Termination of employment contract: 7 steps employees should follow

Losing your job is rarely just a legal issue. After receiving a termination letter, important deadlines start running: you must register with the Employment Agency, decide whether to file a dismissal protection claim within three weeks, and often negotiate severance pay. At the same time, questions about references, outstanding claims, your next job, or your residence permit may arise. This guide explains the seven most important steps after a termination in Germany.

1. Check the termination letter

Imagine getting called into a “quick morning 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. That is not how your day should start.

How a Termination Letter Must Be Delivered

A termination only becomes effective once it reaches the employee. Employers usually deliver termination letters in one of the following ways:

Simple postal letter
A termination sent by ordinary mail is risky for the employer. If the employee later denies receiving the letter, the employer usually cannot prove delivery. For this reason, employers rarely use this method.

Registered mail with return receipt
The employee must sign for receipt. If the employee refuses acceptance or does not collect the letter, delivery can become problematic. In some situations, however, courts may treat a deliberate refusal to accept an expected termination as sufficient for legal delivery.

Registered mail (mailbox delivery)
The postal service places the letter directly into the mailbox. In principle, delivery occurs when the letter reaches the employee’s mailbox. However, the employer should be able to produce reliable proof of delivery. Without proper documentation, proving receipt can be difficult.

Courier or messenger
Many employers use a courier or messenger who personally delivers the termination and documents the delivery. This is generally considered the safest method because it provides strong evidence that the employee received the notice.

The date of delivery (see above) is important for two legal deadlines:

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

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

Check proper form – must be in writing

A termination is only valid if it is on paper with a handwritten signature (“wet ink”). 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 often must attach a power of attorney. If it’s missing, the employee can immediately reject the termination under § 174 BGB. This, however, must be done without delay (usually within one week). Employer errors can be healed quite easily. So this can buy you a month or two, but it won’t save your job.

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

Check for any special protection against dismissal

General protection against unfair dismissal is pretty strong. Certain groups (e.g., pregnant employees, employees on parental leave, severely disabled employees) have even stronger protection. They 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 at least a “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. Employees are never legally required to sign anything during or after 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” – sounds like the oldest trick in the book.

3. Contact the works council after termination of the employment contract

If your employer has a works council, contact them immediately after the termination of the employment contract. 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, this could help you big time to obtain continued employment after the notice period ends. Even if you do not want to stay, this leverage often increases the severance amount in settlement significantly.

4. Register as job-seeking and unemployed

In Germany, registrations as job-seeking and as unemployed are mandatory, and noncompliance can have consequences. Two deadlines matter:

Within three calendar days after the termination of the employment contract, you must register as “looking for work” (job-seeking, or Arbeitssuchend). Technically, no later than 3 months before the employment ends, and if you learn about the end later than 3 months before, then within 3 days of knowledge.

On the first day after the contract ends, you must register as unemployed (Arbeitslos) and apply for benefits. Both steps can be completed online at the Employment Agency. However, missing either deadline can lead to reduced or delayed unemployment benefits due to a blocking period.¹ 

5. Check if a lawsuit against the termination is worthwhile

A dismissal protection claim aims to have the termination declared invalid. In practice, however, almost all cases settle, and the employee receives a severance payment. This can be significantly higher than if you settle out of court, because employers often prefer a fast separation over a lengthy trial. Your chances in court – and hence the amount of severance – depend on various factors, including:

• If your termination is a regular, “ordinary dismissal” – or if you are terminated without notice (fristlose Kündigung)
• If the Unfair Dismissal Protection Act (KSchG) applies. Different principles apply for fixed-term contracts, during probation, or very small employers.

Chances in the case of ordinary dismissal

Whether an employer needs a valid reason for an ordinary dismissal depends on the legal framework, particularly on whether the Dismissal Protection Act (KSchG) applies. The KSchG protects employees against unfair dismissal and sets out the conditions under which an employer may terminate employment. The Act applies if:

• The employee has worked for the same employer for at least six uninterrupted months (Section 1(1) KSchG). The employee must complete this six-month qualifying period before receiving the notice of termination.
• The employer regularly employs more than ten employees (excluding apprentices). In other words, the employer must not qualify as a small business under the KSchG.

If these requirements are met, the employer can only terminate the employment relationship if the dismissal complies with the requirements of the KSchG.

Chances in case of dismissal without notice

If you are terminated without notice (fristlose Kündigung), even stricter requirements apply. Which makes sense, because the consequences are even bigger. You don’t just lose your salary from one day to the next – you also risk a three-month unemployment benefit freeze (ALG “Sperrzeit”), which can leave you with zero income for a few months.

That is why most folks in Germany file a claim against a termination without notice. It is not a hostile act – really more self-defense and a completely normal practice. On top of that, the chances of settling (w severance) in court are pretty good, because the legal threshold for a valid termination without notice is high, and many employers prefer to settle rather than risk losing the case.

However, you only have three weeks to file the claim. If you miss that deadline, your chance for severance pay is gone. Details are in our article on termination without notice.

Achtung: The three-week deadline for filing a claim is absolutely non-negotiable. After that, the dismissal becomes legally binding, even if it was clearly unlawful. A single statement of claim filed at the labor court (Klage) initiating the legal claims processing within that period is enough to start settlement talks in earnest. But without that letter, it’s hasta la vista, fair severance pay.

6. Request a job reference

Every dismissed employee is entitled to a written job reference. Even though reference letters have lost some of their importance in recent years, many employers – especially in the public sector, among small and mid-sized companies, and in the countryside – still value them as proof of performance and behavior. If you decide to request one, it must be printed on the company letterhead and signed by hand. Although you can request an electronic version.³

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

Frequently asked questions (FAQ)

1. Section 159 SGB III ↩︎
2. Sec. 82(6) Residence Act (AufenthG) ↩︎
3. Sec 109 Gewerbeordnung ↩︎