Protection against dismissal under German labour law

The regulations on protection against dismissal should give stability and security to the employment relationship. If all conditions for termination have been complied with in all points, the termination is considered effective.

Lawsuit against unfair dismissal

The employee may file complaint against unfair dismissal at the German Labour Court (Arbeitsgericht in German).

If the employee asserts that a termination is socially unjustified or is legally ineffective for other reasons, he has the chance to file a lawsuit within three weeks after the receipt of the written notice of dismissal.

In the event of dismissal for variation of the contract, legal action shall be taken in order to ascertain that the change in terms of employment is socially unjustified or legally ineffective for other reasons.

If the employee has lodged an objection with the works council, he shall enclose the statement of the works council to the lawsuit documentation.

Insofar, as the termination requires the approval of an authority, the appeal-period for bringing the matter to the Labour Court is not initiated until the decision of the authority has been notified to the employee.

Dismissal for variation of contract 

If the employer terminates the contract and offers the employee a variation of their employment relationship, the employee has the option to accept this offer and understand that the dismissal is actually not socially unjustified. This reservation must be declared by the employer to the employee within the period of notice, at the latest within three weeks after receipt of the notice of dismissal.

Termination – opposition proceeding

If the employee considers the dismissal to be socially unjustified, he may lodge an objection at the works council within one week after his dismissal. If the works council considers the appeal to be justified, he has to try to reach an agreement with the employer. It shall communicate its opinion on the objection in writing to the employee and the employer upon request.

Cancellation agreement

In the event of a contractual termination, employees and employers shall terminate the employment contract by mutual agreement. Advantage: The consequences of a termination procedure can be avoided.

The annulment is sealed by a cancellation agreement (“Aufhebungsvertrag” in German).

The employee should be informed of the consequences before the signing of the termination agreement.

Make sure that you do not have any disadvantages by signing the termination contract! Preventive consultation with an attorney will save you from very unexpected and unwanted consequences.

Consequences of a cancellation agreement

Please consider:

  • The statutory period of notice is no longer applicable.
  • The employee has to forego social security benefits. For instance, the unemployment office pays the unemployment benefit only after a period of three months, if the employee is still unemployed after the termination of the previous contract. It should therefore ensure that the lost social insurance benefits in the cancellation contract are balanced.
  • The employee can negotiate a severance pay.
  • In the case of older workers, the employer may have to reimburse the unemployment benefit to be paid by the employee. The employer can be exempted from this obligation by the termination agreement.

Let us advise you in how to win your contract partner with a fair offer for a cancellation contract.

Gratuity under German labour law

When the employment contract is terminated, the employee can demand (under certain conditions) for a severance pay/ gratuity (Abfindung) from his employer. This should provide him with a financial compensation for the loss of the workplace.

If an employer pronounces a lawful termination, he does not have to pay any compensation unless it was previously agreed in the employment contract that in case of a regular termination of the employment relationship a severance pay has to be provided.

The amount of the compensation ultimately depends on the individual case. The rule settlement is half a month’s salary per year of work.

If one of the following situations is not applicable, the employee can nevertheless negotiate a severance payment:

  • The employer and the works council provide for a severance payment in the event of termination.
  • The employee makes a request to terminate the employment contract against payment of compensation and the Labor Court gives this order. The employee must justify the application.

The riskier is the move of the employer, as many possibilities has the employee to receive the severance pay.