As is well known, German employment law grants employees extensive protection against dismissal. The employer needs a vital reason to terminate the employment relationship immediately (i.e., without following notice periods). This must make the continuation of the employment relationship appear unreasonable for the employer. However, if the employee believes they have been wrongfully dismissed, they can take legal action against their employer. Therefore, a prudent approach to extraordinary dismissal is crucial.
Schlun & Elseven Rechtsanwälte offers competent and committed legal assistance to provide our clients with the support they need. Our specialist lawyers for German employment law, Dr Thomas Bichat and Jens Schmidt, will be happy to explain your rights and obligations. They provide reliable support to bring legal disputes to an effective conclusion – through out-of-court settlements, litigation or in the context of an action for protection against dismissal. Please do not hesitate to contact us to benefit from our expertise.
Extraordinary Termination under German Law
Employers can only bring about an extraordinary termination if they have an important reason. Legally speaking, this refers to the employer not being reasonably able to continue the employment relationship until the end of the usual notice period. Employees are granted strong protections under German employment law. Therefore, employers should not take such a decision lightly, or they may leave themselves open to potential unfair dismissal claims.
An “important reason” must be one that is taken seriously in this regard and is generally held to refer to operational, personal or behavioural reasons. However, it should be noted that the termination reasons do not need to be explicitly stated in the notice of termination.
Operational reasons refer to situations where the job position no longer exists or will not exist because of changes in operations. These cases are rare in practice. Usually, employers can be informed in advance and in line with ordinary dismissal in this situation. In insolvency cases, the administrator can give employees notice of termination, even if the notice period is shorter than it should usually be in other conditions.
Extraordinary termination for personal reasons refers to aspects of the employee’s character. An example of how this works in practice is an employee who is constantly out on sick leave and is absent to such a degree that the employer cannot reasonably be expected to keep them in their employment. Other examples may include individuals serving a prison sentence or those suffering from addictions, such as alcohol or drugs, where they have experienced a loss of control or related issues.
The most likely cause for an extraordinary termination refers to reasons relating to the individual’s conduct. Such conduct concerns breaches of the employment contract; there can be no legitimate reasons to justify the breach, and the employee must have acted at least negligently when carrying out the activities. The activities involved that permit an extraordinary termination include the following:
- Disregarding the instructions of superiors and supervisors,
- Breaching the rules of the company, including using company property for personal reasons despite clear rules against it,
- Continual refusal to work,
- Breaching rules relating to working for competitors,
- Criminal offences against the company,
- Criminal offences against customers or partners of the company (such as fraud, theft etc.).
Employers should note that the dismissal must be proportionate to the employee’s activity. Courts can consider the previous working relationship and its duration when determining whether it was proportionate. They may find that other sanctions would have fitted the breach of duty. Employers should consider consulting with employment lawyers in these cases.
Similarly, employees should bring their case to an employment law specialist if they believe that they were unfairly treated in the dismissal. Essentially, German law wants to determine whether the employer’s interest to immediately end the employment relationship is of greater value to the employee’s rights relating to remaining in employment. However, employees need to act quickly, as an action for protection against dismissal should be taken within a three-week period from the time of the dismissal.
Unfair Dismissal under German Law
Without going through the proper procedures, employers leave themselves open to unfair dismissal claims. Unfair dismissal claims arise when employers have not appropriately terminated the employment, whether by failing to the notice in writing, misapplying an extraordinary termination, or ending the employment of a pregnant woman or someone with severe disabilities without applying the correct procedures.
Unfair dismissal cases can be damaging to the company financially and also reputationally. Even in termination cases that seem clear-cut, consulting with a legal professional in advance is recommendable. For employers, there is a need to ensure that all steps have been taken correctly to prevent unfair dismissal cases. Should an unfair dismissal claim still come your way, our lawyers can investigate the matter and help you determine how best to approach the issue, whether in or out of court.
Similarly, for employees, your employer may present you with what appear like solid reasons, but legal action may still be advisable. Our lawyers will investigate the case and determine whether the reason given was the real reason behind the dismissal. It could be the case that their claims regarding your behaviour are unsubstantiated or that the operational reasons provided do not include younger and less long-standing colleagues. It could be that the employer did not follow recommendations regarding official warnings. Our certified specialists know the questions that need to be asked in these cases.
In unfair dismissal cases, a conciliation hearing generally takes place within two weeks of the complaint’s filing. Employees who have had their employment terminated need to act quickly to ensure they fulfil the deadline. Cases are often resolved by a settlement, particular when the parties agree to terminate the employment and reach an agreement regarding severance pay.
If there is no agreement between the parties, the case will be brought before a chamber meeting. This meeting usually happens several months later. Whether you are an employee or an employer, our lawyers will outline what to expect in such cases and ensure that your case is thoroughly prepared in advance.
Protected Groups from Extraordinary Termination
Employers in Germany need to be aware that specific groups are protected under German employment law from ordinary and extraordinary dismissal. The groups in question are pregnant women, employees on maternity leave, works council members, and employees with disabilities. Dismissing employees in such groups requires the consent of the relevant public authority in Germany.
Pregnant women and those on maternity leave are given significant protection from dismissal under German law. Such protection from dismissal starts from the beginning of the pregnancy until four months after childbirth. Employers looking to dismiss such employees, even for gross misconduct, should consult with legal professionals. However, companies often do not wish to get involved with such complex cases.
Pregnant women looking to cancel their employment contract should note that doing so will mean that, in some circumstances, their employer does not need to pay work-related fees such as the “Mutterschaftsgeld” (Maternity allowance). Once again, they should consult with employment law specialists before making any such decision.
Companies that hire severely disabled employees should be aware that they are protected against dismissal. Before taking any dismissal measures, employers need to receive the authorisation of the applicable body (in this case: the “Integrationsamt”) to verify that the dismissal is unrelated to the disability. In these cases, solutions can often be taken, such as examining the employee’s workload, workspace, tasks within the firm and working hours. However, if you wish to proceed with dismissal as an employer, it is best advised to consult with our employment specialists and allow them to approach the situation.
Mutual Terminations: Employment Termination Agreements and Severance Pay
An alternative to the legal difficulties involved with navigating extraordinary terminations is termination by mutual agreement. An employment termination agreement can benefit both sides, providing clarity and an agreed resolution in demanding working environments.
Such agreements need to be signed by both parties and contain provisions relating to when the employment will end and whether they will provide job references and severance payment. By negotiating such an agreement, the parties can also bring their grievances and demands to the table and ensure they are carefully examined. However, before entering such discussions, the parties involved should consult legal advice regarding what is legally permitted under German law.
There are clear benefits for employers by utilising employment termination agreements, as they avoid unfair dismissal claims. As seen, extraordinary termination under German law is a challenge to conclude successfully, and if it is not fulfilled correctly, it can lead to damaging court cases. Minimising this risk is the surest way to avoid those court cases, and negative media attention generally protects the firm’s reputation.
Severance payments are not strictly necessary under German law. However, they can be an efficient method of preventing further disputes. The size of the severance payment is usually determined by the number of years the employer has employed the employee and the agreed salary. Severance payments are often used to resolve disputes because the more likely the employee will be successful in a dismissal protection lawsuit, the more willing the employer will be to pay a settlement.
Employees should be wary that signing employment termination agreements can damage their claims for unemployment benefits, as the German authorities may view that the individual could have refused to sign the contract and thus created the reason for their unemployment. Therefore, a settlement that may appear generous at first can, in turn, prove to have difficulties for them.
At Schlun & Elseven Rechtsanwälte, our employment law team provides extensive insight into German law concerning the employment termination agreement.
Practice Group: German Employment Law
Practice Group:
German Employment Law
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