Reasons for Termination and Dismissal in Germany: A Legal Overview

In Germany, employment cannot be terminated arbitrarily. German labor law requires that employers provide legally valid reasons for termination and dismissal, especially if the employee falls under general dismissal protection. Unlike in some other countries, German law limits the employer’s ability to end an employment contract at will. Instead, a dismissal must be based on one of three accepted categories: operational, personal, or conduct-related reasons. Each category comes with its own legal requirements and documentation standards. This article outlines the legally recognized reasons for termination and dismissal in Germany, explains how they are evaluated in court, and helps expats understand their rights in case of job loss.

1. Legal Framework for Dismissal in Germany

The main legal basis for dismissals in Germany is the Protection Against Dismissal Act (Kündigungsschutzgesetz, or KSchG).

It applies if:

• The employee has worked for more than six months, and
• The employer has more than 10 employees

Under this law, any termination must be socially justified—meaning that it falls under one of the recognized categories of dismissal.

Outside this framework, dismissals may still be possible (e.g. during probation or for fixed-term contracts), but must still follow formal requirements.

2. Three Legally Accepted Reasons for Dismissal

1. Operational Reasons for Termination

(betriebsbedingte Kündigung)

These relate to the needs of the business, and occur when the employer cannot continue the employment due to structural, financial, or organizational changes.

Common operational reasons for dismissal include:

• Department closure or outsourcing
• Company restructuring
• Decline in revenue or workload
• Elimination of the employee’s role

Legal requirements:

• The employer must prove that the job position no longer exists
• The selection of which employees are dismissed must be based on social criteria (age, tenure, dependents, disability)
• The employer must check whether a different suitable position is available before dismissing

2. Personal Reasons for Termination

(personenbedingte Kündigung)

These concern the employee’s own circumstances, which make them permanently unfit to perform the job.

Examples include:

• Long-term or chronic illness (with poor recovery prognosis)
• Loss of necessary work authorization (e.g. residence or work permit)
• Permanent reduction in work capacity
• Driver’s license loss (if required for the role)
• Frequent short-term absences affecting operational reliability

Legal requirements:

• The personal issue must be long-term and unavoidable
• The employee must be unable to fulfill essential job duties
• The employer must prove that continued employment is no longer reasonable

📌 Dismissals for personal reasons require careful medical and legal assessment.

3. Conduct-Based Reasons for Termination

(verhaltensbedingte Kündigung)

These refer to behavioral issues on the part of the employee that breach the employment contract.

Examples:

• Repeated unexcused absences or tardiness
• Insults or threats against coworkers
• Theft or misuse of company property
• Violation of internal rules or safety guidelines
• Refusal to perform assigned duties

Legal requirements:

• The behavior must be serious and intentional
• A prior written warning (Abmahnung) is usually required
• The employee must have been aware that their behavior could result in termination

📌 Only in very serious cases (e.g. theft or violence) can a dismissal occur without notice.

3. Other Reasons Not Accepted in Germany

The following do not qualify as valid reasons for dismissal under German law:

🚫 Poor performance without documented evidence
🚫 Personal dislike or team “fit”
🚫 Pregnancy or parental leave
🚫 Trade union membership or political views
🚫 Age, gender, religion, nationality, or sexual orientation
🚫 Temporary economic fluctuations if alternatives (e.g. short-time work) exist

Dismissals based on these criteria may be challenged in court and declared unlawful.

4. Dismissal During Probation Period

During the first six months of employment (probation), the Protection Against Dismissal Act does not apply. However:

• Dismissals must still be in writing
• Statutory or contractual notice periods must be observed
• Dismissal may still be challenged if it’s discriminatory or abusive

📌 Employers do not need to give reasons during probation—but expats with residence permits tied to employment should still consult a lawyer if dismissed.

5. Termination Without Notice (Extraordinary Dismissal)

In cases of serious misconduct, employers may issue an extraordinary dismissal without notice (fristlose Kündigung).

Examples:

• Theft
• Fraud
• Physical violence
• Serious harassment or threats
• Intentional damage to employer property
• Persistent refusal to work

Legal conditions:

• Employer must act within 2 weeks of discovering the incident
• Misconduct must make continued employment impossible, even during the notice period
• Usually requires documentation and a prior warning, unless the behavior was extreme

📌 The burden of proof lies with the employer, and courts often scrutinize such terminations closely.

6. Formal Requirements for All Dismissals

Regardless of the reason, all dismissals in Germany must:

• Be issued in writing
• Be signed by an authorized representative
• Specify the termination date and notice period
• Include works council consultation (if applicable)

Verbal terminations or informal notices are legally invalid.

7. What Employees Can Do After Dismissal

Employees who believe their dismissal is not justified can file an unfair dismissal claim (Kündigungsschutzklage).

Key facts:

• Deadline: must be filed within 3 weeks of receiving the termination letter
• Filed with the local labor court (Arbeitsgericht)
• Often results in settlement and severance

📌 Employers often offer a severance package to avoid legal risks—especially if the reasons for dismissal are weak.

Conclusion

In Germany, reasons for termination and dismissal must be clearly defined and legally valid. The employer cannot simply “let someone go” without documentation and justification—especially if the employee has been employed for more than six months.

For expats, understanding these reasons is essential to protecting your job, your rights, and in many cases, your residence status. If you are dismissed, act quickly and seek legal advice to ensure your dismissal complies with the law.