Is seniority a legal parameter when there are layoffs in Germany?

Question

In an answer to a recent question, it was stated that

(...) unless you are in Germany or a country with similarly rigid firing order

Is there a legally binding mechanism which takes the seniority into account when a company must choose between several people to be fired?

Is it THE algorithm for the choice, or only ONE of the elements to take into account?

(I am of course not expecting an answer with all possible cases, just a general one on a peculiar law, also interested in other similar setups in the EU)

Answer 1

In Germany, a layoff is called Betriebsbedingte Kündigung (Translation: "Termination due to reasons of corporate setup". Means the job is gone with no replacement, instead of the person was fired to hire someone else.)

Sind mehrere vergleichbare Arbeitnehmer betroffen, muss der Arbeitgeber die Arbeitnehmer, denen er kündigen möchte, zudem nach bestimmten sozialen Kriterien auswählen (Sozialauswahl). Er muss dabei die Dauer der Betriebszugehörigkeit, das Lebensalter, eventuelle Unterhaltspflichten und eine eventuelle Schwerbehinderung des Arbeitnehmers ausreichend berücksichtigen. Auf Verlangen des Arbeitnehmers hat der Arbeitgeber dem Arbeitnehmer die Gründe anzugeben, die zu der getroffenen sozialen Auswahl geführt haben.

Translation (emphasis mine for the context of this question):

If several comparable employees are affected, the employer must also select the employees whom he wishes to dismiss according to certain social criteria (social selection). In doing so, he must take sufficient account of the employee's length of service, age, possible support obligations and any severe disability. At the employee's request, the employer must inform the employee of the reasons that led to the social selection made.

So how do you weight 10 years and 2 ex-wife's against 5 years, a wife and 2 kids? There is no single formula, but the formula has to be made available to all who got laid off. It's called the "Sozialplan".

If you have no "Sozialplan" or your Sozialplan will not hold up in court, the termination is invalid and the company will need to pay the employee as if they had been employed all the time since the layoff. As a court ruling on those cases can take years, that is a pretty hefty risk in the books and many companies rather pay a good severance (which is not legally required in Germany at all) to make sure nobody sues, than having that risk in their books.

Answer 2

When a company is large enough to have a Betriebsrat (workers council), then §112 BetrVG says that mass-layoffs need to be planned according to a Sozialplan (social plan) which is to be negotiated between the Betriebsrat and company management, with the Agentur für Arbeit (labor office) acting as a mediator if no consensus can be found.

The law says that the Sozialplan should protect those employees who:

• Have the largest economical disadvantages through loss of income
• Would lose retirement benefits
• Would have to move or take a job at a much more distant place
• Have a low chance to find a new job
• Are relevant for the existence of the company

And prefer to fire those who:

• Could be moved to an adequate different job at the company or one of its subsidiaries but reject that offer

So no, seniority alone is not directly relevant in this case. But it can be indirectly relevant, because people with high seniority are often in a situation where it is difficult for them to find a job at a different company, are often also very important for the existence of the company. They also tend to have a higher income, so there is the argument that they have the largest disadvantage through loss of income.