does not apply there.
In the specific case, an employee of a pharmacy with seven employees had filed for re-employment after a redundancy dismissal and subsequent continuation of operations. The Federal Labor Court rejected this: A right to re-employment only exists if the Protection Against Dismissal Act is applicable. In small businesses, protection remains limited to cases of unconscionable or bad faith dismissals under §§ 138, 242 BGB.
Advice for consultants: Even in small businesses, a minimum level of social consideration must be maintained in selection decisions.
BAG Urt. v. 19.10.2017 – 8 AZR 845/15; LAG Düsseldorf – 4 Sa 1289/14
My podcast on employment law: Dismissal & severance pay
Lawyer Andreas Martin
📍 Specialist lawyer for employment law
📍 Storkower Straße 139 b, 10407 Berlin
Many clients come not only from the immediate vicinity, but also from adjacent districts such as Prenzlauer Berg or Friedrichshain, where redundancy dismissals and severance negotiations often play a role. For English-speaking clients, I also provide service as an Employment Lawyer in Berlin specialized in German labor law.
When urgent operational requirements exist, no continued employment is possible, the social selection was correctly carried out, and the works council was properly consulted.
How does social selection work in a redundancy dismissal?
The employer must evaluate comparable employees according to social criteria: length of service, age, maintenance obligations, and severe disability. The selection must not be arbitrary.
Is there an entitlement to severance pay for redundancy dismissal?
A statutory entitlement exists only if the employer offers it in the dismissal letter according to § 1a KSchG and no unfair dismissal claim is filed. In other cases, severance pay is a matter of negotiation.
What is the deadline for filing a claim against a redundancy dismissal?
The unfair dismissal claim must be filed with the labor court within three weeks of receiving the dismissal. After this period, the dismissal is considered valid.
Can I be released from duties during the notice period?
Yes, the employer can release the employee from duties – while continuing to pay remuneration. However, it must be clarified whether vacation days will be offset.
Will I receive unemployment benefits after a redundancy dismissal?
Yes, provided that the qualifying period has been fulfilled and timely registration with the employment agency has occurred, there is an entitlement to ALG I without a blocking period.
