4.2.5.2 Vertrauensschutz as an exceptional exception to the ex tunc effect

188. It is noteworthy that the reference date lies more than three years back in time from the date upon which the Landesarbeitsgericht delivered its decision. According to the Landesarbeitsgericht the obligation of national courts to disapply §622 II 2 BGB stretches to other dismissals next to the one at issue. The obligation has ex tunc effect, too. That is, the correct term of notice for dismissal applies ex tunc to dismissals from 2 December 2006 onwards. As time went by, the application of the correct term of notice is embodied by the employer’s obligation to pay to the employee an amount equal to the monthly salary for the amount of months that should be added to the wrongful term of notice. In that way, the ex post facto application of the correct statutory term of notice results in an “upward adjustment” to repair the discrimination on account of age.1

189. In relation to the changes in the legal relationship resulting from the disapplication of the legislative provision upon which the legal relationship relied, the Landesarbeitsgericht notes:

Against the background of the rule of law (Rechtsstaatlichkeitsprinzip) – which requires that legal subjects can rely on the legality of legal relationships building on the law in force – the Landesarbeitsgericht puts the principle of the protection of legitimate expectations and the principle of legal certainty on the stage. These principles form part of Union law and have to be respected by national courts, especially in cases in which due to the development of law a legislative provision is modified or disapplied ex tunc.3 Immediately, however, the Landesarbeitsgericht puts forward some counterbalance to the principles indicated. It states:

In relation to the case at hand, the employer legitimately expected that the threshold adopted in §622 II 2 BGB was applicable to the dismissal of Kücükdeveci. On the other hand, however, Kücükdeveci should have been protected by a legislative provision implementing Directive 2000/78. The German provision at stake appeared to be an incorrect implementation of this directive. The term of notice applied in the legal relationship between private parties thus relies on an erroneous legislative provision. As stated, directives lack direct horizontal effect and in horizontal proceedings national courts cannot set aside national provisions as a result of a substantive compatibility review against a directive.5 Nevertheless, according to the rulings in Mangold and Kücükdeveci the employee is protected by the generalprinciple prohibiting age discrimination. In that light, the Landesarbeitsgericht states:

Clearly, in order to achieve the “Herstellung der materiellen Gerechtigkeit”, a balancing of rights and interests is thus inevitable in cases like the one at issue and the principle of non-discrimination is of particular importance. The Landesarbeitsgericht explicitly requested the Court of Justice for a decision on the question whether the legitimate expectations of the employer should be protected. The Court, however, remained silent on the matter. In reaction to this silence, the Landesarbeitsgericht takes a swing and states:

The Landesarbeitsgericht assumes that the Court of Justice does not accept that the effect of its rulings is diluted by the protection of legitimate expectations.8 Indeed, earlier case law of the Court of Justice clarifies that the effect of rulings of the Court of Justice can be temporally restricted only in exceptional cases in which there are “overriding considerations of legal certainty”.9

190. In spite of the fact that the Court of Justice seems to take a rather rigid attitude towards the protection of legitimate expectations, the Landesarbeitsgericht states that national courts can still decide to protect these expectations when, considering the special circumstances of the case, the rule of law requires them to do so.10 With the Court’s ruling in Dansk Industri this statement can be questioned. Either way, the Landesarbeitsgericht immediately adds that German labour courts have rarely protected legitimate expectations.11

Although in Kücükdeveci the Court of Justice thus remained silent about the question whether the employer’s legitimate expectations should be protected in this very case, the Landesarbeitsgericht wanted to be clear about this matter. First, the Landesarbeitsgericht briefly considers:

The Rechtsänderung (change in law) following from the substantive compatibility review is that §622 II 2 BGB is Unanwendbar13 (inapplicable). The subsequent consideration reads as follows:

The Landesarbeitsgericht sets out that parties to a case that has not yet been decided by that date, can invoke the disapplication of §622 II 2 BGB against their employer, unless the employer would find himself in unreasonable hardship resulting from the extended term of notice. Parties cannot invoke the disapplication of the problematicprovision if their case has been decided before the date upon which the Court of Justice’s judgment was published.

Conversely, the Landesarbeitsgericht reasons, the protection of legitimate expectations prevails when a national court is asked to deliver a ruling in a case that had been closed already before the publication of the Court of Justice’s ruling in Kücükdeveci. The Landesarbeitsgericht holds that in this respect legitimate expectations can be considered to be protected by the open norm (Generalklausel) of Treu und Glauben (§242 BGB) and the doctrine of Verwirkung (forfeiture of rights). 15

191. After its exploration, the Landesarbeitsgericht reports the contents of the settlement between Kücükdeveci and Swedex in a few words. As indicated, Swedex agrees to respect the extended term of notice for dismissal in retroaction, which results in the payment of an amount equivalent to three months of pay. The settlement reflects that the disapplication of §622 II 2 BGB has not caused unreasonable and disproportionate hardship on the side of Swedex, nor has it threatened Swedex’s existence in any other way.16 Therefore, given the prerequisites for the Vertrauensschutz, Swedex would not be successful in claiming the protection of its legitimate interests. And, since Kücükdeveci has challenged the short term of notice on time she has not forfeited her claim for the observation of a longer term of notice.17

192. Lastly, it should be noted that although its considerations on the protection of legitimate expectations are reasonable, the approach taken by the Landesarbeitsgericht would not be in line with what the Court of Justice has later held in Dansk Industri. After all, according to the Landesarbeitsgericht national courts have the opportunity to give the protection of legitimate expectations precedence over the principle prohibiting age discrimination. Regardless of the remark that this can only take place in exceptional cases, it nonetheless cannot be reconciled with the consideration of the Court of Justice in Dansk Industri which seems to not give national courts any space to take a decision on the protection of legitimate expectations of a private party that relied on a legislative provision that has to be set aside because of its incompatibility with the principle prohibiting age discrimination.18