Terminating employees – how employers should proceed

Good personnel is the treasure of every entrepreneur. Only with motivated and qualified employees can the company’s goals be achieved. All the more annoying when a shot turns out to be a mistake in retrospect. Then many employers wonder how they can terminate the employee concerned. Restructuring in the company can also be a reason for job cuts. But protection against dismissal carries great weight in Germany. The law firm WILDE BEUGER SOLMECKE has been advising companies for years on how to carry out terminations in a legally secure manner.

Employees in Germany – unlike in the USA, for example – are well protected against arbitrary dismissal. This does not mean, however, that employees are not dismissable. However, there are some points for companies to consider when parting with an employee. Otherwise, it can quickly happen that the dismissal is overturned by the labor court. This is another reason why legal advice is indispensable when giving notice of termination.

The following text outlines the individual legal hurdles of a termination in order to subsequently provide employers with recommendations for action.

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How the notice of termination must be given?

Termination

"You’re fired!"An angry boss yells at his employee with a high red head and he immediately sets off to pack his seven things into a cardboard box – Such scenes are familiar from various movies. But in reality, such a termination would not be legally tenable at all, because according to Section 623 of the German Civil Code (BGB), the Notice of termination must be in writing take place. Otherwise it is void according to § 125 BGB and thus ineffective. The notice of termination must therefore necessarily be on paper. The legislator has clarified that the electronic form is not sufficient, so that a notice of termination by e-mail also does not meet the formal requirements.

Furthermore, the letter of termination must also reach the employee. This can be done in two ways. Either the letter is given to the employee in person or it is sent to him or her by mail. Care must also be taken to ensure that the notice of termination is given by someone who has the authority to do so. Who exactly this is depends on the organizational structure of the respective company.

The legislator has also defined the requirements for the content of the letter. The letter must state the date on which the employment relationship is to be terminated and the reasons for the termination.

If other bodies besides the employee have to be informed?

Depending on the circumstances of the individual case, the employer may still have to inform other bodies of the termination. If there is a works council in the company, it must be consulted prior to the termination in accordance with Section 102 (1) of the German Labor Code. 1 of the Works Constitution Act (BetrVG). The employer must therefore inform the works council in advance of the intended termination and explain the reasons for it. If the hearing is not held, the termination is invalid.

In the case of ordinary dismissals, the works council then has one week to make its concerns known. If it does not respond within this time, the consent is deemed to have been granted. If, on the other hand, the works council objects to the dismissal, this does not mean, however, that the employee cannot be dismissed before. The sole consequence of the objection is that the employer must attach the works council’s statement to the letter of termination. Only if the employee brings an action for protection against dismissal can it be possible that he or she will be dismissed in accordance with Section 102 (1) of the German Civil Code (HGB). If the employee submits a request for continued employment in accordance with Section 5 of the Works Council Constitution Act (BetrVG), he or she must continue to be employed not merely until the end of the notice period, but until the end of the proceedings. However, the legislator has also laid down exceptions to this rule.

In addition to the works council, it may be that other bodies must be informed. Dismissal of severely disabled employees is difficult. The legislator has placed these under very special protection, because they have a difficult time on the labor market anyway. For this reason, the approval of the Integration Office must first be obtained when severely disabled persons are dismissed in accordance with Section 168 of the Ninth Book of the Social Code (SGB IX). The office then first has the task of fully clarifying the underlying facts of the case. It should then work towards an amicable agreement between the employee and the employer. If such an agreement is reached, the employer must withdraw the notice of termination.

If, on the other hand, no agreement is reached, the integration office must make a decision. Before this, the person concerned, the company’s representative body for severely disabled persons and, if available, the works council must be consulted. Subsequently, the integration office makes the decision on the approval according to dutiful discretion. Thereby it has u.a. to take into account the severity of the disability, the age of the employee, the size of the company and the reason for the dismissal. In the final decision, the integration office then only has the option of granting or refusing consent. Other solutions can then no longer be proposed.

Due to the high hurdles for the dismissal of severely disabled employees, such a dismissal is therefore usually only considered if there are behavioral or personal reasons for it and these reasons are not or only slightly related to the disability.

Which groups are still particularly protected against dismissal?

The economic model of the social market economy has become established in Germany. This model supplements the free market economy with social elements such as solidarity-based health insurance, a state pension system and precisely the protection against dismissal. The legislator therefore has the task of providing special protection for the "severely handicapped. Employees are the weak link in this relationship vis-à-vis their employer due to their economic dependence. This is why there is statutory protection against dismissal. Even more in need of protection are pregnant women, trainees and as already mentioned severely disabled persons.

Pregnant woman are specially protected against dismissal by the Maternity Protection Act (MuSchG). Otherwise, they would be at a considerable disadvantage compared to their male colleagues. In § 17 para. 1 MuSchG therefore stipulates that women may not be dismissed either during pregnancy or within four months of giving birth or within four months of a miscarriage. It is irrelevant whether the employer was aware of the pregnancy at the time the notice of termination was given – at least as long as the employer is informed of the facts within two weeks of the notice of termination.

However, pregnant women cannot be dismissed. In § 17 para. 2 MuSchG states that the state authority responsible for occupational health and safety may declare the termination permissible "in special cases. This applies above all to cases in which termination without notice would be permissible. However, this only applies to cases that have nothing to do with pregnancy. The European Court of Justice has ruled that reasons that lie in the person of the employee are regularly not sufficient for this purpose (ECJ ruling of 30.06.1998 – Az. C 394/96). The situation is different for reasons of conduct if the employee repeatedly violates duties arising from the employment relationship. Likewise, a broken relationship between employee and employer may constitute a special case within the meaning of Section 17 (1) of the Act. 2 MuSchG represent. Company-related reasons, on the other hand, are only sufficient if continued employment is completely ruled out. This is regularly the case only in the case of a permanent hiring or relocation of the business.

The dismissal of pregnant women is therefore only permissible in very limited exceptional cases. However, the special protection against dismissal only applies to them up to four months after the birth. After this, the general regulations on protection against dismissal apply again.

Another group to which the legislator grants special protection against dismissal are Trainee. You can only be terminated without notice after the end of the probationary period for good cause. Ordinary termination on the part of the employer is not possible. An important reason exists if it is completely unreasonable for the employer to continue employing the trainee. This is the case, for example, in the event of sexual assault, alcohol consumption at the workplace or feigning incapacity for work. As a rule, however, a prior warning is required. Only if the trainee then again attracts negative attention, the termination may be pronounced.

Severely disabled persons, pregnant women and trainees can therefore only be dismissed under strict conditions. Although the employer’s hands are not completely tied, the dismissal may only be legally tenable in extreme cases.

Which legal requirements apply to regular employees?

In most cases, the assessment of the admissibility of a termination is likely to be based on the German Protection against Dismissal Act (KSchG). For the law to apply, two criteria must be met. On the one hand, the employment relationship must be terminated in accordance with § 1 para. 1 of the German Unfair Dismissal Act (KSchG) must have already existed for six months or longer and, on the other hand, the company must, in accordance with § 23 para. 1 S. 3 KSchG must employ at least ten employees (for employees whose employment relationship began before 2004, five employees are already sufficient).

If these criteria are not met, the KSchG does not apply. The employee is then not without protection, but in this case he can only invoke the General Equal Treatment Act (AGG). The AGG prohibits unequal treatment of employees without a legal reason.

What are the grounds for termination under the Dismissal Protection Act??

According to § 1 KSchG, termination of an employment relationship is only permitted if it is socially justified is. A social justification can arise for three reasons: personal reasons, behavioral reasons and operational reasons. The employer must explain the reasons for the termination in his letter of termination.

Termination for personal reasons

A Termination for personal reasons is given if the reason for dismissal lies in the person of the employee. In this case, it is regularly not a question of the employee’s controllable behavior, but rather of his or her abilities and characteristics. If the employee can no longer perform due to the loss of a skill or characteristic, the termination may be socially justified for personal reasons.

However, not every loss of a skill or characteristic justifies termination of employment. On the contrary contractual or Operational interests affected be. The discontinuation of the characteristic must therefore have such a great impact that the operational process is disturbed in the long term. This is the case, for example, if the employee has to serve a prison sentence and is therefore unable to work, or if a bus driver loses his driver’s license.

In addition, a Prognosis The employer must show that the employee will not regain the property in the foreseeable future. For example, an illness can significantly impair the interests of the company, but if it is evident that the employee will be fit again in a few weeks, the prognosis decision is in his favor and he may not be dismissed. If, however, it can be assumed that the employee will fall ill regularly in the future and that the company will thus be disturbed in the long term, the prognosis can also be different.

Even if the prognosis is negative, the employee may only be terminated if the no milder means is available. A more lenient means may be considered, for example, if a transfer or retraining is possible.

If such a milder means is not available, the opposing interests must finally be weighed against each other. Thereby u.a. consideration must be given to the age and length of service, but also to the reason for the lack of suitability.

With person-conditioned dismissals thus above all the argumentation is important. Employers should explain in detail why continued employment is not possible for them and also consider what counter-arguments the employee might have.

Behavior-related termination

The Termination for behavioral reasons is likely to be the most frequent reason for termination. Here, the reason must lie in the behavior of the employee himself/herself. In other words, he or she must have breached his or her contractual obligations to such an extent that continued employment is unreasonable for the employer. Here, too, several conditions must be met.

First of all, there must be a considerable Breach of contract. This can be done in many ways. For example, persistent tardiness, unexcused absences, sexual harassment of colleagues or customers, or theft. In the case of theft in particular, the courts have repeatedly ruled that the value of the stolen goods is irrelevant. The decisive factor is that the necessary relationship of trust between the employee and the employer is shaken by the act, and this can in principle also be the case if low-value items such as deposit receipts or office supplies are stolen.

Furthermore, here, too, a Prognosis decision take place. As in the case of dismissals for personal reasons, it must therefore be determined whether it can be assumed that the employee will repeat his or her behavior in breach of the contract.

In addition, likewise No milder means be available. In the case of behavior-related terminations, it is likely to be initially milder in most cases to give the employee an Warning to issue a reprimand for the conduct. In individual cases, a transfer may also be considered. This is possible, for example, in constellations in which two employees are constantly arguing with each other and are thus prevented from doing their work. The means chosen must always be considered in the context of the forecast decision. The employer must therefore not choose a means for which it is obvious from the outset that it will not have the desired effect.

Finally, there must also be a Weighing of interests be undertaken. In this case, the employer’s interest in terminating the employment relationship must outweigh the employee’s interest in continued employment. This is particularly relevant in cases of theft. Here, for example, the courts have acknowledged that the theft of a deposit receipt of low value does in principle justify a dismissal. However, if the thieving employee has been with the company for decades and has never been guilty of anything during this time, the balance of interests is in favor of the employee. As a rule, however, the courts are very strict here.

Termination for operational reasons

Finally, there are termination for operational reasons. In contrast to the other two cases, the reason for the termination is not in the sphere of the employee, but in that of the employer. The reasons for this can be manifold. Some employers want to rationalize production processes, sometimes there is a restructuring in the company and in the worst case orders are lost or there is even the threat of insolvency. In such cases, a company may have to cut jobs for better or worse. However, even here, individual employees may not be dismissed without further ado. In fact, certain guidelines must be adhered to here as well.

First of all, a urgent operational requirement to eliminate the position exist. That is, there must be such changes in the company that there is a surplus of workers. However, here too a prognosis must show that this situation is not only short-term, but it must not be foreseeable when there will be a need for the employees again. Urgent operational requirements are u.a. Site closures, order slump, restructuring, insolvency or changes in the market structure. However, other reasonable options for continued employment in the company must also be considered for the employees concerned. However, employers are not obliged to make their employees as comfortable as possible. It is therefore perfectly permissible to offer employees the opportunity of continued employment in a similar field of activity, but at a different company location – even if it is obvious that the employee will not accept the offer.

In addition, as in the case of termination for behavioral reasons and for personal reasons, there must be a Weighing up interests The following criteria must be taken into account when making a decision that is in favor of the employer.

A special feature of dismissal for operational reasons is that the employer, in accordance with Section 1 para. 3 KSchG requires a Social selection must be made. If several employees are considered for termination, the employer must, according to the law, include four criteria in his considerations: Length of service, maintenance obligations, disability and Age.

In principle, it is assumed that a longer period of employment and an advanced age tend to speak in favor of stronger protection against dismissal. However, the employer can deviate from this with good justification. For example, it may make sense from a corporate policy perspective to keep younger employees in the company if there is otherwise a threat of a wave of retirements in the foreseeable future that would eliminate a large number of employees in one fell swoop. As a rule, however, it is easier to dismiss a single, childless employee in his early 20s for operational reasons than a family man in his late 40s.

It should also be mentioned that it is not mandatory to terminate the employment of the person who has filled the position that has been rationalized away, but that anyone who could potentially fill the position can be considered for termination. This gives employers wide latitude.

The dismissal of employees is therefore not impossible, but the legislator has certainly placed hurdles in its way. Employers should therefore pay particular attention to their argumentation. It is not uncommon for terminations to fail because courts found the reasons given to be inadequate. Here, good legal advice is the be-all and end-all.

What is the period of notice based on??

When terminating employment relationships, the statutory notice period under Section 622 of the German Civil Code must be observed. This is measured according to the length of service of the employee concerned. Employers may only terminate employment relationships with effect from the end of a month. In detail, the following notice periods apply:

  • 2 years in the employment relationship – 1 month to the end of the month
  • 5 years in employment – 2 months to the end of the month
  • 8 years in employment – 3 months to the end of the month
  • 10 years in the employment relationship – 4 months to the end of the month
  • 12 years of employment – 5 months to the end of the month
  • 15 years of employment – 6 months to the end of the month
  • 20 years in the employment relationship – 7 months to the end of the month

In principle, however, other periods can be agreed at the level of collective agreements or employment contracts, although it should be noted that shorter periods can only be agreed through collective agreements. Only longer terms can be stipulated in the employment contract. However, exceptions apply to companies with less than 20 employees, whereby trainees are not included in the number of employees. In this case, a shorter period may be agreed, as long as it is at least four weeks. In addition, a shorter notice period may be agreed in the employment contract for temporary workers if they are not to remain with the company for more than three months.

Furthermore, the above-mentioned deadlines do not have to be adhered to during the probationary period. In this case, the employment relationship may be terminated in accordance with § 622 para. 3 BGB can be terminated at any time with a notice period of two weeks. However, the probationary period may not exceed six months.

When may an employer give extraordinary notice of termination?

Extraordinary termination in accordance with Section 626 of the German Civil Code (BGB) is the most severe means available to an employer, as it allows him to get rid of an employee without having to observe the notice period. Due to the serious consequences, extraordinary termination may only take place in particularly blatant exceptional cases. The requirements for this are very narrow:

1. Important reason

First of all, a important reason be present. This is the case if it would be completely unreasonable for the employer to wait for the ordinary period of notice. As a rule, the reason lies in the behavior of the employee, occasionally also in the person. An extraordinary dismissal, on the other hand, cannot be based on operational reasons. Although the legislator has not defined when exactly good cause is given, there is agreement that a two-stage procedure must be followed. First of all, there must be an important reason in itself. This means that circumstances must exist which are fundamentally suitable for making continued employment and waiting for the notice period unreasonable. Then the specific circumstances of the individual case must be considered in order to determine whether good cause also exists in the individual case.

In the meantime, the courts have ruled on a number of Case groups The following points have been worked out, which are in principle suitable to constitute an important reason:

  • working time fraud
  • Repeated unexcused absences
  • Alcohol consumption despite explicit prohibition
  • secondary employment despite sick leave
  • Acceptance of bribes
  • Damage to business and reputation
  • Serious insult to colleagues or customers
  • Theft of operating resources
  • Bodily injury to colleagues
  • Betrayal of trade secrets
  • Lack of work permit
  • Imprisonment
  • Right-wing extremist activity (also outside the workplace)
  • Sexual harassment at the workplace
  • Systematic mobbing of colleagues

However, even if there is good cause, termination without notice must also be justified in the individual case. So there must be a weighing of interests. In this case, u.a. It is important to consider how the employee has behaved up to now, how long he has been with the company, how serious the violation was and whether there is a risk that he will repeat his misconduct.

2. Milder means?

If there is an important reason, the extraordinary termination must also be necessary. It may therefore no milder means that just as effectively rules out any further misconduct. In many cases, therefore, the employer must first issue a warning to be issued. Only if the employee again misconducts himself/herself may he/she be dismissed for cause. Ordinary termination can also be a more lenient means.

The employer must then give notice of termination without notice be declared within two weeks of becoming aware of the reason for termination. Afterwards only the ordinary notice of termination is possible for him. The deadline must therefore be observed. In addition, the employee must be informed in writing of the reason for termination in accordance with § 626 para. 2 BGB (German Civil Code) must be communicated to the employee in writing – but only upon request.

Tip: Even in the case of an extraordinary termination, the ordinary termination should always be declared as an alternative as well. In this way, employers can at least give ordinary notice of termination of the employment relationship in the event that an employment court declares the extraordinary termination to be invalid. However, it should be noted that the works council must be consulted on both the extraordinary and the ordinary termination of employment.

What must be written in a warning??

In many cases, the employer must first issue a warning before declaring extraordinary termination. On the one hand, this has a warning function towards the employee – it should be made clear to him that he will lose his job in case of a further violation – and on the other hand, it also has a documentation function – the employer can thus prove that he first gave his employee the chance to change his behavior.

Although the warning is not bound to a specific form, it should always be in writing for evidence purposes. This means that there are no problems later in explaining the exact content in court. A time limit does not have to be observed either. However, it makes sense to issue a warning as soon as possible, as otherwise there could be reason to believe that the employer is not that serious.

In a warning letter, employers should in any event Name the breach of duty as concretely as possible. It is best to describe the facts of the case, stating time and date. The broader the warning, the easier it is for the employee to later claim in court that he or she did not know what behavior was intended.

In addition, the warning should include a explicit request include the obligation to immediately cease and desist from the conduct in violation of the agreement. Incidentally, the employee should already be given notice of termination in the event of any infringements Threatened termination without notice be. Employers should make absolutely sure that these three points are included, otherwise it could be merely an admonition. If there is any ambiguity, a visit to a lawyer will help.

Must employees be paid severance pay?

In principle, there is no blanket legal entitlement to payment of severance pay in the event of a dismissal. Rather, it is a voluntary benefit provided by the employer. However, something else may be agreed in the collective bargaining agreement.

However, an exception applies in the case of terminations for operational reasons. The employer has the option of offering the dismissed employee severance pay in accordance with Section 1a of the German Unfair Dismissal Act (KSchG), provided the employee waives the right to bring an action for unfair dismissal before the labor court.

In addition, employees have a claim to severance pay if they terminate their employment without notice due to conduct by the employer that is in breach of the contract.

What is what? An overview

Notice of termination

A notice of termination is given – usually in writing either by the employee or by the employer. It usually refers to the provisions of the employment contract. If the employment contract specifies a mutual notice period of, for example, one month, you should specify the resulting termination date in the termination letter.

Up to the actual termination date, the employment relationship will continue as normal – in most cases, however, remaining vacation days and overtime will be offset against the remaining working time, so that the real working time – i.e. the working days on which the employee is actually still on site – will be significantly reduced. In addition, the means of choice is often a release from work by the employer. The employee retains his entitlement to continued payment of wages, but is released from his duty to work.

If the employee terminates the contract himself without good cause, the employment agency can make a Blocking period for unemployment benefits impose. If the employee is properly terminated and he is not responsible for the reason for termination (especially in the case of dismissals for operational reasons the case), the employment agency steps in with the right to unemployment benefit I.

An independent termination by the employee is therefore associated with many disadvantages. not only run the risk of being subject to a lock-up period, but also have no possibility of negotiating a severance payment.

termination

A termination, on the other hand, in contrast to a notice of termination termination is not unilateral of the employment relationship. Instead, an agreement is reached bilaterally on a dissolution. The details, such as the specific termination date, how to deal with remaining vacation entitlements or how to return work materials, are set out in a termination agreement.

A termination agreement must therefore not have been preceded by notice of termination. Termination of the employment relationship is only agreed as part of the termination agreement. In most cases, there are also additional agreements that make it attractive for both sides to conclude the corresponding contract. For the employee, usually in the form of a severance payment; for the employer, the circumvention of any dismissal protection requirements and the possibility of imposing a "blocking period" on the employee (especially in research-intensive occupational groups) and/or obliging him to maintain confidentiality.

The disadvantage for the employee can be the blocking period by the employment agency. Even in the case of a termination agreement, the employee ultimately agrees "voluntarily" to the end of the contract – corresponding to an independent notice of termination. For this reason, up to 12 weeks can elapse before a claim to unemployment benefit I exists again. Employees should therefore consider in advance exactly whether and under which conditions they agree to a termination agreement.

Severance pay

Severance pay is defined as a one-time monetary payment from the employer in the context of the end of the employment relationship. As a rule, the amount of the severance payment is negotiated between the employer and the employee – in rare cases, however, this may also be stipulated in advance in the employment contract or in a works agreement. Feel free to use our severance calculator if you would like to determine your potential severance amount.

In most cases, severance pay is paid if regular termination of the employee would only be possible if high hurdles were met, or if any Risk of an action for unfair dismissal reduced should be.

The amount of the severance payment depends accordingly on how high the pressure of the employer is and which consequential costs he would have to fear in case of a regular dismissal. Particularly employees with many years of service and employees who would be given lower priority in the context of a social selection can profit here. In addition, the amount of severance pay varies greatly depending on the industry to which the employee belongs.

In principle, it is possible to reach an informal agreement on severance pay. As a rule, however, it is stipulated in the termination or settlement agreement, since the aim is to avoid a regular dismissal. However, anyone who receives a very large severance payment – in whatever form agreed – should expect to be subject to a blocking period imposed by the employment agency. This is particularly the case if the severance pay is significantly higher than the entitlement to the outstanding Salary continuation.

Attention! Besides the contractually agreed severance pay, there is also the sued-in severance pay. In this case, the employer usually first takes legal action against dismissal and only offers them a severance payment in the course of an out-of-court settlement.

Settlement

Settlement, or the terms of a settlement agreement, refers to the provisions of the settlement agreement Circumstances of termination of an employment relationship. Thus, the settlement agreement does not regulate the end of the contractual relationship itself, but only its details. In most cases, the settlement agreement is preceded by a regular notice of termination.

However, one of the two sides, or even both sides, see a need to record additional details of the end of the contract. For example, there may be provisions on what happens to company property owned by the employee, how residual vacation entitlements are to be handled, or whether the employee will be subject to a lock-up period to protect company secrets. The modalities of such an agreement can also be clarified verbally – however, it is always advisable to put this in writing for reasons of legal certainty.

Even within a severance agreement, it can be stated that an employee has recourse to the options to which he or she is entitled after a dismissal – for example, to take legal action against dismissal. Since this is brought about by signing the settlement agreement oneself, the employment agency often imposes a blocking period, even if the termination was initially initiated by the employer or if severance pay was waived.

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