The successful management and timing of compliance investigations requires careful consideration of the statutory two-week exclusionary period for immediate dismissal for cause of employees involved in any compliance violations.
In German law, an immediate dismissal for cause is only valid and legally effective if the competent works council was duly heard and the written dismissal notice is served to the employee within two weeks from the date the employer obtained knowledge of the circumstances forming the basis of the dismissal (sec. 626 para. 2 of the Civil Code). The two-week period is strictly applied. In principle, the exclusionary period starts to run immediately from when the relevant circumstances are known to the individual who actually has the right to dismiss the employee. This is either the employer itself or individuals who are authorised to represent the employing entity by statute (e.g. managing directors of a GmbH or board members of an AG) or contractually (e.g. HR Directors).
In a case involving a compliance investigation, the Court of Berlin-Brandenburg (October 23, 2014, file no. 21 Sa 800/14) decided that the two-week period started to run when the board of the employing Bank had received the final report of the Bank’s compliance department. The Court ruled that until the final report the employer had not received complete and reliable knowledge of the facts underlying the dismissal. In particular, a further hearing of the employee was still necessary from the Court’s point of view in order to give the employee an opportunity to provide evidence in her favour.
However, in another case decided by the Labour Court of Hamm (July 15, 2014, file no. 7 Sa 94/14), the two-week period started to run already before the final report of the compliance department had been submitted. The compliance department of the employing entity’s parent company had conducted investigations on the matter and informed another employee of the results. This employee in turn informed the HR Director of the employing entity, who then only received the final auditory report more than a month later. In the view of the court the final auditory report contained no additional information. The Court therefore ruled that the HR Director had received complete and reliable knowledge when he had been orally informed on the results of the investigations.
In summary, in complex group-wide compliance investigations, either by internal or external investigators, a diligent timing and communication plan must be implemented. It is important to be aware that any oral or written reports to the authorized representatives of the employing entity within the company group may start the two-week exclusionary period for immediate dismissal for cause.