Dismissal protection in Germany: When does it apply and what is reviewed?

Dismissal protection does not mean that an employment relationship can never be terminated. It means that the employer cannot dismiss an employee freely and without a legally relevant reason if the statutory requirements are met.

If the German Dismissal Protection Act applies, an ordinary dismissal must be socially justified. In simple terms, the dismissal must be based on a recognised reason.

The typical categories are:

• operational reasons,

• conduct-related reasons,

• personal reasons.

It must also be reviewed whether there were milder alternatives, such as continued employment in another position or a dismissal with an offer to continue the employment relationship under changed conditions.

General dismissal protection does not apply automatically in every employment relationship. Three requirements are particularly important.

The German Dismissal Protection Act protects employees. Anyone who is actually employed as an employee can generally rely on general dismissal protection.

Genuine self-employed contractors, freelancers or company officers such as managing directors of a GmbH are generally not covered. In borderline cases, the wording of the contract is not the only decisive factor. What matters is how the relationship is actually carried out.

Part-time employees, mini-job employees and fixed-term employees can also be employees within the meaning of dismissal protection law.

General dismissal protection generally applies only if the employment relationship has existed for more than six months when the dismissal is received.

These six months are called the waiting period. This is not necessarily the same as a contractual probationary period. Even if the contract provides for a shorter probationary period, the statutory waiting period for general dismissal protection can still be six months.

What matters is the legal existence of the employment relationship. In principle, the relevant question is when the employment relationship started, not whether the employee actually worked on every single day.

Important: Even during the first six months, not every dismissal is automatically effective. Formal defects, special dismissal protection, discrimination rules or a missing works council hearing may still be relevant.

The German Dismissal Protection Act generally does not apply in small establishments. The key question is not simply how many people work for the company, but how many employees are usually employed in the establishment.

Part-time employees are counted proportionally. In simplified terms:

• up to 20 hours per week: 0.5,

• up to 30 hours per week: 0.75,

• more than 30 hours per week: 1.0.

Apprentices are generally not counted for this calculation.

Temporary agency workers may also be relevant if they cover a regular staffing need in the establishment and are not used only for short-term peaks.

In some cases, it must also be reviewed whether several legally separate companies actually operate a joint establishment. In that case, employees of different employers may have to be counted together for the purpose of determining establishment size.

Many employees hear after a dismissal: “We are a small business, so dismissal protection does not apply.”

That may be correct. But it should not be accepted without review.

Especially in borderline cases, important questions arise:

• How many employees are regularly employed?

• How many hours do the part-time employees work?

• Are temporary agency workers used?

• Are there several locations or organisational units?

• Is the establishment operated jointly with another company?

• Is there a single management structure?

• Are employees actually used permanently within the same work organisation?

For employees, this is often difficult to assess. The employer usually knows the internal structures much better. In dismissal protection proceedings, this can become relevant for the burden of presentation.

If the German Dismissal Protection Act applies, an ordinary dismissal must be socially justified.

This means that the employer must be able to present a reason for the dismissal. It is not enough that the employer simply wants to end the employment relationship.

The three most important categories are:

• operational dismissal,

• conduct-related dismissal,

• personal dismissal.

In an operational dismissal, the employer relies on business-related reasons. Typical examples are restructuring, loss of orders, decline in revenue, closure of a department or outsourcing.

However, the employer must show more than a wish to reduce personnel costs. The employer must be able to explain which business decision was made and why this results in a loss of employment need.

Important points include:

• Is there a comprehensible business decision?

• Has the need for employment actually ceased?

• Is the loss permanent and not only temporary?

• Could the employee be continued in another vacant position?

• Was a proper social selection carried out?

Operational dismissals often deserve close review. A general reference to a poor order situation or restructuring is not automatically sufficient.

In a conduct-related dismissal, the employer accuses the employee of controllable misconduct.

This may include, for example:

• repeated lateness,

• refusal to work,

• breaches of duties towards customers or colleagues,

• violations of company rules,

• absence without excuse,

• serious breaches of trust.

In many cases, a prior warning is required before a conduct-related dismissal. The warning is intended to make clear which conduct is criticised and that repetition may endanger the employment relationship.

However, a warning is not always mandatory. In cases of particularly serious breaches of duty, a warning may be unnecessary, especially if the employee must have known that the employer would not tolerate the conduct.

Here too, the individual circumstances are decisive.

Written warning in Germany: what employees should know

A personal dismissal is not based on culpable misconduct. The reason lies in personal characteristics or circumstances of the employee.

The most common example is dismissal due to illness.

Illness alone is not automatically enough for a dismissal. It must be reviewed whether the illness affects the employment relationship and whether further significant impairments are to be expected in the future.

Typical review points are:

• negative prognosis,

• significant impairment of operational or economic interests,

• no possibility of continued employment,

• balancing of interests.

In cases of illness, occupational reintegration management and additional protection rules for severely disabled employees may also be relevant.

A dismissal should generally be the last resort.

It must therefore be reviewed whether the employer could have continued to employ the employee in another way. This may include a vacant position in the same establishment or company.

Sometimes a dismissal with an offer to continue employment under changed conditions may also be relevant. In that case, the issue is not the complete termination of the employment relationship, but continued employment under modified terms.

Not every theoretical possibility is sufficient. The other position must actually be vacant and suitable. Nevertheless, this point is important in many dismissal protection cases.

If several comparable employees could be affected by an operational dismissal, the employer must carry out a social selection.

In particular, the employer must consider:

• length of service,

• age,

• maintenance obligations,

• severe disability.

The purpose of social selection is to prevent the employer from freely choosing which employee to dismiss from a group of comparable employees.

There are many detailed questions: Who is comparable? Which employees belong to the selection group? Did the employer exclude certain employees because of special skills? Were the social data correctly considered?

If the German Dismissal Protection Act does not apply, this does not mean that the employer is completely free to dismiss.

Even outside the Act, there are limits. A dismissal must not be, for example:

• arbitrary,

• contrary to good faith,

• discriminatory,

• an unlawful retaliation measure,

• contrary to statutory prohibitions.

However, this protection is weaker than general dismissal protection under the German Dismissal Protection Act. In small establishments or during the waiting period, it is therefore especially important to check whether there are concrete indications of invalidity.

Termination without notice in Germany: what employees should check immediately

In addition to general dismissal protection, there is special dismissal protection for certain groups of employees.

This may include, for example:

• pregnant employees,

• employees on parental leave,

• severely disabled employees,

• works council members,

• apprentices after the probationary period,

• certain data protection officers.

In such cases, additional requirements may apply. In some situations, the employer needs official approval before issuing the dismissal.

This special dismissal protection is separate from general dismissal protection. It may be relevant even if the German Dismissal Protection Act does not otherwise apply.

If there is a works council in the establishment, the employer must hear the works council before every dismissal.

This generally also applies to dismissals during the waiting period and to extraordinary dismissals.

The employer must inform the works council of the dismissal reasons from the employer's perspective. If the works council is not heard at all or is not heard properly, the dismissal may be invalid.

Important: The works council hearing is not a full dismissal protection trial in advance. But the works council must be informed sufficiently to be able to comment meaningfully on the intended dismissal.

Anyone who has received a written dismissal must act quickly.

In principle, a dismissal protection claim must be filed with the labour court within three weeks after receiving the dismissal. If this deadline is missed, the dismissal is generally deemed effective from the beginning.

This can happen even if there would have been strong arguments against the dismissal.

After receiving a dismissal, employees should therefore not wait too long.

After receiving a dismissal, the following points should be clarified in particular:

1. When was the dismissal received?

2. Was the dismissal issued in writing?

3. Has the employment relationship existed for more than six months?

4. How large is the establishment?

5. Is there special dismissal protection?

6. Is there a works council?

7. Which dismissal reasons does the employer rely on?

8. Is continued employment possible?

9. Was social selection carried out in an operational dismissal?

10. Is the three-week deadline still running?

Whether a dismissal is effective depends on many points. General dismissal protection under the German Dismissal Protection Act is particularly important, but it only applies if certain requirements are met.

If the Act applies, the employer must socially justify the dismissal. Operational, conduct-related and personal dismissals each have their own review standards.

Even outside the German Dismissal Protection Act, there are limits, for example against arbitrary, bad-faith or discriminatory dismissals.

But one point is always crucial: the three-week deadline must not be missed.