Retroactive Nullification of Mass Layoffs: Europe’s Highest Court Reshapes Employer Obligations

A series of summer rulings from European courts has tightened worker protections across multiple jurisdictions, leaving employers with little room for procedural error. The European Court of Justice (ECJ) delivered the most striking blow in July, ruling that mass layoffs can be declared retroactively invalid if companies fail to follow mandatory consultation procedures or respect prescribed deadlines. Member states are now required to amend their national laws to ensure that employees benefit from this safeguard.

European courts are tightening procedural requirements across the board, and the same principle applies to workplace safety. Many UK businesses risk significant fines for missing health and safety documentation. A free Health & Safety Toolkit provides ready-to-use risk assessments and checklists to help you stay compliant. Get your free Health & Safety Toolkit

The ECJ’s decision came alongside a separate ruling on consumer rights issued on 9 July. The court classified personalised streaming subscriptions as digital services rather than digital content, granting consumers a 14-day right of withdrawal that cannot be extinguished early even when they consent to immediate service delivery.

Works Councils Gain Cross-Border Standing

In a parallel development, the Berlin-Brandenburg State Labour Court provided clarity on 15 April regarding the international jurisdiction of German courts in labour disputes. The case involved the works council of an airline operating at Berlin Brandenburg Airport. Although the company is registered in Malta, the court affirmed that German courts have jurisdiction, allowing the local works council to exercise its co-determination rights in full. The council’s election had not been challenged, confirming its operational capacity.

Switzerland’s Federal Supreme Court also strengthened employee positions on 12 January. It ruled that anyone who acquires a contractual claim from an employment relationship can bring a lawsuit at the employee’s habitual place of work. Citing the Lugano Convention, the court anchored the venue to where the work is performed, not to the current creditor’s location.

Cross-Border Tax Rulings and Part-Time Side Jobs

The German Federal Fiscal Court (BFH) clarified the tax treatment of cross-border commuters between Germany and Switzerland in 2026. An employee residing in Switzerland was denied a refund of withheld wage tax. Germany’s right to tax applied only to the 47 days the employee actually worked inside the country.

Meanwhile, the Graubünden High Court ruled in early January in favour of an employee who, alongside a part-time position, had founded a sole proprietorship and worked for competing businesses. The court found no violation of the duty of loyalty. It reasoned that for part-time employment, employers must generally expect employees to hold side jobs. Compensation claims were dismissed for lack of demonstrable causation.

Pay Transparency Deadline Expires Without Full German Implementation

The deadline for transposing the EU Pay Transparency Directive expired on 7 June 2026, and Germany has not yet fully incorporated the requirements into national law. The directive mandates reporting obligations for companies with 100 or more employees and reverses the burden of proof in cases of suspected discrimination – meaning the employer must prove no discrimination occurred.

A decision by Germany’s Federal Labour Court on 23 October 2025 had already signalled the direction of travel. The court held that if an employee learns of a higher salary paid to a male colleague in the same comparison group, that knowledge can serve as preliminary evidence of discrimination.

Just as courts are strengthening protections against discrimination, UK employers must also ensure robust compliance with the Health and Safety at Work Act 1974. A free toolkit offers nine practical tools to help you meet your legal duties and avoid costly penalties. Download the free Health & Safety at Work Act 1974 Toolkit

Coalition Agrees on Labour Law Overhaul – With Key Deferrals

The German federal government is preparing a comprehensive labour law reform. In July, the coalition committee agreed on a set of cornerstones:

• Fixed-term contracts without a specific reason can be extended from the current two-year limit to four years, with up to six renewals.
• The requirement for paper-format employment contracts will be replaced by text form as of 1 January 2027.
• Employees will need a doctor’s note from the first day of sick leave, eliminating phone-in sick notes.
• The minimum wage will rise to €13.90 in 2026.

The committee postponed any decision on a mandatory working-time recording system, pushing the reform of working-hours legislation to autumn.

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