In a recent decision the German Federal Labour Court made some welcome clarifications with regard to the entitlement to give and to reject a notice of dismissal.

Basic principles re the entitlement to give and to reject a notice of dismissal

Under German law notice can only be given by duly authorized persons and, in case of any doubts about the authorization, the terminated employee may reject the dismissal. In particular where there are deadlines (e.g. the end of a probationary period) such rejection can lead to significant additional costs for the employer as any new dismissal following the rejection might be too late for the applicable deadline.

The employer´s registered legal representatives (e.g. board members or managing directors) are always entitled to give the notice without the need to show further authorization. If, however, the notice of dismissal is given by any other authorized representative of the employer a power of attorney needs to be attached when delivering the notice letter. The PoA needs to be an original (i.e. with wet signature; copy, fax, email etc. is not sufficient!) and signed by a competent board member or a competent managing director.

If there is no such PoA and the employee promptly rejects the notice, it is ineffective even if the representative had in fact been authorized properly. A rejection of the dismissal is not possible, (i) if the employer had informed the employee prior to this about the authorization of the relevant representative to give notices of dismissal or (ii) if the relevant representative occupies a position within the company that is usually connected with the entitlement to give a notice of dismissal and the dismissed employee had knowledge of this. The employer himself can reject the employee`s rejection if it is given by a representative of the employee (e.g. a lawyer) who does not present an appropriate power of attorney himself.

The facts of the decided case

The parties argued about the effectiveness of a dismissal. The letter of dismissal had been signed by the employer´s chief human resource manager with the supplement “ppa” (that is an abbreviation for proxer holder) and by a personnel officer. According to the commercial register the chief human resource manager was at the same time a proxy holder and authorized to represent the employer together with a managing director or another proxy holder. The plaintiff employee rejected the dismissal on the grounds that an original power of attorney showing the proper authorization had not been presented to him.

The judgment of the German Federal Labour Court

The German Federal Labour Court confirmed that the rejection of a dismissal is not possible as far as (i) the notice of dismissal is given by a person in a position that is usually connected with the right of termination (e.g. proxy holders, chief representatives or chief human resource managers) and (ii) the dismissed employee is informed that the person giving the notice of dismissal has such a position in the company. Furthermore, the federal judges made clear that a dismissal given by a proxy holder with the power of sole representation cannot be rejected by the employee irrespective of the employee´s knowledge regarding the position as proxy holder if the proxy has been registered in the commercial register for over 15 days.

In addition, the German Federal Labour Court decided that a notice of dismissal given solely by a chief human resource manager who is also a proxy holder without the power of sole representation cannot be rejected if the employee knew that person was the chief human resource manager. In the view of the federal judges, the entitlement of the chief human resource manager to give a notice of dismissal on his own is not restricted by the fact that he is at the same time proxy holder without the power of sole representation. These principles do also apply if the chief human resource manager signs the letter of dismissal with the supplement “ppa” as a valid representation does not require that the representative makes clear on the basis of which authorization he is acting.

Nevertheless, the German Federal Labour Court could not make a final decision as the lower court had not made any findings with regard to the question of whether the plaintiff employee knew that the person terminating the employment relationship was the chief human resource manager. Therefore the German Federal Labour Court remanded the case.

 

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