All corrections
Substack March 5, 2026 at 03:08 PM

www.richardhanania.com/p/labor-freedom-is-the-best-explanation

3 corrections found

1
Claim
In Germany, a worker who is fairly dismissed due to business needs is entitled by law to 15 days of pay for every year they have spent with the employer.
Correction

German law does not generally guarantee automatic severance pay for redundancies; the commonly cited “half a month per year” amount is only owed in specific situations (e.g., when the employer offers it under §1a KSchG and the employee does not file a dismissal-protection claim).

Full reasoning
The post states that a German worker dismissed for business needs is *automatically* “entitled by law” to severance of **15 days’ pay per year of tenure**. That overstates German law. ### What the law and major summaries say - The OECD’s Employment Protection Legislation (EPL) country note for Germany explains that, for operational dismissals, a severance claim exists **only under specific conditions**: the employer must indicate in the termination notice that the dismissal is for urgent operational reasons **and** that the employee can claim severance if they accept the dismissal (i.e., do not file a claim within three weeks). The OECD note further summarizes this as a formula of **half a month’s pay per year of tenure** under **§1a KSchG**, and explicitly notes: **“Calculation: 0 months since the employer is free to offer or not severance pay.”** - A practical legal overview (Fisher Phillips) similarly notes: **“employees in Germany do not have a legal right to automatic severance pay upon termination”** and describes §1a KSchG as an *exception* that depends on the employer’s notice and the employee not filing a claim. So, while **0.5 months (~15 days) per year** is a well-known benchmark in Germany, it is not a universal, automatic statutory entitlement for any “fairly dismissed” worker due to business needs—the claim depends on the specific §1a KSchG mechanism (and other potential sources like social plans or agreements).
2 sources
  • OECD EPL Database (update 2019) – Germany country note (items regulations in force on 1 January 2019)

    “Operational reasons: If a dismissal is based on business needs or compelling operational reasons, the employee has a right to a severance payment if he does not bring his case to the court within 3 weeks. The right is only given if the employer points out in the notice… The amount of the severance payment is a half month pay for each year of tenure (§ 1a Kündigungsschutzgesetz (KSchG)). Calculation: 0 months since the employer is free to offer or not severance pay.”

  • Fisher Phillips – “Demystifying Severance in Germany: Key Strategies for Smooth Exits” (Oct 8, 2024)

    “Contrary to a widespread assumption, employees in Germany do not have a legal right to automatic severance pay upon termination of employment. … A severance claim may arise under §1a … if … the employee does not file a claim within this period. In such cases, the employee is automatically entitled to severance equivalent to half a month’s salary per year of employment.”

2
Claim
In many European countries, companies with more than a certain number of workers – 50 in the Netherlands, 5 in Germany – are obliged to create a works council,
Correction

In Germany, there is no legal obligation for a company to “create” a works council; employees have the right to elect one, but the law does not require that one be established.

Full reasoning
The claim says that German companies above a threshold ("5 in Germany") are **obliged to create a works council**. Germany’s Works Constitution Act (BetrVG) does set a **minimum establishment size** at which employees *may elect* a works council (commonly summarized as: at least five eligible employees, with three eligible to be elected). But **the employer/company is not legally required to set one up**. The German Bundestag’s own summary of a petition on this point explicitly states that, although the BetrVG provides rules for forming a works council, there is **“no legal obligation”** to found one; rather, employees are given the right to elect a works council, and if they choose to do so, the employer must tolerate/support the process and bear costs. Therefore, describing Germany as a country where companies with more than 5 workers are “obliged to create a works council” is inaccurate (it conflates *eligibility to elect* with a *mandatory requirement to establish*).
1 source
3
Claim
Under the Protection Against Dismissal Act, the Kündigungsschutzgesetz, redundancies over ten employees must pass a social selection test (Sozialauswahl).
Correction

Germany’s “social selection” (Sozialauswahl) requirement is tied to the Dismissal Protection Act applying in establishments with more than 10 employees (and other conditions), not to making “redundancies over ten employees.”

Full reasoning
The post claims that **“redundancies over ten employees”** trigger the social selection test under Germany’s Dismissal Protection Act (KSchG). But the commonly described threshold for when KSchG protections (including the need for social justification and social selection in operational dismissals) apply is based on the **size of the establishment/employer**, not on whether a particular redundancy round affects “over ten employees.” For example: - Ius Laboris explains that for operational dismissals **in a company with no more than ten employees**, the employer is generally free to choose whom to dismiss; **if the organisation has more than ten employees** (and employment has lasted more than six months), a social justification is required and the employer must carry out **‘social selection’** using statutory criteria. - The OECD’s Germany EPL country note also describes the KSchG coverage threshold in terms of **establishments employing 10 or fewer employees being exempt** from regular employment protection legislation. So the “over ten” figure relates to **headcount at the establishment/employer level**, not (as written) to *redundancies over ten employees*. The statement is therefore factually inaccurate as phrased.
2 sources
Model: OPENAI_GPT_5 Prompt: v1.16.0