Cancellation agreement and threat of exceptional notice of dismissal

Employers threatening to issue a notice of dismissal with immediate effect ought to have serious grounds for terminating the employment relationship. That was the verdict of the Landesarbeitsgericht (LAG) Köln [Regional Labour Court of Cologne] (Az.: 11 Sa 114/16).

In addition to ordinary notice of dismissal, employers can also issue exceptional notice of dismissal. We at the commercial law firm GRP Rainer Rechtsanwälte note that there needs to be good cause in order for an exceptional notice of dismissal to be effective. Besides dismissal, employers can often make use of a cancellation agreement to terminate the employment relationship.

In its ruling of October 19, 2016, the LAG Köln clarified that employers can only entertain the notion of issuing exceptional notice of dismissal if it must assume taking into account all of the facts and circumstances that the threatened dismissal would most likely not stand up to a judicial review by a labour court. Moreover, there needs to be strong suspicion in cases involving dismissal based on suspicion, i.e. there should be a high probability of the suspicion being true.

This very criterium was not fulfilled in the case that came before the LAG Köln. In that case, the employer had presented an employee with the prospect of exceptional notice of dismissal, with the parties ultimately settling on a cancellation agreement. Notwithstanding this, the employee then contested said agreement.

The employee“s responsibilities included carrying out surveillance activities in a department store together with a worker from an outside company based on the „four-eyes“ or „dual-control“ principle. The food department was monitored by cameras. Following a body search performed on the worker employed by an external company, it was established that he had stolen food. He also admitted to further incidences of theft. It was beyond dispute that the plaintiff had been in the camera room again, thus there were grounds to suspect that he had manipulated the cameras in order to conceal the offences. For this reason, the employer threatened him with dismissal and the employee subsequently signed a cancellation agreement.

However, the LAG Köln ruled that the cancellation agreement was null and void, stating that while it is possible in principle for notice of dismissal to be issued in the absence of comprehensive evidence, there would then need to be a strong suspicion and all reasonable potential explanations exhausted. The Court went on to say that the suspicion here had been based on mere assumptions and did not constitute a strong suspicion. It was therefore not permissible for the employer to threaten with dismissal as a way of inducing the employee to sign the cancellation agreement.

Exceptional notice of dismissal should always be well prepared. Lawyers who are experienced in the field of employment law can advise employers.

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GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

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