Pursuant to section 23 (1) of the Protection Against Dismissal Act (Kündigungsschutzgesetz, KSchG), employees in establishments in which, as a rule, only ten or fewer employees are employed do not enjoy protection against dismissal. The resulting unequal treatment between employees of larger and smaller companies does not violate Article 3 of the Basic Law. It is objectively justified because small businesses are typically characterised by close personal cooperation, lower financial resources and a lack of administrative capacity. Even if an entrepreneur maintains several small businesses, the numbers of employees there are not automatically added together if they are in fact organisationally sufficiently independent units and therefore independent businesses. It must be ensured, however, that units of larger enterprises, to which the typical characteristics of a small business (close personal cooperation, etc.) do not apply, are not excluded from the scope of the law. This is not always the case if the enterprise lacks even one of these typical characteristics. Rather, the circumstances of the individual case are decisive.
The defendant employed at least eight workers at its headquarters in Leipzig and six at its Hamburg site. In January 2006 it appointed a plant manager in Hamburg who worked on site and whom - as it claimed - it authorised to make appointments and dismissals there. The plaintiff had worked at the Hamburg site as a caretaker and building technician since 1990. A comparable employee was hired in 2003, is significantly younger than the plaintiff and - unlike the latter - is not obliged to support anyone. In March 2006, the defendant terminated the employment relationship with the plaintiff, citing operational reasons. The lower courts upheld the action on the grounds of insufficient social selection. The Regional Labour Court held that the Protection Against Dismissal Act was applicable because the defendant's capitalisation was not low and its managing director in Hamburg had not worked there.
The defendant's appeal was successful before the Second Senate of the Federal Labour Court. It led to the case being referred back to the Regional Labour Court. Contrary to the opinion of the lower courts, in the case in dispute it is not necessary for constitutional reasons to regard both establishments as a single business for the purposes of protection against dismissal even if they are organisationally independent. Whether this is the case requires further findings by the Regional Labour Court.
Source: Press release of the Federal Labour Court
Federal Labor Court, Judgment of October 28, 2010 - 2 AZR 392/08 -
Previous instance: Hamburg Regional Labor Court, judgment of January 17, 2008 - 7 Sa 41/07 -
Goldberg Attorneys at Law
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law (IT law)
E-mail: info@goldberg.de
