Mass Dismissal Notification Failures Render Collective Redundancies Invalid, European Court of Justice Rules

Quick Hits

• The ECJ issued two decisions finding dismissals are invalid if prior mass dismissal notification requirements under EU Directive 98/59/EC and national law are not met.
• In the two German cases involving collective redundancies, the ECJ found that insufficient or incomplete mass dismissal notifications to the competent public authority led to the invalidity of dismissals.
• The ECJ ruled that proper mass dismissal notifications and compliance with the consultation requirements are required before the employer issues any dismissals, and that employers cannot rectify that noncompliance afterward.

Both ECJ cases involve the interpretation of the EU Collective Redundancies Directive 98/59/EC, specifically concerning whether a failure to provide prior notice of a proposed mass reduction in force, or an incomplete or incorrect notice in this regard renders the dismissals invalid.

According to Directive 98/59/EC, prior notification must be given to the competent public authority, and the dismissals cannot take effect until at least thirty days after this notification. The purpose of this “standstill” waiting period is to allow the public authority to seek solutions to the issues raised by the proposed reduction in force and to explore alternative measures to mitigate the impact on affected employees.

The ECJ ruled that insufficient notice prevents affected employees from being included in a reduction in force until after the mandated thirty-day “standstill” period, starting when a proper notification has passed.

In the two cases, the German Federal Labour Court (Bundesarbeitsgericht) had requested a preliminary ruling from the ECJ on the interpretation of the EU Collective Redundancies Directive 98/59/EC on the consequences of noncompliance with the mass dismissal notification requirements. Neither German law nor the EU Collective Redundancies Directive 98/59 EC provide for any penalties in case no (proper) notification has been made.

In one case decided (C-134/24 Tomann) the employer failed to notify the competent employment agency of a mass dismissal prior to dismissing the respective employees.

In the second case involved (C-402/24 Sewel) the insolvency administrator of the insolvent business had filed a mass dismissal notification, but the notification did not include final statements from the works council, nor did it include information on the stage reached in consultations with the works council as required under German law.

Practical Consequences

The ECJ rulings reinforce employers’ obligations to comply with the notification and consultation requirements under national laws and the EU Directive 98/59/EC prior to implementing a mass reduction in force. Notably, the ECJ ruled that noncompliance with mass dismissal notification and consultation requirements leads to the invalidity of dismissals and that a rectification at a later stage is not possible. The rulings are relevant for reorganizations within the EU. Every country has implemented Directive 98/59/EC in local laws and provides for thresholds when mass dismissal notifications must be filed and specific procedures for doing so.

Ogletree Deakins’ Germany offices will continue to monitor developments and will provide updates on the Cross-Border, Germany, Global Reorganizations, and Reductions in Force blogs as additional information becomes available.

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