Federal Participation Act – new rules for dismissing severely disabled employees from 1 January 2017

On 1 December 2016 the lower house of the German parliament, the Bundestag, adopted the German Federal Participation Act (the “Act”), which entered into force on 1 January 2017. The aim of the Act is to strengthen the participation and self-determination of people with disabilities. It will come into force in three rounds of reform. Businesses are only gradually becoming aware that (even at the first stage) the protection of severely disabled people from redundancy has also been significantly reinforced from 1 January 2017 on a practical level by extending the rights of those representing severely disabled employees. Thus businesses will have to gear themselves to even more complex dismissal proceedings.

New rules on dismissals involving representatives of the severely disabled

The Federal Participation Act provides among other things for an amendment to the Ninth Book of the German Social Security Code (the “Code”), which deals with the rehabilitation and participation of disabled people. In the course of the legislative reforms, section 95 of the Ninth Book of the Social Security Code will become section 178 of the Ninth Book of the amended version of the Code from 1 January 2018. However, section 95 of the Ninth Book will already contain a new third sentence from 1 January 2017 stating that the dismissal of a person with severe disabilities which is issued by the employer without involving the severely disabled persons’ representative is ineffective. Despite the new definition of disability in section 2 subsection 1 of the Ninth Book of the Code, employees with a degree of disability recognised as being at least 50% will be regarded as being severely disabled. People with a degree of disability of at least 30% but less than 50% can apply to be treated as equivalent to a person with severe disabilities. They then enjoy essentially the same protection.

Previous legal situation: consultation not a precondition for effective dismissal

Under the previous legal situation, it was necessary to consult the person responsible for representing the interests of severely disabled employees beforehand. However, this was not a precondition which had to be met in order for a dismissal to be effective.

Tougher requirements from 1 January 2017

Since 1 January 2017 things are different: if a company fails to properly inform the severely disabled persons’ representative and to consult him or her before giving notice, performance or completion of the measure no longer simply has to be suspended and repeated after seven days. The notice of dismissal is ineffective pursuant to section 95 subsection 2 sentence 3 of the Ninth Book of the Code (as amended) (from 1 January 2018 section 178 subsection 2 sentence 3 of the Ninth Book of the Code). The representative’s option to bring the matter before a labour court (by way of an interim injunction) in order to enforce the employee’s right to participate in working life is no longer sufficient for the legislator.

Consequently, the formal and procedural requirements for a notice of dismissal to be effective have increased significantly since 1 January 2017. At least three proceedings have to be conducted if a disabled employees’ representative and works council exist:

• apart from the consent of the Integration Office (previously section 85 Ninth Book of the Code, and in future section 168 Ninth Book of the Code)
• and proper consultation of the works council (section 102 Works Constitution Act),
• it must also be ensured that the severely disabled persons’ representative is able to properly participate (section 95 subsection 2 sentence 3 Ninth Book of the Code (as amended), and in future section 178 subsection 2 Ninth Book of the Code (as amended)).

If notice is to be given as part of mass redundancies, the procedure set out in section 17 German Act Against Unfair Dismissal also has to be carried out in advance, although this act is not altered by the Federal Participation Act. If the Act Against Unfair Dismissal applies, a reason for dismissal is of course required as well (section 1 subsection 2 Act Against Unfair Dismissal).

Outstanding questions – parallels to consultation of works council?

It is not exactly helpful for the day-to-day practices of businesses that the legislator has not specified any time limits for consultation and statements in section 95 Ninth Book of the Code (as amended) (and section 178 Ninth Book of the Code (as amended)). In this respect it would have been opportune to adopt the differentiated rule in section 102 German Works Constitution Act. However, the fact that this did not happen was probably not a conscious decision. Ultimately, only case law will bring clarity in this respect. Until then, businesses will have to be able to let themselves be guided by section 102 Works Constitution Act and to use the rules on time limits specified there by analogy. Moreover, companies should make sure that they obtain a conclusive statement from the severely disabled persons’ representative before issuing notice of dismissal.

The restated version of section 95 subsection 2 of the Ninth Book of the Code (and section 178 subsection 2 Ninth Book of the Code (as amended)) also fails to make clear how the timing of the consultation of the severely disabled persons’ representative should relate to the timing of the employer’s application to the Integration Office. Hence the representative and the Integration Office should be simultaneously involved in order to guarantee that they have the same information status and to avoid ineffective notice being given. To avoid delays, all the participation proceedings should ultimately be carried out on a parallel basis.

Conclusion

The Federal Participation Act strengths the rights of employees with severe disabilities and equivalent employees in connection with notices of dismissal. Employees will also have to make sure that the severely disabled persons’ representative is informed and consulted before giving notice. The uncertainties associated with the incomplete new legislation will have to be jointly managed by the employer and employee representatives. With their new tasks, the responsibilities taken on by those acting as representatives of the severely disabled towards their employers will also increase as a result of their greater influence. Companies will be able to fall back on their experience gained in connection with section 102 Works Constitution Act in this context.