Termination of the Employment Contract: What to Consider?

Termination of an employment contract is always a unilateral declaration of intent. In contrast to a termination agreement or a change agreement, it is legally effective even without the consent of the contractual partner. However, some guidelines, rules and limits from employment law must be observed. The procedure and form are also largely regulated and there are different types. In principle, the employer has to follow stricter guidelines than the employee; numerous laws on protection against dismissal ensure this.

Types of Termination of an Employment Contract

Ordinary notice of termination: A notice of termination after the legally valid notice period is an ordinary notice of termination, it is alternatively called a notice of termination in due time.

The extraordinary notice of termination: In exceptional cases with special justification, one of the parties may deviate from the ordinary notice period.

All other types of termination are subtypes as well as the so-called termination without notice: This is an extraordinary termination in which the employment relationship ends immediately. It is only permissible for particularly serious reasons.

Protection against Dismissal and Reasons for Dismissal

As a rule, an employer must state a factual reason in the letter of termination, whereas an employee does not.

Dismissal Protection Act (KschG)

This and more is regulated by the Dismissal Protection Act (KschG) in the general protection against dismissal: in employment relationships of at least 6 months duration and companies with more than 10 full-time employees. Less strict rules apply to employees in probationary periods and in small businesses.

An employer may only terminate an employment contract for three reasons: personal reasons, behavioral reasons or operational reasons. Collective bargaining agreements can regulate additional reasons. Dismissal due to sickness (personal reasons) is also only permitted if the ability to work cannot be restored.

Termination for Operational Reasons

If termination is due to operational reasons, the company must also make a social selection among the workforce according to defined criteria. Short-time work is not an independent reason for termination, but it is also not an obstacle to termination. Dismissal for operational reasons and for urgent reasons entails the obligation to pay severance. In addition, some groups of employees in need of protection, such as severely disabled persons, works council members, employees on maternity or parental leave, are subject to special protection against dismissal under labor law.

Extraordinary Termination

§ Section 626 of the German Civil Code (BGB) states that extraordinary notice of termination can only be given for good cause. This must be preceded by a warning (termination after warning) and a works council hearing. At the latest 2 weeks after the reason for termination has become known, the person giving notice must then declare their intention.

Which reasons are unreasonable is not specified, but there are gradations in severity? Examples: Taking vacation without permission, mobbing, refusal to work, fraud, theft, serious business damage. Or on the employee side: failure to pay salary, insult or harassment.

Writing Notice of Termination: Form, Deadlines and Delivery

According to Section 623 of the German Civil Code, notice of termination of an employment contract must be in writing with an original signature. E-mail or fax are not sufficient. The deadline for the ordinary variant is regulated by law either in the employment contract, collective agreement or in Section 622 of the German Civil Code.

By law, the minimum notice period is always four weeks, either to the 15th or the end of a calendar month, or an extended period as per the contract. During a probationary period (maximum 6 months), the employment relationship can be terminated with a notice period of two weeks.

However, there are exceptions to this: If the employer gives notice, they must consider the length of service of the employee, because it successively extends the legal notice period

Termination during the Probationary Period

An ordinary notice of termination during the probationary period can be given with a shortened legal notice period of two weeks and without cause, even on the last day of the probationary period. Unless, for example, the employee or his child is on sick leave or there is special protection against dismissal. Extraordinary notices of termination must follow the obligations already mentioned above.

The period begins to run when the notice is received: as soon as it can be assumed that the recipient has free access. This can also be the case despite his absence vacation. It is good if the person giving notice has proof of delivery and personal handover: at least by handover registered letter, even better with advice of receipt or by hand.

Termination of the Employment Contract and the Vacation Entitlement

In principle, according to the law, vacation should be perceived as such and paid out only in exceptions, incidentally, “overtime” as well. A notice of termination may be such an exception. In any case, vacation may not be denied by the company. Quite the opposite of up to 3 months’ leave from work, whether paid or unpaid.

The amount of vacation entitlement depends, among other things, on the date on which the employment relationship ends. Until June 30, only in monthly portions, thereafter full annual leave.