Dismissal of a consulate employee – No access to German jurisdiction due to sovereign immunity?

BAG judgment of April 3, 2024, Ref.: 2 AZR 72/24

The Federal Labor Court (BAG) dealt with the question of whether and to what extent German courts may review the dismissal of an employee by a foreign state. The focus was on so-called state immunity, i.e. the principle that states cannot be sued in the courts of other states, particularly when sovereign activities are involved. 

Background to the case

The plaintiff, an employee of the Consulate General of a foreign state since 1999, most recently worked in the so-called "Federal Benefits Unit". This unit supports recipients of US social security benefits in Germany, Switzerland, Liechtenstein and Austria. The plaintiff was treated as a severely disabled person and was therefore subject to special protection against dismissal under German law. 

In August 2020, the foreign state duly terminated the employment relationship. The plaintiff then brought an action for unfair dismissal before the competent labor court. She argued that the dismissal was socially unjustified and had also been made without the required approval of the Integration Office, which made it invalid under German law. The defendant state, on the other hand, invoked state immunity and the fact that the plaintiff had performed sovereign duties. In addition, the "security certification" required for her work had been withdrawn, which made further employment impossible. 

Key legal issues

The central legal issue was whether German courts are authorized to review the dismissal if a foreign state acts as employer and invokes sovereign reasons. In principle, states and their bodies are not subject to the jurisdiction of other states when sovereign activities are involved. 

The Labour Court and the Regional Labour Court had dismissed the employee's claim because they assumed that the review of the dismissal was inadmissible due to the principle of state immunity. However, the BAG overturned these decisions and clarified that German jurisdiction is not excluded across the board in this case. 

Key considerations of the court

The BAG found that the review of the validity of a termination by a foreign state is not generally excluded. The decisive factor was whether the plaintiff's activity was actually of a sovereign nature. This means that it depends on whether the plaintiff's tasks were so closely connected to the sovereign tasks of the state that a judicial review would affect the core area of state authority (legislation, administration of justice, exercise of police power, exercise of foreign or military authority).

The BAG emphasized that not every activity in an embassy or consulate is automatically sovereign. Rather, it must be examined on a case-by-case basis whether the specific activity - in this case the support of social benefit recipients - is actually sovereign or rather administrative and therefore under private law. Only if the activity is in the core area of state authority is state immunity mandatory. 

Another important point was the question of whether the withdrawal of the "security certification" is a sufficient reason for termination and whether German courts may review this reason. The BAG clarified that although the review of the content of a foreign sovereign act (such as the withdrawal of the security certification) is generally excluded, it is possible to review whether such an act exists at all and whether it was actually necessary for the plaintiff's activities.

In addition, the court stated that the special protection against dismissal for severely disabled persons also applies to employees who are employed by foreign consulates, provided that the employment relationship is subject to German law. 

Consequences of the ruling 

The ruling of the Federal Labor Court makes it clear that the dismissal of employees of foreign consulates in Germany is not generally excluded from German jurisdiction. 

The Federal Labor Court therefore overturned the ruling of the Regional Labor Court and referred the case back for a new hearing. The Higher Labor Court must now clarify whether the plaintiff's activity was actually sovereign. If this is not the case, it must examine whether the dismissal was socially justified and whether the requirements for the dismissal of a severely disabled person were met.