Will a notice of termination by an employee prior to a potential TUPE situation be deemed a circumvention of the German TUPE rules?
The answer is: It depends.
The general TUPE rules in Germany are the following: If a purchaser takes over control of an entity by way of a legal transaction, the relevant employments transfer to the purchaser provided that the employees concerned do not object to the transfer. Dismissals by reason of the transfer of the undertaking are invalid. However, dismissals for other reasons remain possible. E.g. if an employee objects to the transfer because his/her position will cease to exist at the seller’s company, the seller may dismiss the employee for business reasons.
In a recent decision, the German Federal Labour Court had to decide whether the following situation should be deemed a circumvention of the prohibition on dismissal of employees by reason of a transfer. An employer caused the employees to give notice of termination. Then the business was transferred to a purchaser and the purchaser employed some of the employees who had given notice before. As a result the TUPE rules did not apply.
The court decided that such notice of termination by employees and the subsequent recruitment of some of them by the purchaser should not be deemed to be a circumvention of the TUPE rules if neither the seller nor the purchaser promised employment at the purchaser’s to the employees. However, in the event that the employees could be certain of employment by the purchaser after the transfer of the business, the situation would be deemed a circumvention of the TUPE rules.
The same applies if the seller and the employee agree on a termination agreement prior to the transfer.
In a nutshell: If the seller and purchaser are uncertain whether the purchaser will (be able to) take over the employees, they have the option to agree on termination with the employees, or to cause the employees to give notice of termination themselves prior to the transfer of business. However, such a procedure must be evaluated in the particular circumstances of the given situation and in any case any communication about possible employment by the purchaser must be avoided.
