Germany’s Federal Labour Court Sets One-Third Performance Threshold for Dismissal as Multiple Compliance Deadlines Converge
Published on 07/13/2026 at 07:34 | Redaktion boerse-global.de
Employers who want to dismiss a worker for poor performance must now show that the employee’s output lags roughly one-third below comparable colleagues, Germany’s Federal Labour Court ruled on 18 June 2026 (case 2 AZR 213/25). The judgment underscores that a behavioural dismissal requires a formal warning beforehand, even when underperformance stems from genuine overload. The same ruling simultaneously strengthened parental-leave protections: if a parent splits parental leave into several segments, the special dismissal shield springs back into force before each individual segment begins — even if all segments were requested in a single letter. Employers must therefore verify whether further parental-leave periods have been logged before issuing any notice.
The performance-benchmark decision arrives as companies face a tight July 31 deadline under the EU NIS2 cybersecurity directive. Enterprises that miss the registration deadline risk fines of up to €10 million or 2% of global annual turnover. The digitalisation of time tracking mandated by the Federal Labour Court in September 2022 (case 1 ABR 22/21) adds another layer of complexity: any electronic system must satisfy labour law, data-protection rules and works council co-determination rights simultaneously.
A separate ruling on 15 April 2026 (case 7 AZR 114/25) raised the bar for works council members demanding higher pay. The court held that a councillor must prove concretely what salary they would have earned in a hypothetical job during the disputed period — pointing to vague theoretical potential no longer suffices. Claimants must also ensure the standalone employment contract is formally introduced as the subject of the dispute. On confidentiality duties under § 79 of the Works Constitution Act (BetrVG), the same decision clarified that only explicitly designated trade secrets are covered; planned job cuts do not fall under the secrecy obligation.
Co-determination rights continue to shape daily operations. Under § 87 (1) No. 5 BetrVG, works councils have a broad say in vacation principles, schedules and the timing of individual leave — though the total duration of leave is not negotiable. Similarly, the court reaffirmed that commuting from home to work is not working time, but employer-ordered internal travel must be paid. Changing into required protective gear also counts as compensable time, and company agreements can provide clarity.
These legal shifts play out against a backdrop of industrial restructuring. At Volkswagen, the group works council sharply criticised management’s communication regarding planned cost cuts. Plants in Emden, Hannover and Zwickau are considered at risk, and media reports suggest up to 120,000 positions could be cut after a sharp sales drop in China during the second quarter. O2 Telefónica is trimming more than 1,000 roles — roughly every sixth or seventh position — and has launched a voluntary redundancy programme. Labour-law experts remind employees that they are not obliged to sign termination agreements; anyone facing a dismissal must file a protection claim within three weeks.
On a more positive note, the acquisition of the Josephs-Hospital has stabilised the Ameos-Klinikum in Warendorf, according to its works council. The majority of staff have already signed new contracts.
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