Labor law | LAG on high severance payment claim

Labor law | LAG on high severance payment claim

Employment law | The Hamm Regional Labor Court ruled in a judgment (case no.: 6 Sa 903/21) that the city of Iserlohn is not entitled to repayment of a severance payment of around € 265,000 that it had initially promised to an administrative employee in a termination agreement and later paid.

In the specific case, the defendant administrative employee had been employed by the City of Iserlohn since January 2008 and received a monthly salary of around € 3,700. After differences arose with superiors due to the introduction of a new shift model, the city offered the defendant the termination of his employment contract with seven months’ paid leave and a severance payment of € 250,000 plus increments in the event of early termination. The employment relationship was terminated on April 30, 2019 and the city paid a severance payment of € 264,800 gross. As a result, a public prosecutor’s investigation was initiated, the defendant’s assets were frozen and the municipal supervisory authority intervened. In the meantime, charges have been brought against the former mayor of the city of Iserlohn, the then Head of Human Resources and the defendant employee on suspicion of breach of trust.

The Iserlohn Labor Court initially upheld the city’s claim for repayment of the severance payment. The reason given was that the termination agreement in accordance with § Section 74 para. 3 State Staff Representation Act is ineffective. The city had not sufficiently informed the staff council about the contents of the employment contract, in particular the amount of the severance payment, which led to the invalidity of the termination agreement and the loss of the legal basis for the payments made. The Hamm Regional Labor Court did not follow this reasoning. The inadequate involvement of the staff council was due to an omission on the part of the city, so that it could not invoke the resulting invalidity of the termination agreement. It was also not apparent that the defendant had violated criminal law or common decency when concluding the contract, so that he was entitled to accept the offer that seemed advantageous to him.

Source of information: Press office of the Hamm Regional Labor Court, press release dated 15.02.2022


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