Possibility of Refusal to Accept Dismissal in the Absence of Explicit Authorization?

22.04.2016

[Cologne, ] In its judgment of 24 September 2015 (Ref.: 6 AZR 492/14), the Federal Labor ruled on the question as to whether it is possible to refuse to accept dismissal pursuant to § 174 sent. 1 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) (due to the failure of the party signing the notice of dismissal to include appropriate authorization) if such authorization had already been provided previously.

In the case at hand, the legal predecessor of the defendant, represented by its current attorney of record, terminated the employment relationship with the plaintiff, a salaried attorney, in a letter dated 20 June 2012. The notice of termination was accompanied by an original counterpart of the letter authorizing the attorney of record to terminate the employment contract with the plaintiff and make any other declarations required in connection with the dismissal. However, this initial dismissal proved to be invalid. The defendant then had the employment relationship severed again through its attorney in a letter dated 31 July 2012, but this letter only alluded to the original counterpart of the authorization letter enclosed with the initial notice of dismissal. The plaintiff refused to accept the dismissal.

The Federal Labor Court ruled that there were no grounds for refusal to accept dismissal pursuant to § 174 sent. 2 of the German Civil Code, reasoning that the plaintiff had already been adequately informed by the defendant of the fact that the attorney of record would also be authorized to continue to serve notice of dismissal in compliance with § 174 sent. 2 of the German Civil Code by virtue of the original counterpart of the authorization letter accompanying the initial notice of dismissal. According to the Court, the fact that the necessary authorization had already been presented in connection with a previous unilateral legal act will not under normal circumstances suffice for the purposes of providing authorization as required by § 174 sent. 1 of the German Civil Code, but the provision contained in § 174 of the German Civil Code does not give the recipient any right to refuse to accept the legitimacy of the authorization. The Court mentioned that the only possible recourse is to question the validity pursuant to § 180 of the German Civil Code in the case of any such doubt as regards the validity of the power of attorney, but the purpose of § 174 of the German Civil Code is to ensure that the recipient need not make any inquiries as to the position of the holder of the authorization or whether that party is authorized to carry out the legal act. In summary, the Court concluded that the recipient had been adequately advised of the existence of authorization within the meaning of § 174 sent. 2 of the German Civil Code by virtue of the purpose of § 174 of the German Civil Code since the authorization letter produced with the first notice of dismissal also applied to subsequent dismissals as seen from the point of view of the recipient of the authorization.

Implications for Practice

This decision shows once again how important the provision contained in § 174 of the German Civil Code can be in practice. As the Federal Labor Court also ruled in the case of this decision, every new notice of dismissal served by an authorized party must be accompanied by the corresponding authorization (which will regularly be the case, for example, when the notice of dismissal is not signed by a managing director or personnel manager, but by an employee of the personnel department or the head of marketing). The dismissal is then invalid if the recipient declines to accept it. As a result, the Federal Labor Court was able to exclude the possibility of refusal pursuant to § 174 sent. 2 of the German Civil Code in this case only because the original authorization letter was very broad. In practice, it is still always advisable to include a (new) authorization letter when repeating a dismissal.

In the case of dismissal by an authorized agent or representative, it is also always absolutely necessary to provide an original counterpart of the authorization letter and not merely a photocopy. However, if notice of dismissal is given by an officer (e.g., a managing director), the provision contained in § 174 sent. 1 of the German Civil Code does not apply, but special rules do apply in the case of civil-law partnerships. In conclusion, it is important to keep in mind that the right of refusal pursuant to § 174 sent. 2 of the German Civil Code is precluded if, for example, the head of the personnel department serves the notice since the requisite authority usually comes with the position.

If, however, an employee should refuse to accept dismissal due to failure to provide proof of power of attorney, such refusal will be valid only if announced in a timely manner. The Federal Labor Court assumes that refusal after more than a week elapses can no longer normally be considered to have been made in a timely manner. Finally, it is necessary to keep in mind that refusal to accept dismissal will also be invalid if notice of refusal is given by an authorized party but is not accompanied by an original of the power of attorney and the employer chooses not to acknowledge the refusal.

GÖRG Newsletter

We inform you about current legal developments in the areas that are relevant to you.

Please subscribe to receive our newsletter.

We're using cookies to statistically monitor the usage of our website.

OK Deny tracking Privacy policy