In today’s working world, various factors can lead to employers or employees having to decide to terminate the employment relationship. The reasons for termination can be manifold – ranging from operational restructuring to dissatisfaction in a position.
A common reason for termination on the part of the employer is economic difficulties in the company or technological changes that could make certain positions obsolete. In such situations, the employer often tries to reduce the number of employees in order to save costs and keep the company running in the long term.
What reasons can justify dismissal? German labour law does not allow employers to dismiss arbitrarily. A valid dismissal always requires an appropriate reason – this can be personal, behavioural or operational.
In this article you will learn more about which reasons are permissible and what your chances are of challenging your employer’s decision. The type of reason depends on two different types of dismissal: ordinary and extraordinary.
Reasons for ordinary termination
Ordinary termination by the employer requires a legal basis, which is defined in three different grounds. The effectiveness of the decision is thus dependent on the existence of one of these criteria and is not permissible without this basis.
These official grounds for regular termination of the employment contract include:
- Person-related grounds for termination
- Behaviour-related grounds for termination
- Business-related grounds for termination
- No lawful dismissal can take place without the existence of a reason for termination.
Dismissal for personal reasons
Dismissal for personal reasons occurs when the employee is no longer able to perform his or her contractually agreed work for personal reasons. Possible causes include a lack of mental ability or impairments in the private sphere that jeopardise the interests of the company. A lack of performance exists and entitles the employer to dismiss the employee without notice.
Examples of grounds for dismissal for personal reasons:
- Drinking alcohol during working hours
- Lack of or impaired mental faculties
- Other personal impairments
In some cases, prolonged illness can serve as a trigger for dismissal on personal grounds. Although it is generally known that long periods of illness can have a negative effect on professional activity – especially in the case of physical strain – case law sets high standards for this particular case of decision-making under labour law: There must be a poor prognosis regarding the course of recovery as well as transfer within the company.
A common mistake is to assume that only past days of sick leave are decisive; in fact, a prognosis for the future is the employer’s decisive argument. In concrete terms, this means: If it is foreseeable or already apparent (e.g. through certificates) that the employee will soon be fully fit for work again or would even now be able to do so – then this does not justify immediate termination of his employment relationship. Only if there is a negative prognosis for the future can the employer’s termination be considered justified and is not contestable.
Reasons for termination: Subjective and objective performance deficiencies
Termination for personal reasons is divided into two types of performance deficiencies: subjective and objective. The subjective performance deficiencies with regard to work performance refer to missing qualities that should actually be present according to the employment contract.
Concrete examples of such obstacles may include matters of faith or conscience, as well as a wage garnishment in the case of employees with a duty of care for property.
Unlike subjective reasons, objective performance deficiencies are not directly rooted in the employee. Instead, they are framework conditions that may make it impossible to perform contractual agreements. Objective performance deficiencies could be, for example, imprisonment, a lack of the necessary qualifications or a lack of work permits.
Behavioural dismissal
Dismissal for misconduct may well occur when an employee directly or indirectly causes harm to the employer. Examples are refusal to work, frequent culpable lateness and violations of fringe benefits under labour law.
In contrast to dismissal for personal reasons, in this case the result of the action has been caused by the employee himself. The irregularity of his or her behaviour is considered a deliberate act – either intentional or grossly negligent in contradiction to the agreed rules between him or her and his or her boss.
However, before dismissing an employee for misconduct, the manager must first inform his employee of his bad behaviour. Here the warning plays an essential role: it should be formulated effectively so that no doubts remain about its legal validity later, even in the event of judicial review. The legal framework for this measure is strictly regulated: It must be in writing and refer exclusively to inappropriate behaviour that the employee can influence. In addition, it contains detailed information on the inappropriate behaviour and its timing. Usually, the employee is threatened with further consequences, such as dismissal without notice in the near future, if the behaviour is not stopped.
Termination for operational reasons
A dismissal for operational reasons is never due to the employee’s misconduct or lack of qualities. The cause of such a decision is much more changes in the company or in a sub-sector of it.
Examples of operational dismissal:
- General decline in work
- External effects such as a bad economy
- Relocation of part of the business abroad
There are various reasons that can lead to a dismissal for operational reasons. In practice, a distinction is made between internal and external circumstances. The internal variant occurs when the employer alone decides that it is necessary to terminate an employment relationship. This gives him the opportunity to adapt his entrepreneurial actions to changed economic conditions.
Examples of this are:
- Merging of departments
- Reduction of staff
- Closure of a business
Outside the company, a dismissal can be triggered by a decline in turnover or a lack of orders at the employer itself – this means that the employer has to reduce its workforce in order to adjust its cost structure.
Typical examples are:
- Lack of orders
- Decline in turnover
- Reduction in budgetary resources
In order to be fair in a redundancy decision, the employer should act in a socially responsible way – the rules on this are defined in more detail in the topic “Social selection”.
Grounds for termination for cause (without notice)
For an employee to be dismissed for cause, there must be serious misconduct. The reasons always depend on the individual case; there are no legal provisions for such grounds for termination. Extraordinary dismissal may be considered if the employer cannot reasonably be expected to continue the employment relationship and the employee’s conduct actually constitutes a serious reason for dismissal. In this case, however, it must be noted that the employer does not have to state the exact reason in the termination letter. However, upon request by the employee, the reason for termination must be communicated directly pursuant to section 626(2) of the BGB. A serious incident to justify summary dismissal can show itself to be of different kinds:
- Fraud or embezzlement with direct damage to the company,
- insults to the superior
- Statements that may have a damaging effect on the business,
- Working time fraud
- Sexual harassment in the workplace
- Alcohol abuse and violations of company rules
Termination during the probationary period (Probezeit)
When entering into a new employment relationship, it is common to agree on a probationary period. This serves to get to know each other and to determine whether the new employee fits into the company and can fulfil the contractual requirements.
According to Section 622 (3) BGB, the probationary period may last a maximum of six months.
During this time, it is generally possible to terminate the employment relationship without special cause with a notice period of two weeks. Termination without notice as an “emergency exit” from the contract is only possible if one of the above reasons applies.
The Federal Labour Court has ruled that in the case of ordinary termination within the probationary period, reasons must be given why it is not in the employer’s interest to continue the employment relationship.
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