Immediate dismissal in retail: Sale of goods without proper registration from an employment law perspective
May an employer terminate the employment relationship without notice if an employeesells goods without recording the sales process as required in the cash register system? This question was recently at the center of a labor court dispute, on which the Federal Labor Court (BAG) ruled on July 11, 2024 (Ref.: 2 AZR 508/21).
The judgment not only examines the employment law requirements concerning the trustworthiness of cashiers, but also the compliance and organizational aspects relevant to the entire retail sector. The following outlines the facts of the case, the procedural development, the legal assessment, as well as the tension between employee interests and employer obligations in detail.
Facts: Failure to register as the trigger for termination
In the underlying case, a long-term female employee working at the checkout area of a retail company handed over goods to a third party without recording the sale in the cash register system. The failure to register the sale was uncovered during internal audits. Subsequently, the employer deemed that the minimum standard of loyalty and care required for the trust relationship in the checkout area was no longer present, and issued an extraordinary, immediate dismissal.
The employee, however, argued that it was merely an act of negligence without any intent to cause harm and without financial disadvantage to the company.
Legal assessment by the labor courts
Labor court and Higher Labor Court
Both the labor court and the Higher Labor Court, which was called upon as the second instance, deemed the dismissal to be lawful. The principal justification was that the sale of goods outside the prescribed checkout process constitutes a significant breach of duty and severely impairs the trust relationship. The labor courts based their decision on relevant case law, which, especially in the so-called ‘checkout area,’ demands the highest level of transparency and strict compliance with internal company procedures as prerequisites for the proper handling of business operations.
Decision of the Federal Labor Court
The BAG affirmed the view of the lower courts and emphasized that, in activities requiring proper accounting of cash transactions, even minor violations may seriously and permanently undermine the trust essential for continued employment. In particular, it is irrelevant whether financial loss occurred or the employee intended personal gain. The objective breach of duty takes precedence.
In this individual case, the BAG recognized that a prior warning was unnecessary due to the severity of the violation. The failure to record the sale deliberately bypassed the basis for traceability and review of operational procedures, making it unreasonable for the employer to continue the employment relationship—even temporarily.
Labor law implications and business-relevant aspects
Special duties of loyalty in checkout and trust-sensitive areas
Certain areas of activity in retail, especially handling cash registers and sales transactions, require employees to exercise significantly increased diligence. The traceability of each transaction is essential not only for tax and accounting purposes, but also to prevent compliance violations.
Even unintentional, one-off failures to register sales can be serious from a labor law perspective. This is because, particularly in the checkout area, the trust relationship between employer and employee constitutes a fundamental basis.
Presumption of innocence and the principle of proportionality
Although case law generally attaches special weight to even minor incidents in sensitive areas of activity, the principle of proportionality remains safeguarded. Each individual case involves a careful weighing of the interests of both parties. To be considered are, for example, the previous conduct of theemployee, the duration of employment, and the specific circumstances surrounding the breach of duty.
However, decisions such as those of the BAG show that the requirements for integrity among employees entrusted with money or goods movements are exceedingly high.
Economic risks and prevention obligations for companies
The case underscores the significant importance of a comprehensive and transparent control system in retail as well as of clear training and sensitization of employees to the obligations associated with their activities. Violations of work instructions, such as failing to register sales, can have serious consequences for employees and also create significant liability and tax compliance risks for businesses.
In addition to breaches of contractual duties, violations of checkout regulations may prompt further investigations, such as by tax authorities, and increase the liability risk for company management.
Conclusions for employment contract design and operational practice
The Federal Labor Court’s ruling highlights the necessity of clear, comprehensible regulations and regular information for employees on the procedures to be followed at the checkout. Employers face the challenge of establishing both operational processes and employment relationships on a secure and reliable footing.
In cases of doubt, a careful examination of the specific facts and legal situation is advisable. The case decided by the BAG demonstrates that even seemingly clear situations require comprehensive legal assessment. Since labor court disputes are always decided on a case-by-case basis, it is advisable to seek legal advice at an early stage if there is any uncertainty.
If you require legal advice on employment law issues relating to cash register responsibility or internal company control mechanisms, the Rechtsanwalt at MTR Legal, with their many years of experience in commercial and employment law, can assist you.
