Immediate termination of an employment contract in Germany

Extraordinary and immediate terminations can conclude the employment relationship without observing particular deadline or periods of notice. Both employees and employers can terminate an employment relationship without previous notice. The prerequisite for an extraordinary termination of the contract is a particularly important reason for leaving.

When is the extraordinary and immediate termination of the employment contract legally effective?

  • The person that is interrupting the employment relations has to present a notice of termination within two weeks after the important fact (reason for leaving) has been recognized. The notification has to be provided in written form;
  • In addition, he/she must obtain a statement from the works council within three days;
  • The employer must request the consent of the Integration Office to terminate the employment relationship with a severely disabled person;
  • The employer must request the consent of the Public Health Department in order to terminate the employment relationship with a pregnant woman;
  • The employer must file an application with the Labour Court in order to terminate the employment relationship with a member of the works council
  • If the terminating party does not comply with the above-mentioned conditions, the extraordinary termination shall be forfeited.

An extraordinary termination is always the last step to take against an employee.

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.

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.