Dismissal Protection Act – your rights in Germany

The Unfair Dismissal Protection Act protects – among other things – employees from wrongful termination. It limits valid dismissals to only three categories and applies once a six-month waiting period has passed. The law does not apply to small businesses with ten or fewer employees. For many workers, the Act is the key safeguard that ensures job stability and prevents unjustified job loss. Our guide explains when the Act applies, which dismissal grounds are lawful, and how employees can use these rules to defend their rights.

When does protection under the Dismissal Protection Act apply?

Employees are protected under the Unfair Dismissal Protection Act in Germany (Kündigungsschutzgesetz or KSchG), only when all core requirements are met. First, there must be a valid employment relationship. The law applies only to employees, not freelancers, and special rules apply to executive staff. Second, the statutory waiting period must be fulfilled. According to Section 1 KSchG, an uninterrupted employment duration of more than six months is required. Third, the employer must not be a small business. Since January 1, 2004, the Unfair Dismissal Protection Act applies only to companies with more than ten employees. Part-time workers count proportionally: up to 20 weekly hours count as 0.5, up to 30 weekly hours count as 0.75. Employees whose contracts existed before December 31, 2003, may still be protected in companies with more than five employees, but this older regime has additional conditions that should be reviewed with a lawyer.

When can employers dismiss under the Unfair Dismissal Protection Act

The Unfair Dismissal Protection Act contains three categories of dismissals: person related, conduct related and operational terminations. Although the law names these categories, the specific conditions come from case law. Courts examine the facts closely. Employers carry the burden of proving that each legal element is met. Employees benefit when they preserve documents such as emails, instructions, reviews and warnings.

Person-related dismissal

A person related dismissal is possible when employees can no longer perform their contractual duties for personal reasons they cannot control, such as long term illness. A negative prognosis must exist, meaning the inability is expected to continue. The employer must show that operational or economic interests are significantly affected. Before dismissing, the employer must consider milder alternatives such as transfer or adjusted duties. Courts also weigh the interests of both sides to decide whether continuation of employment is reasonable.

Conduct-related dismissal

A conduct related dismissal is based on behavior that the employee can control. Examples include ignoring instructions, refusing to work or theft. Courts require a negative prognosis here as well: the employer must show that similar breaches are likely to happen again. The principle of proportionality applies. In most cases, at least one valid warning is required before dismissal. Finally, the court balances the interests of both parties to determine whether termination is reasonable. Documentation is important. Keeping emails, warnings, performance notes and schedules can make a decisive difference.

Operational dismissal

Operational dismissals under the Unfair Dismissal Protection Act are common in practice. They require urgent business reasons. These include internal or external circumstances that permanently eliminate a job, for example site closures, loss of orders or economic downturn. Employers must first assess whether other positions are available before issuing a dismissal. Social selection is required when several comparable employees exist. The employer must compare factors such as length of service, age, dependents and disability. Employees who score higher based on these criteria cannot be dismissed as easily.

Exotic variant: The “change dismissal”

A “change dismissal” allows employers to adjust contractual terms while still respecting the notice period. The employer issues a regular dismissal but simultaneously offers a new contract with modified conditions. Employees then have three options: accept the new terms, accept them under reservation of court review or reject the offer. Accepting under reservation is often the safest approach because it keeps the job while preserving the right to challenge the dismissal. The three week filing period applies here as well. Missing this deadline usually makes an otherwise invalid dismissal legally effective.

Employees should examine any proposed changes carefully. New conditions may include reduced hours, altered duties or lower pay. If the changes are substantial or appear unnecessary, employees can challenge the dismissal and the proposed terms. Courts review whether the employer acted proportionately. If the employer could have achieved the same result with a milder measure, the dismissal may not hold up.

When the works council needs to be consulted

Where a works council exists, it must be consulted before any dismissal. This requirement is set out in Section 102 Works Constitution Act. If the employer fails to consult the council, the dismissal is invalid for this reason alone. The works council may raise objections or express concerns. Although it cannot prevent the dismissal entirely, its objections may strengthen the employee’s position in a later claim.

A timely and formal objection by the works council gives employees an additional benefit: a right to continued employment beyond the end of the notice period until the court reaches a final decision. This can be a significant strategic advantage. Many employers choose to settle rather than continue paying wages for months during ongoing litigation.

General vs special dismissal protection

The Unfair Dismissal Protection Act provides general protection for most employees. In addition to this protection, several groups benefit from special rules that further restrict dismissals. These include pregnant employees under Section 17 Maternity Protection Act, works council members under Section 15 Dismissal Protection Act and employees with severe disabilities under Section 168 Social Code IX.

Special protection usually means that employers must obtain approval from external authorities before dismissing. If this approval is missing, the dismissal is automatically invalid. Because these cases involve strict formalities, employers rarely succeed without precise documentation. Employees in these categories often have strong leverage in negotiations and claims.

Deadlines and three-week rule

Anyone who wants to challenge a dismissal must file a dismissal protection claim within three weeks of receiving the termination letter. Courts interpret this period strictly. If the deadline passes without filing, the dismissal becomes valid even if it was unlawful. This rule also affects severance negotiations. Employers rarely offer severance once the three week period has expired because the risk of losing in court disappears. The deadline begins the day after the termination letter is received.

For example, if an employee receives notice on 9 May, the deadline ends on 31 May. The same rule applies to change dismissals. Because the deadline is short, employees should act promptly. Even if they are uncertain, filing preserves their rights. In practice, filing a claim is standard in Germany and not seen as hostile. It simply keeps options open and prevents the employer’s position from solidifying.

German labor courts often resolve disputes early. Many cases settle at the first hearing, sometimes within weeks. For this reason, filing a claim often leads to quicker and better outcomes. A well prepared claim, backed by documents and a clear explanation of the facts, can shift negotiations in the employee’s favor. In many cases, challenging a dismissal pays off because courts examine employer reasoning critically and apply strict standards to legal grounds.

Benefits for employees from the Unfair Dismissal Protection Act

The Unfair Dismissal Protection Act offers employees several important advantages. The most significant is protection from unjustified dismissal. When a termination is not socially justified, employees have a right to continued employment. This means the job does not end until the court decides otherwise. The Act reduces existential risks by giving workers a stable legal basis and a fair procedure. It also promotes workplace fairness because employers must show that termination is necessary and proportionate.

Employees can file a dismissal protection claim at the competent labor court. This is the central tool for enforcing rights under the Act. If a dismissal is declared invalid but continuing the employment relationship is unreasonable for both sides, courts may award severance pay under Sections 9 and 10 Dismissal Protection Act. This is rare because most disputes settle before reaching the final stage. Still, this statutory option strengthens employee leverage during negotiations. Employees who prepare well and gather documents early usually achieve better outcomes.

Frequently asked questions (FAQ)