15. Jun 15

The German Protection Against Dismissal Act and its implications

Employers wishing to dismiss their employees have to be mindful of various regulations, the most significant of which in many cases is the German Protection Against Dismissal Act (Kündigungsschutzgesetz (KSchG)).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: In contrast to a cancellation agreement, termination entails one of the contractual parties unilaterally ending the employment relationship. Various statutory regulations must nevertheless be observed in cases involving termination in order to avoid legal disputes. A report by Handelsblatt details an example of a large warehouse group which may soon be faced with this outcome. According to this, 65 employees wish to take action against their dismissals. They accuse the company, inter alia, of failing to comply with notice periods or choosing the wrong social criteria.

Of course, the employer has the right, just as an employee does, to give notice of termination if the circumstances, e.g. the company’s economic position, so require. However, statutory protection against dismissal needs to be taken into account in doing so. The German Protection Against Dismissal Act is applicable if the employment relationship began no earlier than January 1, 2004 and the firm regularly employs more than ten workers. If the employment relationship came into existence before January 1, 2004, there generally needs to have been more than five employees working for the firm. Furthermore, the Act does not kick in until after the employee has been working for the company for at least half a year.

Various reasons can justify dismissing an employee. Notice can be given for an operational redundancy if this is necessitated by the company’s economic position and the job ceases to exist. If several employees are being considered for job cuts within a company, social criteria need to be established. Here, the employer determines which employees would be least affected by losing their job, having regard to various criteria such as age, length of employment with the company or family status.

Apart from operational redundancy there is also dismissal on grounds of personal capability, whereby the grounds for dismissal pertain to the personal circumstances of the employee, who, for instance, is not mentally or physically up to the job. Dismissal based on conduct is also possible if the employee’s conduct (refusal to work, causing offence, physical assault, theft etc.) interferes with the employment relationship. A prior written warning is absolutely necessary.

In order to prevent legal disputes in the event of termination, the termination ought to be reviewed by lawyers who are competent in the field of labour law.

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