Dismissal for personal reasons: Grounds, examples & severance pay

Dismissal for personal reasons is – alongside conduct-related and redundancy-based dismissal – one of the three types of termination recognized under the Protection Against Unfair Dismissal Act (Kündigungsschutzgesetz). Personal dismissals are relatively rare: only about three percent of all employees are dismissed on personal grounds. However, the consequences for those affected are often particularly severe, as dismissals for personal reasons include, for example, terminations due to illness. Strict legal requirements must be met in order for such a dismissal to be lawful. This article outlines the conditions, examples, and grounds for dismissal for personal reasons.

Key points:

• Dismissal for personal reasons is subject to strict legal requirements. It is only considered socially justified if:
  • The employee is no longer able to fulfill their duties due to a lack of personal suitability (negative future prognosis).
  • This results in significant operational or economic disadvantages for the employer.
  • A balancing of interests weighs in favor of the employer.
• Examples include long-term illness or the loss of a work permit.
• As with other types of dismissal, there is no general legal entitlement to severance pay in cases of personal dismissal. However, employers are often willing to offer severance if the employee’s chances of success in a dismissal protection lawsuit are high.

What is a dismissal for personal reasons?

Dismissal for personal reasons is one of the three types of termination recognized under the Protection Against Unfair Dismissal Act (Kündigungsschutzgesetz). The other two types are conduct-related and redundancy-based dismissals. Personal dismissals are relatively rare: only about three percent of all employees are dismissed on personal grounds.

The most common form of personal dismissal is dismissal due to illness, which is addressed in a separate article. However, there are other examples of personal dismissal as well. These include lack of professional qualification, loss of a pilot’s license, loss of a driver’s license for professional drivers, or even pre-trial detention.

Requirements for dismissal for personal reasons

In order for an employer to effectively dismiss an employee on personal reason, the following requirements must be met:

• Negative prognosis: The employee must be wholly or partially unable to fulfil their obligations under the employment contract due to their professional, psychological or physical aptitude or ability (negative prognosis for the future). The employee cannot control the loss of the necessary abilities. Fault is irrelevant. If the behaviour is controllable, behaviour-related dismissal (with other requirements) may be considered.
• Significant impairment of operational processes or economic interests: Due to the lack of suitability, operational processes must be significantly affected or the employer’s economic interests impaired. Examples: machine downtime, production losses, overworking of other employees, continued payment of wages, additional payment for overtime, hiring of replacement staff.
• Balancing of interests: When deciding on a dismissal, the interests of both the employee and the employer must be considered. For the employee, things like how long they have worked there, their age, family responsibilities, and how hard it would be to find a new job are important. For the employer, it’s about how much the employee’s situation affects daily operations or causes extra costs. The balance of interests must be in favour of the employer.
• Ultima ratio principle: Termination may only be used as a last resort (ultima ratio principle). Therefore, before terminating an employment relationship for personal reasons, it must be examined whether a less severe measure is possible. For example: Implementation of a ‘company reintegration management’ (BEM) programme; Transferring the employee to an equivalent vacant position, possibly through reasonable retraining or further training.

Further general requirements

In addition to the requirements under the Unfair Dismissal Protection Act, further requirements must be met:

• If there is a works council, the employer must consult it before dismissing an employee on personal grounds. Dismissal without the involvement of the works council is invalid.
• In addition, the provisions of special protection against dismissal, for example for severely disabled persons, persons on parental leave, works council members, trainees or pregnant women, must be observed.

Examples of dismissals due to personal reasons

Reasons for dismissals for personal reasons can include, for example:

• Illness of the employee: The most important case of dismissal for personal reasons is the illness of the employee. This includes both long-term illness and frequent short-term illnesses, as well as the employee’s reduced performance due to illness. You can find more information on this in our separate article ‘Dismissal due to illness’.
• Lack of aptitude means that the employee is no longer suitable for performing their work. This may result, for example, from the withdrawal of a professional licence or authorisation, such as a doctor’s licence to practise medicine, a pilot’s licence, or a truck driver’s licence. Similarly, the lack of work permit for non-EU foreigners may constitute a lack of suitability.
• Prevention: The employee is unable to perform their work, e.g. due to a prison sentence of several years.
• Conflict of belief or conscience: The employee refuses to work as a result of a conflict of conscience or belief. For example, an employee in a slaughterhouse may refuse to kill animals due to newly acquired religious beliefs. As a result, they are no longer able to fulfil their professional duties.
• Student assistants and working students: Many companies employ student assistants or working students. The prerequisite for this type of employment is usually that the person in question is enrolled at a university (or university of applied sciences). If the student drops out of their studies or graduates, BAG case law allows for dismissal for personal reasons, as student status is considered a ‘personal circumstance’ and is an essential contractual condition.

Severance pay in the event of dismissal for personal reasons

There is also no legal entitlement to severance pay in the event of dismissal for personal reasons. However, employers are often willing to pay severance pay in this type of dismissal. This is because the requirements for effective dismissal for personal reasons are high – as is the employer’s interest in parting ways with the employee. The greater the likelihood of success in an action for unfair dismissal, the greater the willingness to pay severance pay.

Frequently asked questions (FAQ)