German Top Court Stipulates Unbreakable Dismissal Sequencing Amid Political Push to Soften Protections
01.07.2026 - 09:05:13 | boerse-global.de
Manager unemployment in Germany surged 14 percent in 2025, hitting 49,000, as the Federal Labour Court (BAG) issued a flurry of rulings that simultaneously tighten and clarify mass-dismissal rules. Against this backdrop, the government is weighing proposals to relax dismissal protection for smaller firms and startups, drawing fierce union opposition.
The sharpest shift comes from the BAG’s April 1, 2026 decisions (6 AZR 152/22 and 6 AZR 157/22), which make the sequence of a mass layoff mandatory: employers must first conclude the consultation procedure with the works council, then file the required notification with the Federal Employment Agency, and only afterwards hand out dismissal notices. Any deviation renders the terminations void. The court reinforced this stance on March 19, 2026 (2 AS 22/23), grounding the invalidity directly in the European Collective Redundancies Directive. A subsequent submission of the notification, the European Court of Justice ruled in October 2025, cannot cure the defect.
On June 25, 2026, however, the BAG offered a narrow reprieve. In decision 6 AZR 7/26, it held that minor inaccuracies in the mass-dismissal notification itself do not automatically nullify the layoffs. A company that announced 34 redundancies but ultimately carried out only 31 or 32 saw its dismissals upheld, because the error did not undermine the notification’s purpose.
For day?to?day HR practice, a May 7, 2026 ruling (2 AZR 184/25) strips certified mail (“Einwurf-Einschreiben”) of its automatic evidentiary value for proving receipt. That makes legally watertight delivery of dismissals and warnings considerably harder. At the same time, the Cologne Regional Court tightened requirements for the mandatory reintegration management process (BEM) as early as October 2025.
Overtime compensation rules also hardened. The BAG confirmed that extra hours are payable only if the employer explicitly ordered or tolerated them. Contractual “flat?rate” clauses covering overtime are valid only if they specify a concrete upper limit, such as ten percent of working time.
A separate line of case law targets severance pay. In March 2025, the Federal Court of Justice ruled that paying a conspicuously excessive severance package can constitute breach of trust (Untreue) or aiding such breach. This applies not only in the public sector but also in private industry when the sum is grossly disproportionate to salary. The Düsseldorf Regional Labour Court added in May 2025 that serious disloyalty during restructuring may justify extraordinary dismissal.
These legal clarifications coincide with a political debate over loosening Germany’s dismissal protection regime. The SPD has signalled openness to a limited trial run of exemptions for businesses with fewer than 50 employees and for startups. One model envisions employers effectively buying their way out of dismissal protection through severance payments. The SPD would confine such experiments to higher earners. Verdi chief Frank Werneke has threatened mass protests against any softening.
Labour law experts advise companies to adhere strictly to the “four?eyes principle” and maintain exhaustive documentation during separation processes to avoid legal and criminal pitfalls.
