German employment law and termination

German employment law and termination of employment

Although an employment relationship is based on a civil law private contract between an employer and employee, a raft of statutory provisions under German employment law govern the protection to employees from the whims of their employers.

It is important that employers follow proper procedure when terminating an employee’s employment contract. Conversely, employees should be aware of their rights and not be afraid to challenge an employer who attempts to dismiss them incorrectly.

Termination with notice

Termination with notice means that an employer or employee terminates the employment relationship in accordance with the rules agreed in the employment contract or those contained in statute.

1. Termination letter

Certain statutory provisions are implied into the contract. For a termination letter to be effective, these must be followed.

The termination of employment must be expressed in writing (§ 623 German Civil Code, BGB). This means that a termination is ineffective if it is expressed orally or by text, fax, e-mail or telegram.

Preferably, a dismissal should be on the company’s headed paper. The termination letter must also be signed by the person entitled to dismiss the employee.

The termination letter must make it clear and beyond doubt that the intention of the letter is to end the employment relationship. The word termination or dismissal need not appear in the letter, but the use of imprecise and unclear language will render the termination letter ineffective.

A termination letter is also ineffective unless it can be proven that it was delivered to the intended recipient. The best way for an employer to ensure the letter reaches the recipient is to deliver it by hand or to use recorded delivery.

The letter should also draw the employee’s attention to the fact that if they do not approach the unemployment office immediately after their employment has ended, they may receive reduced unemployment benefit.

2. Notice periods

The notice period required in order to end the employment relationship effectively will either be contained in the employment contract, a collective employment agreement or statute.

German employment law foresees minimum notice periods calculated in accordance with the length of service.

Where the length of service is up to two years, the notice period is 4 weeks, beginning on the 15th or at the end of the calendar month. This notice period applies to employees and employers.

Employers must comply with extended notice periods when an employee’s length of service exceeds two years as follows:

 

Length of service completed (years)

Minimum notice period (months)

Date notice period commences

2

1

End of calendar month

5

2

End of calendar month

8

3

End of calendar month

10

4

End of calendar month

12

5

End of calendar month

15

6

End of calendar month

20

7

End of calendar month

The length of service is calculated in terms of how long it legally existed. This means that short breaks in service, such as for reasons of illness, do not break the continuity of service. Continuity of service also remains where employment is terminated and then immediately recommenced with the same employer.

A two week notice period applies where employment is subject to a probation period of a maximum of 6 months.

Where a different notice period has been adopted in a collective agreement, the longer period applies.

3. Socially justifiable reason

Where an employer employs more than 10 people for longer than 6 months, employment can only be terminated if the employer has a socially justifiable reason.

The three social justifiable reasons relate to:

  • the individual (e.g. employee illness);
  • (mis)conduct (e.g. an employee commits theft); and
  • business needs (e.g. the number of orders for a product sinks)

Where termination concerns pregnant employees, employees on maternity/paternity leave, disabled and other protected employees, stricter conditions apply. An employer must prove breach of duty and obtain permission from the authorities to terminate employment.

Termination without notice

Termination without notice describes the immediate cessation of the employment relationship without observing the contractually agreed or statutory notice period.

Under § 626 BGB, either party to an employment contract can terminate the contract without observing a notice period, provided they have an important reason and, having regard to all the circumstances and after weighing up the interests of both parties, it appears to the party terminating the contract that continuation of the employment relationship to the end of the notice period or to the agreed termination point would no longer have been reasonable.

The notice to terminate employment must be submitted within 2 weeks from when the party becomes aware of the important reason or when the circumstances arise.

It is important that both employers and employees do not act hastily when considering whether to terminate an employment relationship. Seeking legal advice is often well advised.

For more information on German employment law and our employment law services, contact our expert team of German lawyers on +49 (0) 221 / 951 563 0 or use our contact form.


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Christian Solmecke is a partner at the law firm WILDE BEUGER SOLMECKE. He is the author of numerous legal publications in the area of internet and IT law. He is also an associate lecturer for social media law at the Cologne University of Applied Sciences.

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