Dismissal Protection: What Employers Need to Know

Fundamentals of Dismissal Protection

German employment law grants employees comprehensive protection against dismissal. For employers, this means that a dismissal must be carefully prepared and justified. Mistakes can be costly: if the labour court finds the dismissal to be invalid, the employer must continue to employ the worker and pay all outstanding wages.

Scope of the Dismissal Protection Act

The Dismissal Protection Act (KSchG) applies when:

• The employment relationship has existed for more than six months (§ 1 Abs. 1 KSchG, waiting period)
• The establishment regularly employs more than ten full-time employees (§ 23 Abs. 1 KSchG, small business exemption)

In small businesses with ten or fewer employees, only minimum protection applies: the dismissal must not be arbitrary, contrary to good faith, or discriminatory.

Grounds for Dismissal Under the KSchG

Person-related Dismissal

A person-related dismissal is based on personal characteristics or abilities of the employee that prevent them from performing their work. The most significant practical case is dismissal due to illness.

Requirements for dismissal due to illness:

1. Negative health prognosis: Further significant absences must be expected
2. Significant impairment of operational interests: Disruptions to operations or financial burdens
3. Balancing of interests: The employer's interests must prevail

Conduct-related Dismissal

A conduct-related dismissal requires culpable misconduct by the employee. Typical cases include refusal to work, unexcused absences, theft, or insulting superiors.

Principle: Warning before dismissal

Before a conduct-related dismissal, a formal warning is generally required. The warning must specifically describe the objectionable behaviour and threaten employment law consequences in the event of recurrence. Only in cases of particularly serious breaches of duty (e.g. criminal offences against the employer) may a dismissal be issued without prior warning.

Operational Dismissal

The operational dismissal is the most common ground for dismissal in practice. It requires:

1. Urgent operational necessity: A business decision leading to the elimination of the position (e.g. plant closure, restructuring, loss of orders)
2. No possibility of continued employment: On another vacant, comparable position
3. Social selection: Where several comparable employees exist, the one who is least in need of social protection must be dismissed

Social Selection in Detail

Social selection under § 1 Abs. 3 KSchG takes into account four criteria:

• Length of service: The longer, the more worthy of protection
• Age: Older employees receive greater protection
• Maintenance obligations: Employees with children or dependents requiring care
• Severe disability: Severely disabled and equivalent employees

The criteria are not hierarchically ordered but must be considered in an overall assessment. In practice, many companies use point systems to objectify the selection.

Special Dismissal Protection

Certain groups of employees enjoy special protection against dismissal:

• Pregnant women and mothers: During pregnancy and up to four months after delivery (§ 17 MuSchG)
• Parents on parental leave: From registration, at the earliest eight weeks before the start of parental leave (§ 18 BEEG)
• Severely disabled persons: Dismissal only with the consent of the Integration Office (§ 168 SGB IX)
• Works council members: Ordinary dismissal is generally excluded (§ 15 KSchG)
• Data protection officers: Special dismissal protection under § 6 Abs. 4 BDSG

Formal Requirements

Written Form

Pursuant to § 623 BGB, a dismissal must be in written form. An oral dismissal, or a dismissal by email or fax, is invalid.

Consultation of the Works Council

If a works council exists, it must be consulted before every dismissal under § 102 BetrVG. A dismissal issued without consultation is invalid. The consultation must include the grounds for dismissal and the social data of the affected employee.

Notice Periods

Statutory notice periods are governed by § 622 BGB and increase with length of service from four weeks up to seven months. Collective bargaining agreements or individual contractual arrangements may provide for different periods.

Typical Mistakes in Dismissals

• Missing or defective warning before a conduct-related dismissal
• Errors in social selection: Not all comparable employees included
• Formal defects: Missing written form or missing original signature
• Failure to consult the works council or incomplete information provided to the works council
• Late delivery: The dismissal must be received by the employee in due time

Conclusion

Dismissal protection in Germany imposes high demands on employers. Careful preparation and compliance with all formal and substantive requirements are essential. Errors can not only render the dismissal invalid but also result in substantial costs through severance payments and litigation expenses. Early legal advice is therefore strongly recommended.