End of Employment in Germany

Ending an employment relationship in Germany requires strict adherence to national labour laws. German employment law provides some of the strongest dismissal protections in Europe, meaning terminations must follow clear legal procedures, justified reasons, and formal documentation.

Because of this high protection threshold, many employers and employees choose to end the relationship through a mutual separation agreement rather than a disputed termination.

1. Ordinary (regular) dismissal

This applies when an employer gives notice according to statutory or contractual notice periods. The notice period depends on the employee’s tenure, unless a longer period is agreed in the contract.

2. Extraordinary (immediate) dismissal

Used only in exceptional cases, such as cases of serious misconduct. This type of dismissal requires a significant breach of duty and must be carried out without undue delay.

Mandatory Requirements for All Terminations

Every termination in Germany must follow specific procedural steps:

Works council consultation, if a works council exists
A clear, specific, and lawful reason for the dismissal
A written termination letter with original (“wet ink”) signature
Compliance with the applicable notice period

Electronic scans, emails, and faxes are not legally valid for dismissing an employee.

During the notice period, the employee continues receiving full salary. Employers may release the employee from work duties (garden leave) while still paying salary, provided remaining vacation balances are taken into account.

Final salary and outstanding payments must be included in the next regular payroll cycle. Employers must also notify the health insurance provider of the employee’s departure four weeks before the contract ends. Deregistration with authorities is completed through payroll.

Unfair Dismissal in Germany

Employees working more than six months in companies with more than ten employees fall under the German Dismissal Protection Act, which restricts terminations unless there is a socially justified reason:

Types of permitted dismissal reasons:

Behavior-related (e.g., serious misconduct, repeated violations after a warning)
Personal reasons (e.g., long-term medical inability to work)
Operational reasons (e.g., restructuring, job elimination)

The employer carries the burden of proof for demonstrating that the dismissal is justified.

Employees have three weeks from receiving the termination letter to challenge the dismissal in court. If the court finds the dismissal invalid, the employer must reinstate the employee and compensate for back pay. If the dismissal is valid, the relationship ends at the end of the notice period.

Employees on parental leave, pregnant workers, people with severe disabilities, and works council members benefit from extra layers of protection, requiring prior government approval before termination.

Redundancy Pay & Collective Dismissals

Collective Redundancies

When a company plans to lay off a significant number of employees in a short period, the employer must:

Notify the Federal Employment Agency
Inform and consult the works council
Negotiate a reconciliation of interests
Agree on a social plan including compensation measures

If these procedures are not followed, affected employees may claim compensation for economic losses.

Redundancy Pay

There is no automatic statutory right to severance. However, in practice, severance is frequently negotiated to avoid lengthy court disputes.

A commonly used formula is:
½ month’s salary per year of service,
though actual amounts vary and can be significantly higher depending on negotiations.

Executives follow separate legal rules, and in some cases, mandatory severance may apply based on court decisions.

Resignation Procedure for Employees

Employees may resign at any time by providing a written resignation notice. The letter must include:

Employee’s name and address
Employer’s name and address
Date of the letter
Final working day
Employee’s handwritten signature

Email resignations are not legally valid.

Notice Periods in Germany

During probation (up to six months), either party may terminate employment with two weeks’ notice.

After probation, statutory notice periods increase with tenure:

2 years → 1 month
5 years → 2 months
8 years → 3 months
10 years → 4 months
12 years → 5 months
15 years → 6 months
20+ years → 7 months

Contracts or collective agreements may specify longer notice periods. Anything shorter than the statutory minimum is invalid.

Severance in Germany

Severance payments are not automatically required unless:

mandated in a works council social plan,
offered as part of a mutual termination agreement, or
ordered by a court in specific executive cases.

Typical severance amounts range from 0.5 to 2 months of salary per year of employment, depending on circumstances.

Unemployment Benefits

Employers and employees jointly finance the unemployment insurance system. Benefit entitlements depend on the employee’s previous salary:

With children: 67% of previous net salary
Without children: 60% of previous net salary

Duration:

Up to 12 months for workers under 50
Up to 24 months for workers aged 50+

After benefits expire, individuals may apply for Unemployment Benefits II (Bürgergeld).

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