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social plan

What you as an employer need to know

The social plan deals with the effects of changes in operation, for instance termination due to relocation of operations. The employee representative committee and the employer work out severance and relocation payments. This way, economic disadvantages for the employees are mitigated.

Fundamentals, you need to know

As an employer it is important for you to know: That unlike a balance of interests, the creation of a social plan is compellable. The ruling of the conciliation board is legally binding. As a result, employees receive individual legal claims. Entitled employees can use the agreed upon settlement to assert their own claim. This also applies to employees who have been wrongfully excluded from the circle of beneficiaries or who have left the company prematurely. Note: In this case it depends on whether or not an “effective date arrangement” was implemented in the social plan.

Inform timely and comprehensively

The stipulation of a social plan is done in a legally independent process. It is important for you to know: That if you as an employer are planning changes in operations, then it is your duty to inform the employee representative committee of your plans in a timely and comprehensive fashion. The negotiations will follow this. Employers often commit errors of form; it is therefore advisable to never enter these negotiations without prior legal counsel. Our law firm will of course advise you extensively on the necessary actions and will work out the best possible negotiation strategies for you.

There are exceptions where a social plan is not mandatory. If you run a newly created business: There is no requirement for a social plan. Even a downsizing can constitute an operational change, but may not require a social plan. 

What margin of discretion is available to you

The design of a social plan is at the discretion of the operating parties. If the social plan is agreed upon voluntarily, then the margin of discretion is continued forward. The margin of discretion is only limited by the principle of equal treatment and the prohibition of discrimination constituted by the General Act on Equal Treatment. Differentiation criteria can be created, if there is an objective reason. Note: When it comes to the consideration of the individual behavior of an employee, disputes can ensue quickly – e.g. when a voluntary termination serves to reduce severance payment. That is why our legal experts are by your side.

How to design a social plan according to your interests

Differentiation criteria offer employers great potential savings. In order to limit the social plan appropriately, you need to determine the exact operational situation, be aware of prohibition standards and know current labor law rulings. As employer you can profit from the use of targeted incentives. For example, you are allowed to offer payments to your employees, so that they will not file dismissal protection suits.

When designing a social plan be particularly vigilant: Agreements are subject to strict requirements. Have one of our specialist lawyers advise you on this topic.

You want to know how to design a social plan in a legally secure manner? And who can make use of social security benefits?

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