Termination of employment contracts in Germany

Title:
Employees’ Rights and Legal Procedures

Introduction

The possibility of having an employment contract terminated is a source of concern for many employees and workers in Germany, but such termination is not always legally valid. Every employee should know their rights and the steps to take in case of dismissal or resignation. In this article, we explain in detail the rights of employees and what can be done if an employment contract is terminated.

Can an employee simply be dismissed?

Employees in Germany enjoy strong legal protection against dismissal, especially if they work in a company with more than 10 employees and have been employed there for more than 6 months. An employer may only dismiss an employee if one of the following reasons exists:

Operational reasons (betriebsbedingte Kündigung):
For example, if the company’s business has declined significantly and it can no longer afford to pay the wages of all employees.
Conduct-related reasons (verhaltensbedingte Kündigung):
Improper behaviour such as theft, insults, or surfing the internet at work without permission may lead to dismissal.
Personal reasons (personenbedingte Kündigung):
For instance, if the employee is no longer able to perform their job due to long-term illness or the loss of a work permit.

Important note:
Dismissing an employee for discriminatory reasons – such as gender, age, religion, or ethnic origin – is strictly prohibited.

What are the legal requirements for a valid dismissal?

For a dismissal to be legally valid, the following conditions must be met:

Written form (schriftlich):
The notice of termination must be given in writing.
Notice period (Kündigungsfrist):
The notice period stated in the employment contract must be respected.
If no notice period is specified in the contract, the statutory notice periods under §622 BGB apply, which are based on the length of the employee’s service with the company.

Can a dismissal be prevented or challenged?

If you believe that the dismissal is unlawful, you can file a legal action to protect yourself against it, known as a Kündigungsschutzklage (unfair dismissal claim).
This action must be filed within three weeks of receiving the written notice of termination.

You can obtain legal advice from specialised counselling centres, for example via the website faire-integration.de.

Dismissal without notice (außerordentliche Kündigung)

In cases of extraordinary dismissal (außerordentliche Kündigung), the employer can terminate the contract without observing the regular notice period, and the employee is required to stop working immediately.
This is only permissible in serious cases, such as theft or severe public insults.

Dismissal during the probationary period (Probezeit)

The probationary period is intended to test the employment relationship for both the employer and the employee. During this period, either party may terminate the contract with a short notice period and without having to provide detailed reasons.
As a rule, the probationary period should not exceed 6 months, except in exceptional, well-justified cases.

What is a termination agreement (Aufhebungsvertrag)?

Some companies prefer to offer a termination agreement (Aufhebungsvertrag) instead of unilaterally terminating the employment contract. In such an agreement, both parties mutually consent to end the employment relationship, and it is often linked to financial compensation.

However, you should be aware of the following:

By signing a termination agreement, you give up certain legal protections you would otherwise have in a normal dismissal procedure.
A termination agreement can affect your entitlement to unemployment benefits (Arbeitslosengeld), for example through a waiting period or sanction.
Once you have signed, the agreement can usually no longer be challenged or revoked, except in very rare situations.

Therefore, it is strongly recommended to seek legal advice before signing such an agreement.

What should you do after being dismissed?

Upon receiving a notice of termination, you must inform the Employment Agency (Arbeitsagentur) that you are seeking work within three days. You can do this by phone, online, or in person.

If you fail to notify the agency in time, your unemployment benefits may be reduced.
After your employment contract actually ends, you must visit the Employment Agency again to apply for or activate your unemployment benefits (Arbeitslosengeld).

Protection of severely disabled employees

If an employee has a severe disability with a degree of at least 50%, they enjoy additional protection against dismissal.
In this case, the employer must obtain the approval of the Integrationsamt (Integration Office) before dismissing the employee. Without this approval, the dismissal is usually invalid.

Protection of works council members (Betriebsrat)

Members of the works council (Betriebsrat) are granted special protection against dismissal. They can only be dismissed in very exceptional situations, such as the complete closure of the company.

In the case of an extraordinary dismissal of a works council member, the following is required:

the consent of the works council, or
a decision by the labour court (Arbeitsgericht).

Can an employee resign?

Yes, an employee can resign. However, they must comply with the notice period stated in the employment contract.
If no notice period is specified, the statutory notice period is generally four weeks.

It is advisable not to leave your job unless you already have another job lined up, because:

it may be difficult to find a new job quickly, and
the Employment Agency may impose a waiting period of up to 12 weeks on unemployment benefits if you resign without a valid reason.

Important tips when an employment contract ends

Check the reason for dismissal:
Make sure that the stated reason for termination is lawful and in line with your employment contract.
Consult a lawyer:
If you suspect that the dismissal is unlawful, consult a lawyer specialising in labour law or a recognised advisory centre.
Ask for a fair termination agreement:
If you are considering ending your contract by mutual consent, make sure that the termination agreement is fair and covers all your rights, such as outstanding salary, remaining vacation days, overtime, and possible severance pay.
Inform the Employment Agency in time:
Notify the Employment Agency within three days that you are looking for work in order to avoid reductions in your unemployment benefits.

Conclusion

Terminating an employment contract in Germany is governed by strict rules that aim to protect employees’ rights. Whether you are facing dismissal or considering resigning, it is essential to know your legal rights and the necessary procedures so that you do not suffer unfair financial or professional disadvantages.

Always seek advice from a lawyer or legal expert when dealing with dismissal issues or termination agreements.

The editorial team of our website strives to provide accurate information based on thorough research and consultation of multiple sources. However, errors or incomplete information may still occur. Therefore, please regard the information in this article as an initial reference only and always contact the competent authorities or qualified experts to obtain binding and up-to-date information.