Termination & Resignation

Effectiveness of a Termination

First of all, the effective termination of an employment contract has to comply with the notice periods stipulated in the contract, in applicable collective agreements, or in statutory law. Besides, the termination of an employment contract has to be in writing and the termination notice should be signed by a person with appropriate authorization under (alternatively an original PoA has to be enclosed). In addition, the receipt of the notice by the employee should be provable in court. Furthermore, the works council has to be consulted in accordance with the Works Constitution Act (Betriebsverfassungsgesetz – BetrVG). It is remarkable how many termination letters in practice do not comply with these relatively simple formal specifications and, hence, are invalid under German Employment Law.

Employee rights to lawful termination and resignation: Employment Protection Act (Kündigungsschutzgesetz – KSchG)

Additionally, there are some further restrictions imposed by German employee protection legislation: If more than 10 full-time employees are employed in a business unit and the employment has lasted for more than 6 months, termination has to be socially justified. This means there has to be a valid cause for the termination under German Employment Law, e.g. in relation to the employee’s conduct, the employee’s personal condition, or due to operational reasons. In case there are concerns regarding the effectiveness of a termination, the employee may bring an unfair dismissal claim before the Employment Court (Labor Court, Labor Tribunal) within 3 weeks after receipt of the termination notice. Due to the relatively low costs of proceeding in such a way, this happens quite often in Germany. A good percentage of the Employment Court proceedings end with an amicable settlement. Please note that for employees that are considered to be top-level executives under German Employment Law (leitende Angestellte) special rules apply in the event of a termination of their employment. All general rules also apply to expats in Germany.

Severance pay – severance packages

Although reinstatement has to be the formal objective of the dismissal claim under German Employment Law, in fact, a majority of the employees want to obtain severance pay as lucrative as possible. This is even truer for top-level executives and managerial staff and is clear to all participants of proceedings (including the Employment Court, Labor Court, and Labor Tribunal). Therefore, it is often crucial for the amount that can be realized in a termination settlement if there are other factors (besides the subject of the unfair dismissal claim) that either strengthen or weaken the negotiation position of the employee. A good Employment Lawyer in Germany should take into account all relevant other interests of the parties involved to achieve a successful outcome for his client. In particular, he should not want to make a settlement at any cost, but should rather be determined to fight for a favorable court decision – if necessary through the second instance.