Work in Germany. Termination of an employment contract. A common question many want answered is whether an employment contract can be terminated without reason. What does it mean when you sign a termination agreement? How much time do you have to find a new job or take legal actions? Here’s everything you need to know:
Table of contents
- Termination of an employment contract
- What is the difference between ordinary and extraordinary termination of an employment contract in Germany?
- What requirements does an employer have to meet when terminating a contract in Germany?
- Can you be fired “without cause”?
- Legally approved reasons for termination
- Am I entitled to redundancy pay?
- What should I look out for in termination agreements?
Termination of an employment contract
Losing your job is never easy. But being immersed in an unfamiliar legal system, dealing with contracts and documents in the complicated German language, and struggling to find legal advice in your native language all combine to make it an even more stressful experience.
To help you manage the situation effectively and inform yourself about your rights in the event of termination of employment, here are answers to some of the most important questions.
What is the difference between ordinary and extraordinary termination of an employment contract in Germany?
One of the first things you need to know about termination of employment in Germany is that there are two main types of termination: ordinary and extraordinary terminations:
- Ordinary termination – ends an employment relationship in accordance with statutory or contractual regulations. The notice period and formal regulations must be respected.
- Extraordinary dismissal – requires a good reason. If there is such an important reason, the employment relationship can be terminated immediately – without notice.
If you have received a termination without notice, it is best to contact an attorney immediately, as quick action is especially important here. As a rule, extraordinary termination also means a period of blocking of unemployment benefits and can threaten financial stability.
What requirements does an employer have to meet when terminating a contract in Germany?
It is always important to check that certain legal requirements for terminations have been met by the company.
For example, the termination must be signed by hand, by a person authorised to serve. This is usually the general manager. Notice of termination may be delivered in person, placed in a mailbox, or sent by registered mail. If the employer gave the notice only verbally or sent it by text message or email, the notice is invalid.
As a rule, the statutory notice period as stipulated in section 622 of the German Civil Code (BGB) applies . The statutory notice period varies depending on how long the employee has been working for the company. However, employers and employees may agree on different, longer notice periods in the individual contract. If the employee is on probation, notice of termination can be given by either party during this time, with a much shorter notice period – but at least two weeks.
Can you be fired “without cause”?
If you work for a small company or are still in your first six months of employment (known as the “probation period”), you have no legal protection against being fired. The company only needs to comply with the statutory notice period and other formal requirements.
However, if you work for a company with more than 10 employees and have already completed the first six months of employment, then there must be a valid reason for termination.
Note: The employer does not have to specify the reason when announcing the termination of the contract.
Legally approved reasons for termination
Labor law provides that ordinary notice of termination may be given for operational, personal and behavioral reasons:
- An operating reason could mean that the company is restructuring or outsourcing to maintain operations.
- A personal reason means that the employer sees the reason for termination in the employee’s character (for example, he could be constantly absent due to illness in a way that the company cannot be expected to accept). We have more details here: Working in Germany: Termination of contract due to sickness of the employee
- A behavioural reason usually revolves around the employee’s behaviour, for example, if they have been accused of something like theft or harassment.
It is particularly important to seek advice from an employment lawyer if an employee is fired for conduct, as this may result in loss of unemployment benefits or a lock-out period.
All these reasons must meet very high legal requirements in Germany for the termination to be considered permissible. In many cases, the terminated employee may be able to fight the termination on these points by proving in court that the employer did not comply.
Very important: Call the employment agency immediately after receiving the termination notice and seek legal advice.
Am I entitled to redundancy pay?
To avoid notice periods, employers sometimes offer payments to laid-off employees. Contrary to popular belief, there is usually no legal right to severance pay. As tempting as these offers may seem at first glance, they can have a negative impact, sometimes blocking unemployment benefits and presenting tax disadvantages.
Companies also often use severance payments as part of the termination agreement and condition the severance pay on not taking the case to the employment tribunal. By accepting payment, you often waive your right to challenge the dismissal.
What should I look out for in termination agreements?
In addition to providing you with a sometimes substantial compensation package, termination agreements are often used as a means of putting pressure on employees in other ways.
Sometimes they are combined with a modified (shorter) notice period, or sometimes they are intended to encourage the employee to leave the company voluntarily. For older employees who may be subject to a long notice period, the termination agreement is sometimes intended to circumvent this notice period.
Even if you feel pressured when your employer presents you with a termination agreement, you should proceed with caution. After all, once you sign, there’s no going back.
READ MORE ABOUT THIS TOPIC HERE: List of 5 well-paid jobs in Germany that nobody wants to do