Termination of employment contract: 7 steps employees should follow

Being dismissed is rarely just a legal event – it is often a personal shock. Still, the first decisions you make after receiving a termination letter will shape your financial, legal, and professional future. Employees in Germany only have a short window to protect their rights, secure benefits, and, if useful, negotiate severance. This guide explains the seven essential steps after a termination of employment contract, from checking the notice to preparing for a potential lawsuit and requesting a job reference. Follow them calmly, in the right order, and you will avoid the most costly mistakes.

1. Check the termination letter

Imagine getting called into a “quick meeting” you weren’t expecting. In the room: your manager, someone from HR, serious faces. Then they hand you a termination letter – maybe even paired with a “friendly” severance agreement they want you to sign on the spot.

Check how the termination letter was delivered

A termination only counts if it was properly delivered. Your employer can hand it over in person – like in the meeting above – or send it by mail. Delivery by mail is where things often get messy. The common methods:

• Simple postal letter: If sent as normal mail, it’s a problem for the employer. If the employee later claims they never received it, the employer must prove delivery – which is basically impossible. This is why terminations are rarely sent this way. If you got yours by simple letter, talk to a lawyer.
• Registered mail with return receipt: You must confirm receipt in writing. If you refuse, the letter comes back as undeliverable. The employee can simply not pick it up. If the letter is refused or only collected after the deadline, the employer bears the risk for late delivery.
• Registered mail – “drop in mailbox” version: The postman drops it directly into your mailbox. Earlier case law said: delivery is complete the moment it hits the mailbox. But several recent court decisions question this. If you receive your termination this way, get legal advice.
• Courier or messenger delivery: A courier hands it over and documents the delivery. For the employer, this is the safest option.

Pay attention to the three-week deadline for filing a lawsuit

The date of delivery decides two things:

• when the notice period starts
• when the three-week deadline to file a claim at the labor court begins

A termination is considered delivered when the employee can reasonably take note of it – for example:

• when it is placed in your mailbox (not when you read it)
• even if you are on vacation
• even if it’s a registered letter waiting at the post office and you don’t pick it up
• even if you refuse to accept the letter – the law still counts it as delivered

Terminations must be in writing

A termination is only valid if it is on paper with a handwritten signature. Verbal notice, email, SMS, WhatsApp, or DocuSign is not legally valid. A stamp or scanned signature is not enough.

Check who signed the letter

If someone other than the employer signed the termination, they must attach a power of attorney. If it’s missing, you can immediately reject the termination under § 174 BGB. This must be done without delay (usually within one week).

Exception: if it is obvious that the person has authority (e.g. HR director), or you were informed beforehand.

Special protection against dismissal

Certain groups (e.g. pregnant employees, employees on parental leave, severely disabled employees) can only be terminated with prior approval from the relevant authority. If such approval exists, it is usually mentioned in the letter.

2. Do not sign anything

Many employers push employees to sign documents immediately, often a termination agreement or “receipt confirmation.” Signing too quickly is one of the most expensive mistakes employees make. A termination agreement usually waives the right to challenge the dismissal in court and may trigger a blocking period for unemployment benefits under Section 159 SGB III.

Employees are never legally required to sign anything during the termination meeting. The correct response is simple: take the documents home, state that you need time to review them, and obtain legal advice. A “good offer that expires today” is almost always a tactic, not a benefit.

3. Contact the works council after termination of employment contract

If the company has a works council, contact them immediately. The employer must formally hear the works council before any dismissal. If this step is skipped, the termination is already invalid. The works council often has insight into restructuring plans, internal objections, or missing approvals.

If the works council has objected to the dismissal, you gain a legal right to continued employment after the notice period ends. Even if you do not want to stay, this leverage often increases severance amounts in settlement talks.

4. Register as job-seeking and unemployed on time

Two deadlines matter: within three calendar days of receiving the termination, you must register as “looking for work.” On the first day after the contract ends, you must register as unemployed and apply for benefits. Both steps can be completed online at the Employment Agency. Missing either deadline leads to reduced or delayed unemployment benefits due to a blocking period under Section 159 SGB III. 

5. Is a lawsuit against the termination of employment contract worthwhile?

A dismissal protection claim aims to have the termination declared invalid. In practice, however, most cases settle, and the employee receives a severance payment. Employers often prefer a clean exit over a trial. 

The three-week deadline for filing a claim is strict. After that, the dismissal becomes legally binding, even if it was clearly unlawful. A single lawyer’s letter within that period is often enough to start settlement talks.

6. Request your job reference

Every dismissed employee is entitled to a written job reference. It must be printed on company letterhead and signed by hand. The wording must be truthful and benevolent, meaning no hidden negative codes.

To avoid later disputes, prepare your own list of tasks, achievements, and projects and hand it to HR. If you negotiate a settlement agreement, the exact wording of the reference should be included in it to avoid later conflict.

7. Get (paid) time off for job search

After termination, employees have the right to paid time off for interviews, assessments, or recruiter meetings. The employer must grant reasonable release from work and continue paying salary. You do not have to disclose all details but must coordinate dates in advance.

Frequently asked questions (FAQ)