According to German law, employment relationships can be terminated through mutual consent in the event a fixed-term contract expires or when a notice is served by either one of the two parties, i.e., the employer and employee. To act in the general protection of all employees, the employer has limited rights to dismiss the employee by the Dismissal Protection Act. The act is applicable if the company or business has more than ten employees and if the employee has worked at the establishment for at least six months without interruption.
The termination of employment in Germany is required to be in writing for the dismissal to be valid. Let’s take a closer look at the different reasons why an employment contract might be terminated.
Temporary Contract Expires
If an employee has been hired on the basis of a temporary work contract with a specific end date, the employer is not obligated to renew it. The employer, however, must inform the contractual employee a month in advance that their contract will not be extended further. In the event the employer wants to terminate the temporary contract early, they must follow the standard procedures for termination of permanent contracts.
Termination of a Permanent Contract
In the event that a permanent work contract exists, the employee can only be dismissed under specific circumstances. If such a termination takes place, the employer must notify the employee in advance, and the former may be entitled to severance pay. Grounds for dismissal in Germany include:
If the company is restructuring its operations, facing a severe financial burden, or completely shutting down – the permanent contract can be terminated. The employer must prove in the dismissal notice that the position no longer exists and there are no vacant spots in the company that are suitable. The employee is entitled to a notice period, even if the company becomes insolvent.
Conduct Related Dismissal
Employers can terminate a permanent contract if the employee has been found guilty of breaching the company’s code of conduct or any of the terms mentioned in the employment contract. An employee may be dismissed on the grounds of inappropriate behavior or not performing according to expectations. To be dismissed based on the employee’s conduct, German law requires that at least one written warning has been previously issued.
Person Related Dismissal
German employers can legally dismiss a worker if the employee cannot work long term due to an illness. The employer is required to prove that the employee has not been completing their tasks and fulfilling the requirements of their role. In case the employee is dismissed based on illness, they can claim the sickness benefit through their medical insurance.