Protection against unfair dismissal

There is one important question in labor (empoyment) law that comes up when an employee is dismissed by their employer. Does the employee have any type of protection against unfair dismissal in Germany?

The period within which action must be brought is short!

For this reason, you need to act fast if you lose your job.

Employees can only file a suit with the respective labor court within three weeks of receiving a dismissal notice. This refers to cases when they have been dismissed with notice in writing. If the labor court does not receive a suit for action by this deadline, the termination of employment is considered lawful. Be sure to schedule an appointment with my office as soon as possible. Click here for more information on my fees for an initial consultation.

It is only possible in rare instances to take action once this period has elapsed. For more information, refer to the article written by RA Rainer Polzin in AA 2007, p. 188 et seqq. [available in German only].

Application of the German law on Protection against unfair dismissal

The employer requires a reason for a dismissal with notice of an employee according to § 1 of the German Protection Against Unfair Dismissal Act / German employment protection act (Kündigungsschutzgesetz – in German only). But only if the employee  has worked for the employer for more than six months and the employer regularly employs more than ten employees. Who is an employee and how the dangers of bogus self-employment can be avoided you can find out here). In this case, the Protection Against Unfair Dismissal Act is applied. Whereby special rules apply to executive employees. There are three reasons for an employee’s dismissal:

Dismissal due to employee conduct

The employer may be entitled to dismiss an employee if it is due to misconduct.

All culpable violations of contractual obligations by the employee are considered reasons for dismissal. These include, repeated unexcused absences or taking leave without authorization, for example.

There are violations of the employment contract upon which action could be taken. This means that there needs to be a prognosis showing that further contract violations are to be expected in the future.

Principle of last resort

A dismissal due to employee conduct must always be the principle of last resort (ultima ratio). Theis follows form § 1 (2) of the German Protection Against Unfair Dismissal Act. It means that there are no other or less restrictive means left. Therefore, a warning letter must always be issued first. If the employer does not issue such a notice, the employee often wins the dismissal lawsuit. A dismissal is only then justified if the situation happens again. However, at times, a notice of admonition is not required. This is the case with serious violations in the trust relationship. I.e. when a restoration of trust cannot be expected.

Likewise, there must be no chance of continuing employment at a different workplace or changing the employment contract (notice of change). Finally, the interests of both parties of the contract are weighed up. However, the requirements here are not quite as strict as in the case of dismissal due to personal circumstances. For it is up to the employee to behave in accordance with the contract.

Burden of proof lies with employer

The employer is in the difficult position of proving the reason for an employee’s dismissal. The employer has to prove that the employee’s conduct was inappropriate or intolerable. For example, the employer must also explain the reasons that led to the notice of admonition. This is often very difficult in the real world. There can be considerable financial risks for the employer. For this reason they often choose to pursue a termination agreement (also known as settlement, annulment or suspension agreement).

Dismissal on grounds of company business / Operational reasons

It may be possible for an employer to terminate an employment contract for reasons of urgent company business that prevent the employee from continuing to work for the company.

If the job is lost due to operational changes, there may be grounds for a dismissal for business reasons. These can be external reasons such as a decline in sales or a lack of orders. Or also internal reasons such as restructuring or a factory shutdown. In this case, the employer must also prove that the affected employee cannot be employed at another workplace in the company. It means that there are no other or less restrictive means left for the employer to pursue. The employer could reduce accrued overtime, the introduction of short-time work or issue a notice for a change of contract.

Social choice

In addition, the employer must conduct a proper social selection. This follows from § 1 (3) of the German employment protection act. To this end, the employer must select from among similar, interchangeable employees the one who has the highest likelihood of coping with a dismissal from a social standpoint. The social data include:

  • the length of time at the company
  • age
  • any alimony obligation
  • and degree of disability

Dismissal due to personal circumstances

Reasons that lie in the personal circumstances of the employee are taken into consideration.

Grounds for dismissal can be based on the employee’s personal circumstances and skills and if the employer’s interests are affected. And it does not necessarily have to be the employee’s fault.

Such a ground only justifies dismissal under certain conditions. It must be foreseeable that the employee perform their contractual work in the future (negative prognosis). The date of receipt of the letter of termination by the employee is decisive. Further, it means that there are no less restrictive means left for the employer to pursue (principle of last resort). The employer must always check whether or not the employee can continue to be employed in another vacant position. To do so, the employer can change working conditions or provide retraining or further training measures. Last but not least, a balance of interests must be reviewed. This means that the grounds for the dismissal are so substantial that it appears appropriate.

Dismissal due to illness is the most frequent case of dismissal on the grounds of personal circumstances.

Observance of deadlines

The employer is obliged to observe the notice periods for dismissals with notice (ordinary dismissal), both those in the employment contract and pursuant to § 622 of the German Civil Code. The longer the duration of the employment relationship, the longer the notice period.

Protection against unfair dismissal: Other reasons negating its validity

There are many other reasons why a dismissal may be invalid, including:

  • Lack of consultation of the works council. This follows from § 102 German Works Council Constitution Act.
  • Lack of approval from local authorities. Approval may be needed from the Integration Office when a severely disabled person is dismissed (in German only).
  • Or for expectant mothers and employees on parental leave.
  • Members of the works council also enjoy special protection against dismissal. This follows from § 15 KSchG.
  • Notification of collective dismissal was improperly communicated, or not at all. This follows from § 17 KSchG.
  • Violation of the written form requirement. This follows from § 623 of the German Civil Code. It is particularly important to note that an e-mail (with or without an attachment) does not count. There has been a significant increase in dismissals violating the written form requirement during the current COVID-19 outbreak.
  • Dismissals due to a transfer of business are invalid. This follows from § 613a German Civil Code.

Unfair dismissal without notice (summary dismissal)

The employer is faced with a great number of requirements for summary dismissal of an employee. The employer needs an important reason. This follows from § 626 (1) of the German Civil Code. This establishes that there must be compelling reasons for dismissal. In addition, the interests of both parties must be comprehensively and meticulously weighed. This evaluation must show the employment relationship cannot reasonably be expected to continue until the end of the notice period. There must be a negative prognosis too, and the principle of last resort must be observed.

The employer must observe also the period in § 626 (2) of the German Civil Code. Notice of summary dismissal may only be given within two weeks. Starting from the point of time that the person entitled to give notice becomes aware of facts leading to a dismissal. Only if the employee receives the dismissal notice within these two weeks is the deadline considered observed. Since the requirements are so high, a dismissal without notice is only possible in case of serious breaches of duty. These include theft or worktime fraud.

Severance in cases of unfair dismissal

Proceedings before a labor court in case of protection against unfair dismissal often deal with determining whether or not the employee is protected against unfair dismissal. Thousands of such cases are heard by the labor courts of the City of Berlin every year.

The employer runs a huge risk in the process. If the labor court decides in favor of the employee and determines that the dismissal is unfair, the employer loses the case. He is then required to pay the employee’s salary for the period since dismissal. The employee is not required to rework the time. The employer runs the risk of having to pay an employee for work that the employee did not perform. Employers should seek professional advice before issuing a dismissal notice.

These protection against unfair dismissal proceedings often result in the employee agreeing to a settlement. Where they receive a severance package. It is not uncommon to negotiate on the compensation of vacation. The elease from work in return for vacation (garden leave) is also regularly subject of negotiations. And the reference letter.