Pursuant to Section 23 (1) KSchG, the Dismissal Protection Act ("KSchG") only applies if there are either more than ten employees in the company at the time of dismissal or more than five (former) employees who were already employed in the company on 31 December 2003. In this respect, it may be necessary to add up the number of employees for several branches in order to prevent circumvention of the KSchG.
Facts of the Case::
Employer had eight employees in Leipzig and six in Hamburg
The defendant employed at least eight employees at its headquarters in Leipzig and six employees at its location in Hamburg. In January 2006, it appointed an on-site operations manager in Hamburg, to whom, according to its allegations, it assigned personnel responsibility. The plaintiff had been working as a caretaker at the Hamburg site since 1990. A comparable employee was hired in 2003. In March 2006, the defendant terminated the employment relationship with the plaintiff, citing operational reasons.
Employee files an action for unfair dismissal - KSchG applicable?
The lower courts ruled in favour of the claim due to insufficient social selection. The LAG held that the Dismissal Protection Act was applicable because the defendant's capitalisation was not low and its managing director in Hamburg had not worked for the company. The defendant appealed against this decision.
Federal Labor Court judgment:
BAG decides that several small businesses are not necessarily counted together for the applicability of the KSchG
The BAG referred the matter back to the Regional Labour Court. With regard to the small business clause in Section 23 (1) KSchG, the BAG states that the numbers of employees in several small businesses are not automatically added together if they are actually organisationally sufficiently independent units and therefore independent businesses. In the case in dispute, according to the BAG, contrary to the opinion of the lower courts, it is not necessary for constitutional reasons to regard both business premises as a single company in terms of dismissal protection law even if they are organisationally independent. Whether the business premises are organisationally independent, however, requires further findings by the Regional Labour Court.
Source: Federal Labor Court
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