Yes, an employer is allowed to terminate an open-ended employment contract (unbefristeter Arbeitsvertrag), but only under strict legal conditions designed to protect the employee from unfair dismissal. An open-ended contract does not enjoy absolute protection against termination, but there are binding rules and procedures the employer must follow under the Dismissal Protection Act (Kündigungsschutzgesetz – KSchG).
Key requirements for dismissing an employee with an open-ended contract:
1. Valid reason for dismissal (Kündigungsgrund)
An employer may only dismiss an employee if there is a legitimate, legally accepted reason, for example:
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Operational reasons (betriebsbedingte Kündigung): Decline in business, closure of a branch, or restructuring that eliminates positions.
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Personal reasons (personenbedingte Kündigung): Permanent medical inability to perform the job, or loss of a valid work permit.
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Conduct-related reasons (verhaltensbedingte Kündigung): Serious misconduct, gross negligence of duties, or repeated refusal to work (usually preceded by a formal written warning – Abmahnung).
2. Compliance with notice periods (Kündigungsfrist)
The employer must comply with the notice period stipulated in the employment contract or laid down by law (§ 622 BGB). These statutory notice periods increase with the length of service and range, depending on the employee’s years of employment, from 4 weeks up to a maximum of 7 months for long-serving staff.
3. Observance of dismissal protection (Kündigungsschutz)
If the company employs more than 10 workers and the employee has been there for more than 6 months, the Dismissal Protection Act (KSchG) applies.
In small businesses (≤ 10 employees or during the probationary period), protection is weaker; in most cases, compliance with the statutory or contractual notice period is sufficient.
4. Special rules for certain protected groups
Certain groups of employees enjoy special protection against dismissal, such as:
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Pregnant employees,
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Employees on parental leave (Elternzeit),
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Severely disabled employees (with officially recognised disability).
They may only be dismissed with prior approval from the competent authority, such as the Integrationsamt or the relevant maternity protection authority (Mutterschutzbehörde).
5. Consultation with the works council (Betriebsrat)
If there is a works council (Betriebsrat) in the company, it must be consulted in writing before the dismissal is issued (§ 102 BetrVG). If there is no proper consultation, the dismissal (Kündigung) can be invalid solely for formal reasons.
Employee’s right to challenge the dismissal
The employee has the right to challenge the dismissal and file a dismissal protection claim (Kündigungsschutzklage) before the labour court (Arbeitsgericht) within 3 weeks of receiving the notice. In these proceedings, the employer bears the burden of proving that the dismissal was justified.
If the court finds the dismissal unjustified, the termination (Kündigung) is deemed legally invalid. In principle, the employee returns to their job or, alternatively, receives financial compensation (severance payment) depending on the court’s decision or a settlement reached between the parties.
Conclusion
Yes, an employer may terminate an open-ended employment contract, but only if the legal grounds and procedural requirements are fully respected.
Any Kündigung that lacks sufficient justification, or where the correct procedures (notice periods, consultation of the Betriebsrat, etc.) were not observed, can be contested and may result in reinstatement or compensation for the employee.
Practical tip:
If you receive a Kündigung, immediately contact a labour-law specialist or your trade union and initiate legal steps within 3 weeks to safeguard your rights.
The website’s team of writers and editors endeavours to provide accurate information based on thorough research and consultation of multiple sources. However, errors may still occur, and some information may be incomplete or not definitively confirmed. For this reason, the information in these articles should be regarded as an initial point of reference only. For binding and final legal guidance, you should always consult the competent authorities or qualified legal professionals.
