Termination without cause in Germany – is that allowed?

When an employee is terminated, they not only lose their job and income – termination also creates considerable uncertainty. Naturally, employees want to know the reasons for their termination when they receive a termination letter. Employers, on the other hand, must explain the termination in writing. In the event of a subsequent dispute, they must also state and prove the reasons for termination. However, with a few exceptions, the employer is not required to state these reasons in the termination letter. Failure to state reasons for termination in the termination letter is generally permissible. This must be distinguished from a termination that was actually issued by the employer without any reasons for termination. Such a case is commonly referred to as termination without cause. This article deals with both cases and the options available to you as an employee to find out the reasons for termination.

The most important points at a glance:

• With a few exceptions, the employer does not have to state the reasons for termination in the termination letter.
• If the Unfair Dismissal Protection Act applies, the employer must present and prove the reasons for termination before the labour court at the latest. If the employer is unable to do so, the termination is invalid.
• If there is a works council, the employee should contact it. It has information because it must be consulted before the dismissal. If it has no information because it was not consulted or not consulted properly, the dismissal is invalid for this reason alone.

What is termination without cause?

Termination ‘without cause’ can mean that ‘only’ the reasons for termination are not stated in the termination letter. However, in many cases, the actual reason for termination is also missing, which in most cases renders the termination invalid.

Termination without ‘legal grounds’

In the case of terminations that fall under the German Unfair Dismissal Protection Act (KSchG), the employer cannot terminate the employment relationship without cause. They must base the termination on the following grounds:

• Operational reasons: Operational reasons are the most common grounds for termination, e.g. in the event of restructuring or closure of the business. In this case, the employer must prove that there are urgent operational requirements that lead to the permanent loss of the employee’s job. In addition, the employer must demonstrate that a social selection process has been carried out. If the employer cannot prove these reasons, the termination is invalid.
• Conduct-related dismissal: This occurs on the basis of conduct for which the employee is responsible (constant tardiness, refusal to work, etc.). In this case, the employer must prove that there have been breaches of duty, previous warnings and that there are no less severe means of dismissal. If the employer cannot prove these reasons, the dismissal is invalid.
• Dismissal for personal reasons: If the employee is permanently unable to perform their agreed work for personal, non-controllable reasons (e.g. due to illness), this constitutes dismissal for personal reasons. In this case, the employer must prove: (1) The employee is no longer able to fully fulfil their contractual obligations due to a lack of personal suitability. (2) The lack of personal suitability leads to significant impairment of operational interests. (3) It is unreasonable for the employer to continue the employment relationship. If the employer cannot prove these reasons, the termination is invalid.

You can find out whether and under what conditions you are covered by the KSchG in our article on the Employment Protection Act.

Termination without cause: act quickly

The labour court decides whether the stated reason for termination is sufficient for the termination to be effective. However, a court decision is often not necessary if a severance payment is agreed quickly. Nevertheless, you should file an action for unfair dismissal with the labour court within three weeks of receiving the termination. This period applies to all terminations – ordinary, extraordinary or termination for change.

Important: If the employee misses the three-week deadline, the dismissal is considered effective from the outset. The employment relationship ends upon expiry of the notice period. Negotiations for termination with severance pay are futile.

It is therefore important to act quickly. In the event of dismissal, you can obtain non-binding advice from a solicitor on the prospects of a lawsuit. The amount of a possible severance payment can also be discussed during a free initial consultation.

Dismissal without written reasons is permissible

In most cases, it is permissible to terminate an employment relationship without giving reasons in the letter of dismissal.

Reasons are usually not required in the letter of dismissal

It is often assumed that at least in the case of ordinary termination, a written reason must be given. This is not the case. Labour lawyers often expressly advise employers not to give any reason in the letter of termination in order to avoid any grounds for subsequent legal action. The employer can, in principle, also submit reasons (including new reasons!) at a later date.

The termination must initially only be made in writing and signed by the terminating party (Section 623 of the German Civil Code (BGB)). However, the law does not require a reason to be given in the letter of termination.

Nevertheless, the employer must of course ‘put their cards on the table’ at some point. At the latest when the employee files an action for unfair dismissal, the employer must present and prove that there is a valid legal reason for dismissal. This applies if the Unfair Dismissal Protection Act is applicable.

Exceptions: Reasons must already be given in the letter of dismissal

There are exceptions where reasons must already be given in the letter of dismissal – the most important of these include:

• Termination during training: According to Section 22 of the Vocational Training Act (BBiG), written reasons are required if the termination occurs after the probationary period.
• Special protective provisions: In the case of pregnant women, Section 17 (2) of the Maternity Protection Act expressly stipulates that the reasons for termination must be stated in the letter of termination. Otherwise, the termination is invalid.
• Collective agreements and employment contracts may stipulate the obligation to state the reasons for termination in the termination letter.

Special case of extraordinary (‘immediate’) termination

Even extraordinary or immediate termination does not have to include reasons for termination in the termination letter. The employer only has to inform the employee of the reason for termination in writing immediately upon request.

Tip: The employee should therefore ask the employer to provide the reasons for termination. Only with this information can the employee assess the chances of success of an action for unfair dismissal. We also strongly advise consulting an employment lawyer in the event of extraordinary termination, who can better assess the validity of the termination and the chances of success of a lawsuit.

Frequently asked questions (FAQ)