Terminating employment in Germany: notice, severance and protection

There are three main ways a German employment ends. An ordinary termination, the ordentliche Kündigung, is a dismissal with notice. An extraordinary termination, the außerordentliche Kündigung, is an immediate dismissal for serious cause, which is rare and hard to justify. And a mutual termination, the Aufhebungsvertrag, is an agreed exit on terms both sides sign up to.

Most planned exits are either an ordinary termination with proper notice or a negotiated Aufhebungsvertrag, which is often the cleaner route because it settles notice and severance in one agreement.

Statutory notice is set by section 622 of the civil code and rises with length of service. During a probation period it is two weeks. After that the base notice is four weeks, and it steps up as the employee stays longer: one month after two years, two months after five, three after eight, four after ten, and on up to seven months after twenty years of service.

These are the statutory minimums. A contract or a collective agreement can set longer notice, and notice generally runs to the fifteenth or the end of a calendar month.

Germany has no automatic statutory severance for an ordinary dismissal. In practice, though, severance, the Abfindung, is common, because it is the price of a clean exit and of the employee not challenging the dismissal in court.

The usual rule of thumb is around half a month’s salary for each year of service, but it is negotiable and can be higher where the employer wants certainty or the dismissal is weak. In a redundancy handled through a social plan, a Sozialplan, the severance formula is agreed with the works council.

Once the Kündigungsschutzgesetz applies, an employee cannot be dismissed without a valid reason. It applies in businesses with more than ten employees, once the person has been there longer than six months. Below that threshold the protection is lighter, though other rules still apply.

Where it applies, a dismissal has to rest on one of three grounds: a reason in the person, a reason in their conduct, or an operational reason such as redundancy. The employee can challenge the dismissal by filing a Kündigungsschutzklage at the labour court, and they have just three weeks from receiving notice to do so, which is why getting the process right the first time matters.

Take an employee on 70,000 euro a year, roughly 5,830 euro a month, who has been with the business for five years and is being let go for operational reasons. Their statutory notice under section 622 is two months, so the contract runs on, paid, through that period.

If both sides prefer a clean break, an Aufhebungsvertrag might settle an Abfindung of around half a month per year, so about 2.5 months of pay, roughly 14,600 euro, in exchange for the employee not contesting the exit. The exact figure is a negotiation, and a weak dismissal or a keen desire for certainty pushes it up.

Because we are the legal employer, we run the termination to German rules on your behalf, from the notice calculation to the settlement paperwork. You decide the commercial outcome, and we make sure the process holds up.