How can the Legal Termination of Employment Contracts happen?
Termination is a unilateral declaration of intent to terminate the employment relationship. If there is a reason for the employee or the employer to decide against the continuation of the employment relationship, this declaration of intent must be expressed correctly and duly delivered to the respective other parties. According to § 623 BGB, this means that this intent should be provided in writing. Therefore, for an effective termination, the written form of the termination is a constitutive element. This is in place to provide the employee with the highest possible degree of legal security regarding the termination of employment. However, this also often means that the associated dismissal protection proceedings before the labour court are simplified and accelerated.
It should be noted that the written form of the termination of employment contracts means written. According to § 126a, BGB electronic signatures are not allowed. Conventionally the notice must be signed by hand! Therefore, electronic signatures, scans, photocopies, telefaxes and computer faxes, SMS, and email are not deemed valid forms of signature.
In addition to the regular termination of the employment relationship, there are also other common termination options for which the written form must be observed. For example, when giving dismissal with an option of altered conditions of employment, the offer of change must also be submitted in writing. Similarly, an employment termination agreement must also be in writing (more information on this topic can be found here)
It is important to consider settlement agreements are not held as a termination within the meaning of § 623 BGB but rather a prerequisite for termination. This means that the written form requirement under § 623 BGB does not apply to settlement agreements.
Termination of Employment: Requirements
With ordinary termination, there is no requirement to provide a reason behind the decision. This is, of course bearing in mind that notice periods and other legal requirements are observed. Explicitly excluded from this by law are the following:
Deviations may also be stipulated in the employment contract or qua collective bargaining agreement or work agreement or may be the case if the Dismissal Protection Act (Kündigungsschutzgesetz – KSchG) applies. Whether failure to state reasons in these cases leads to the invalidity of the termination or the accrual of claims for damages requires a precise legal assessment. Make sure to contact a legal professional to assess your situation and determine the strength of your case.
In the case of extraordinary terminations, the party giving notice of termination is obliged to inform the other party of the reason for termination immediately upon request (§ 626 para. 2 p. 3 BGB). If this is not complied with, claims for damages may also come into consideration here.
Definite and Unconditional Termination of Employment
When writing your intention to terminate the employment relationship, the exact wording is not strictly enforced. The concrete use of particular words or phrases such as “terminate” and “notice of termination” is unnecessary. However, the decisive factor is that the recipient can clearly understand the person’s desire to terminate the employment contract. Therefore, when drafting the termination letter, phrases such as “I hereby terminate the employment relationship …” remains the safest way to avoid misunderstandings. However, such a formulation remains a recommendation and not a requirement.
If it is clear that the person giving notice wants to terminate the employment relationship, but not at what point in time, it is usually assumed that the employment relationship will be terminated in the ordinary course of business. This ordinary course of business includes the required period of notice.
Many employers and employees may view it as tempting to issue a termination letter subject to a condition. However, it is advisable to contact a lawyer in advance of such a step. This action may seem like the best way forward, but it is often not the case. It may not be the most effective way of handling the termination of employment.
So-called potestative conditions are an exception: Only the employee decides whether the condition will be met or not. For example, the employer declares to the employee who is permanently absent without excuse that he will terminate the contract if the employee does not immediately start work. Example: The employer gives notice of termination to the employee and thus attaches the condition that the employee will continue to be employed under worse conditions (so-called change notice). Whether or not the termination becomes effective therefore depends solely on the employee’s decision.
Not to be confused with a permissible precautionary termination: The statement of an extraordinary notice of termination is supplemented by the “alternatively ordinary notice of termination at the next possible date”. (BAG, ruling dated June 20, 2013 – 6 AZR 805/11)
The Notice of Termination of Employment
The notice of termination is deemed to have been received if it has come into the recipient’s sphere of control in such a way that it can be expected under regular circumstances that it will be known (§ 130, (1) Sentence 1, BGB). In other words, it is reasonable that the recipient will have received the termination notice.
As a rule, the termination should take place on a specific date. To achieve this deadline, the applicable notice periods must be observed. If termination is not given in due time, the possibility remains to bring about effectiveness at the “next possible date” without the termination letter becoming generally ineffective.
It is important to remember that there should be no grounds for invalidity of the termination of employment. It is usually not the case that a person will be denied a termination on these grounds, but they need to be considered. The general grounds for invalidity include
The breaches of the above-listed provisions can be solid grounds for legal action, especially when a dismissal has been based on discrimination or the violation of fundamental rights. Should your termination of employment be linked to any of these grounds, do not hesitate to contact a legal professional.
The Right Type of Termination
If the prerequisites of the selected notice type are not fulfilled, the notice is invalid. In addition to the ordinary dismissal, there is also the option of extraordinary dismissal – dismissal without notice. To terminate an employment contract without notice, there must be an important reason (§ 626 Paragraph 1 BGB). Such a reason is only given in exceptional cases, namely in serious misconduct, such as refusal to work and criminal offences. However, even the usually applied ordinary dismissal can be excluded from the outset according to § 9 MuSchG or by employment contract and collective bargaining agreement.
An extraordinary termination is a form of termination which requires legal advice. A case may seem straightforward but consulting with an experienced employment law professional before formalising the decision is the safest course of action. Make sure to contact our legal team in advance of making such a decision!
A brief reference should also be made at this point to the notice of termination by notice of change – as a possibility of termination. Using an amended notice of termination is usually applied to the employee’s economic difficulties to be employed only for changed (often worse) conditions. This path is most often taken when the employer can no longer achieve the change in working conditions using the right to issue instructions. However, arbitrary changes may fail because the employer’s action must also be socially justified in this decision. Once again, employers should consult with an experienced employment law professional before taking this course of action.
The Protection Against Dismissal Act
If the Protection Against Dismissal Act (Kündigungsschutzgesetz) applies, it must be examined whether the dismissal is socially justified. This is the case if there is a relevant operational, personal or behavioural reason for the termination of employment. We will examine in this section what the grounds are for such termination and how the Protection Against Dismissal Act applies.
Effective protection against ineffective terminations: This Act aims to prevent employees from being unfairly dismissed. Should you face a situation where it is likely that you have been unfairly dismissed, you should respond as follows:
- Remain calm when you have received notice of termination: Employees, in particular, are extensively protected. Because of the many different requirements on how and under what circumstances a dismissal may be made, it is often possible to identify legal shortcomings and thus at least delay the actual date of termination.
- Collect evidence: Emails and communications from your employer will be advantageous in presenting your case. Find out the reason for your dismissal.
- Contact our employment law team: With the backing of experienced experts in the field of employment law, your case has a better chance of success. Success will manifest itself in the form of damages.
Read our page on “Unfair Dismissal in Germany” for more information on this legal area.
The central tenet for the protection against unfair dismissal under the Protection Against Dismissal Act is the “social justification” of the dismissal. Not only must there be a reason, but the dismissal must also be proportionate to the infringement in question. Employers who do not have a system of issuing warning letters in the workplace or act against such a system will face legal challenges to the dismissals made. Consult with a lawyer regarding how to have such a system in place in your company.
The reasons allowed for when it comes to dismissals are divided into personal, behavioural and operational concerns.
Person-related reasons for dismissal, for example:
- Illness (short-term but persistent illness as well as long-term illness)
- Criminal offence/imprisonment
- Not acceptable level of performance
- Lack of suitability for the role
- Addiction to substances
- Lack of work permit
Behavioural reasons for termination, for example
- Refusal to work
- Alcohol consumption
- Disturbance of the peace of operation
- Complaints from other staff members
- Working time fraud
- Unauthorized start of vacation
- Criminal offences
- Poor and declining performance
Operational reasons for dismissal, for example
- Loss of the previous job without other employment opportunities and priority protection of another employee.
The list only offers a non-exhaustive list of the grounds which can be held as valid for termination of employment. However, as each case is different, contemplating such a decision always requires a professional legal examination. We would be pleased to support you in this! To jeopardize the possible success of an action for protection against dismissal, it is essential that the three-week period for filing an action be observed. If the lawsuit is not filed in due time after receipt of the notice of termination, the termination of employment is considered effective. Therefore, act quickly when it comes to contacting our legal professionals.
The Limits of the Protection Against Dismissal Act
The Protection Against Dismissal Act does not apply in all circumstances. There are some occasions where it does not play a role. For example, protection against dismissal in small businesses is not as strong as in medium to large businesses. Small businesses, in this case, concerns companies of under 10 employees. When bringing a case for unfair dismissal or challenging your employment termination, it is advantageous if the employee is subject to the Dismissal Protection Act (KSchG). If this is not the case, the court can only examine whether the dismissal was arbitrary. Therefore, the lack of such protection puts the recipient at a disadvantage, but it is not fatal to the case. Even where the Protection Against Dismissal Act does not apply, it can be worthwhile to examine a dismissal using a professional legal advisor. They will examine the termination of employment with the necessary accuracy and expertise.
The Dismissal Protection Act applies if the employee works for at least 6 months continuously in a company (§ 1, para. 1 KSchG) which employs more than 10 employees (§ 23, (1) KSchG). Therefore, the first six months in a job – the probationary time in the job – in Germany can be crucial to future success with that company. It should also be noted that additional protections are provided for pregnant and severely disabled employees and members of works councils.
If, as an employer, you intend to give notice of termination of employment without exposing yourself to the consequences of an ineffective termination, we will be pleased to help you considering the extensive criteria. Our lawyers will examine the facts of the case and determine whether dismissal is justified. This examination will consider whether warnings were in place, whether the action justifies dismissal, and we will prepare you for any challenges that may arise. Even if you have already given notice of termination, please do not hesitate to contact us to allow us to examine the case. Our specialists will check the legal background and advise you accordingly. The quicker you react, the more time remains to attempt to reach an out-of-court settlement or to prepare for an in-court employment termination case.
We also advise employees who have been dismissed or who have been threatened with dismissal. Once again, it is advisable to contact us as early as possible in such a situation. Once our lawyers are working on your side, we can examine the facts of the case and determine the best course of action. Contact us today to find out more about our services in the field.