Redundancy rules in Germany: social selection explained

In Germany, a redundancy dismissal (betriebsbedingte Kündigung) is only valid if the employer conducts a proper “social selection” (Sozialauswahl). The idea: when several employees are doing comparable work, the employer must dismiss those who are least socially protected. The law requires a structured comparison based on age, length of service, family obligations and severe disability. Errors in this process are one of the most common reasons why redundancy dismissals are overturned in court.

Key takeaways

• A redundancy dismissal is only valid if the employer makes a correct “social selection”. Redundancy cases are often won because of errors in social selection – not because the job loss itself was unlawful.
• Social selection is limited to the establishment (Betrieb) and only applies to comparable employees.
• Four legal social criteria must be considered: length of service, age, dependent family obligations, and severe disability.
• Some employees are excluded from social selection, e.g., those in probation, with special protection or who are considered “key employees”.
• A dismissal is invalid if no social selection was made or if it is clear that more protected employees were dismissed.

Redundancy dismissal and social selection

To justify a redundancy dismissal under the Dismissal Protection Act (KSchG), the employer must prove three things:

1. A pressing operational reason eliminates the job (e.g. restructuring, relocation, closure).
2. No reasonable alternative employment exists inside the company.
3. A correct social selection has been carried out.

Example: A company has 50 production workers but only needs 30 after restructuring. The employer cannot freely choose which 20 to dismiss. Instead, he must select those least socially protected based on the statutory criteria. However, there is an exception: If all employees in the establishment are dismissed due to full closure of the branch, no social selection is required. Obviously. 

Social selection applies only within the “establishment”

Step one: the selection and comparison is applied only on the relevant plant or “establishment” (Betrieb), not company-wide.

Example: ABC GmbH has 230 employees across Hamburg, Munich, Berlin and Düsseldorf. If dismissals only affect the Berlin plant (80 employees), then only these 80 employees are part of the social selection. Workers in other cities are not included.

In practice, defining what constitutes a single “establishment” can be complex. Wrong grouping leads to invalid dismissals. Legal advice is recommended in unclear cases.

Social selection only among “comparable employees”

Step two: the employer must define a group of comparable employees. Employees are comparable if:

• They perform similar work and
• The employer could reassign them to another equivalent position by unilateral instruction.

Short retraining periods (sometimes up to 3 months) do not prevent comparability.
Employees do not have to sit in identical roles or be directly interchangeable.

Exceptions: comparable employees who may be excluded

Step three: even if employees are comparable, the employer may exclude certain groups:

Employees in the waiting period

Individuals with contractual or collective “no-termination clauses” are excluded – unless such clauses were created abusively to block redundancies.

Employees who cannot be ordinarily dismissed

Those with contractual or collective “no-termination clauses” are excluded – unless such clauses were created abusively to block redundancies.

Employees with special protection

E.g. pregnant employees, those on parental leave, or employees with severe disability – unless the necessary authority approval has already been granted.

Key employees

Key employees / key contributors  (“Leistungsträger”) may be excluded from the selection process,  if their continued employment is an important business interest. However, this exception is applied very narrowly.

Examples include:

• Unique specialist knowledge or certification
• Exclusive customer or supplier ties
• Essential language skills for international reporting
• Skills linked to legal or public safety duties (e.g. part-time firefighter as the mandatory safety appointee)

Preserving staff structure

The employer may, in exceptional cases, exclude comparable employees from the social selection process if this serves to “maintain a balanced workforce structure.” In many cases, this means: Age structure. Idea is to prevent the workforce from becoming disproportionately old. Since older employees usually score better in the social selection due to their age and longer length of service, they would otherwise be favored.

For that reason, the Federal Labour Court (BAG) accepts that an employer may terminate employees proportionally within different age groups – for example: employees up to 30, 31–40, 41–50, etc. Grouping employees by level of education or qualification is also permitted.

Criteria used in social selection

The employer must evaluate each comparable employee against four statutory criteria:

1. Length of service
2. Age
3. Family support obligations (Unterhaltspflichten)
4. Severe disability

All criteria are equal in importance. Employers may use a points system, but it must reflect a fair balance and allow room for individual case differences.

Additional criteria are only allowed in rare cases and only as secondary factors (e.g., recognised accident injury, single parenting).

Not allowed: spouse income, personal wealth, alleged misconduct or health-based performance issues.

Consequences of faulty social selection

A redundancy dismissal is invalid if:

• No social selection was made at all, or
• The dismissed employee is clearly more socially protected than someone retained.

Example: Two workers are the same age. One has 5 years’ service and 4 dependants; the other has 8 years’ service and no dependants. Dismissing the first would likely be unlawful.

Redundancy cases are often won because of errors in social selection – not because the job loss itself was unlawful.

Exception: review only for “gross errors”

In some scenarios, courts may only check the social selection for gross errors, e.g.:

• A collective agreement or works council agreement sets binding selection guidelines.
• A redundancy plan (Interessenausgleich) lists by name the employees to be dismissed.

“Gross error” means essential elements were ignored or the selection is obviously unreasonable – e.g. excluding all union members or ignoring disability data completely.

Burden of proof

The employee must first show why the selection was wrong and name colleagues who are less protected.
If they lack access to data, they may demand disclosure from the employer.
If the employer refuses to provide data, the dismissal is automatically invalid.

Works council hearing

The works council must be informed about the planned dismissal including full social selection details. If not properly consulted, the dismissal is invalid on that ground alone. A formal works council objection improves severance negotiation leverage and may trigger a continued employment right until the end of the notice period.

Frequently asked questions (FAQ)