In most cases, a dismissal can only become effective when a specific reason stipulated in the Protection against Unfair Dismissal Act exists.
The Protection against Unfair Dismissal Act applies to all companies with more than 10 employees.
The act only applies to employees who have completed a qualifying period of six months work without interruption. Within the first six months, a dismissal is possible without a specific reason. Still, the periods of notice (see above) have to be kept even for these short time employments.
After six months, a dismissal can only be based on
I. personal,
II. conduct-related or
III. operational reasons.
I. Person-related dismissal
The most common reason for a person-related dismissal is illness. A dismissal can be justified in case of a long-term illness. Also, repeated short-term illness might justify a dismissal. In both cases, a negative prognosis of the employee’s future state of health is necessary.
In any case, before terminating a contract for health reasons the employer is obliged to take measures for rehabilitation latest after six weeks of permanent or repeated illness (“betriebliches Eingliederungsmanagement”, § 84 SGB IX).
According to German labour courts, a negative health prognosis can usually not be assumed and a dismissal for health reason will usually not be effective if the employee has not been ill for more than six weeks p.a. over the last years.
Before terminating a contract, the employer is always bound to examine whether there are any, even costly, actions possible to save the employee’s job, e.g. proposing treatments at a health resort, changing positions with another employee to give the person a job fit for his health situation, taking pressure or certain difficult responsibilities from the employee etc.
II. Conduct-related dismissal
If the employee violates against his obligations, a dismissal might be considered. Conducts that may lead to a dismissal include, among others:
• criminal actions or serious misbehaviour against employer/colleagues/customers, e.g. abuse, theft or fraud, (sexual) harassment, assault
• repeated late arrival at work
• repeated refusal to fulfil obligations from work contract
• breach of confidentiality
• feigning illness.
In most cases, at the first incident a written warning (Abmahnung) is sufficient. Only if the employee repeats his misbehaviour, a dismissal may be considered.
A former written warning can only lead to a dismissal if the employee repeats the same or the same kind of misbehaviour. In case of minor incidents (e.g. late arrival at work), several warnings might be necessary before a dismissal is justified. On the other hand, in exceptional cases serious incidents can justify a dismissal without a previous warning.
Before giving notice, the employer has to examine all other alternatives to save the job.
III. Dismissal for urgent operational reasons
The most common operational reason for a dismissal is the permanent elimination of a specific position, especially after closing down a company or part of a company, economisation or rationalisation.
The reasons for eliminating a position are only subject to limited court control. Even decisions that are not economically reasonable have to be accepted by court. The court review will mainly be limited on the question whether there has been a loss of job which has rendered the employment obsolete.
The employer has to prove that the duties and responsibilities connected with the job are either permanently cancelled or that these duties are dealt by other employees within their regular working time.
A dismissal for operational reasons demands that no other vacant jobs for the employee exist within the company. Even positions with lower wages or jobs that take a longer period of vocational adjustment have to be offered to the employee before a dismissal may be considered. All positions within the company have to be considered that are vacant either at the time of the dismissal or that will become vacant within the period of notice or even shortly after that. The alternative position has to be offered before giving notice. If the employee refuses, it might even be necessary to combine the termination notice with a repeated alternative job offer with an “Änderungskündigung” (dismissal with the option of altered conditions of employment).
Next, a social selection (Sozialauswahl) is required. The intention is to protect employees who are less likely to find a new employment or who have social obligations to fulfil. Not the employee that held the eliminated job may automatically be dismissed; instead, all employees that are comparable to each other (those persons with similar work contracts and duties who are able to take over each other’s job after a training period) must be examined to determine who deserves the least social protection. Criteria for the social selection include:
• duration of employment
• age
• number of maintenance obligations (children, husband)
• severe disability
Only the person at the bottom of the list (youngest, no family etc) may be dismissed first.
In exceptional cases, employees whose employment is crucial for the establishment do not have to be considered in the course of this selection process, e.g. persons with unique personal contacts to important business partners.