Termination without cause in Germany: Is it legal?

Can an employer terminate employment without cause in Germany? In most cases, employers do not need to state the reason for dismissal in the termination letter. However, they usually still need valid legal grounds if the employee challenges the dismissal in court. This article explains when a termination without cause is legal and what rights employees have.

The phrase “termination without cause” often causes confusion. It can mean:

1. The termination letter contains no explanation.
2. The employer has no valid legal reason for the dismissal.

These are two different issues. A dismissal can be valid even if the letter contains no explanation. On the other hand, a dismissal can be invalid if the employer cannot prove a legally sufficient reason later in court.

Termination without legal grounds

For dismissals falling under the Dismissal Protection Act, employers cannot terminate without grounds. Under this Act, valid termination requires at least one of these grounds:

• Operational dismissal: Operational dismissal is the most common type, occurring with restructuring or closures. However, employers must specifically prove that operational requirements exist leading to permanent job elimination. Additionally, employers must demonstrate correct social selection. If employers cannot prove these requirements, the dismissal is invalid.
• Conduct-based dismissal: Conduct-based dismissal occurs due to culpable behavior (e.g., constant tardiness, work refusal, etc.). Here, employers must primarily prove serious duty violations, prior warnings, and no milder alternatives exist. If they cannot prove these grounds, the dismissal is invalid.
• Personal dismissal: Personal dismissal is possible when employees can no longer perform agreed work duties permanently due to personal, uncontrollable reasons (e.g., illness). Here, employers must primarily prove that employees cannot fully meet contractual obligations due to lack of personal suitability, this leads to significant operational disruptions, and continuing employment is unreasonable for the employer. If they cannot prove these grounds, the dismissal is invalid.

Whether and when exactly employment falls under the Dismissal Protection Act can be found in our article on the Dismissal Protection Act.

If employers cannot prove grounds under the Dismissal Protection Act, they carry high litigation risk. Willingness to negotiate employment termination and conclude settlements with severance payments is therefore often high.

Practical Tip: Ask yourself one question
Do not focus on what the termination letter says. Focus on whether the employer can actually justify the dismissal.
Many employees worry because the letter contains no explanation. In practice, the more important question is whether the employer can later prove a valid reason in court.

Termination without cause: Act quickly

Whether termination grounds are sufficient for valid dismissal is decided by the labor court. Naturally, this is independent of whether and what reasons are stated in the termination letter (see above). Often, no court decision is needed when parties quickly agree on severance. Nevertheless, to preserve deadlines, employees should file a dismissal protection lawsuit within three weeks of receiving termination. This deadline applies to all dismissals – regular, extraordinary, or modification dismissals.

Termination without written explanation: Usually permissible

People often read online that termination must be justified. Actually, this isn’t true in most cases – employers may terminate without stating reasons. However, exceptions exist, which we explain below. But first, the standard case:

Explanation: Generally not required 

Usually, no explanation is required in the termination letter. On the contrary: in practice, employment attorneys often expressly advise their employer clients not to state reasons in the termination letter initially, to offer less attack surface for dismissal protection lawsuits. Employers can generally submit termination grounds (including new grounds!) later. However, this only applies when no works council exists.

An explanation doesn’t need to be included in the termination, but other requirements exist: Termination must be in writing and personally signed by the terminating party.¹ For companies, an authorized representative must sign. Errors can occur here. However, the law typically doesn’t require explanation in the termination letter (we’ll cover exceptions shortly).

Nevertheless, employers must disclose at some point why they issued termination. At the latest when employees file dismissal protection lawsuits, employers must present and prove in proceedings that valid legal termination grounds exist (assuming Dismissal Protection Act applicability).

Exceptions: Explanation required in termination letter

Exceptions exist where “explanation” – meaning presentation of termination grounds – is required in the termination letter. The most important exceptions are:

• Termination during apprenticeship: Under the Vocational Training Act, written explanation is required if termination occurs after probation. Employers may not submit other grounds later. Important: if apprentices terminate, they must also state reasons. However, it’s sufficient if they only communicate they want to abandon training.² Not stating grounds leads to dismissal invalidity.
• Special protection provisions: For pregnant women, the Maternity Protection Act expressly requires termination grounds be stated in the termination letter. Otherwise, the dismissal is invalid.
• Collective bargaining agreements and employment contracts can also mandate stating termination grounds in the termination letter. Examples include the collective agreement for public service (TVöD) and individual agreements in the metal and electrical industries and other collective agreements.

Special case: extraordinary (“immediate”) dismissal

An extraordinary termination (fristlose Kündigung) also does not need to contain termination grounds in the termination letter. However: upon employee request, employers must provide grounds in writing after extraordinary dismissal. Note: if employers violate their disclosure obligation and don’t provide reasons despite employee request, employees can claim damages (e.g., litigation costs) if they wouldn’t have filed a dismissal protection lawsuit had grounds been stated.³

Can you receive severance pay after a termination without cause?

Yes. In practice, many severance payments result from dismissals where employees challenge whether a valid legal reason exists.

If the employer faces litigation risks because the dismissal may be invalid, both sides often negotiate a settlement. This frequently includes a severance payment in exchange for ending the employment relationship.

Frequently asked questions (FAQ)

1. Section 623 BGB ↩︎
2. Section 22(3) BBiG ↩︎
3. Section 626(2) sentence 3 BGB ↩︎