Extraordinary Termination: Reasons, Requirements & Procedure

Extraordinary termination is a special form of dismissal that can be issued by an employer when there is an important reason. In Germany, termination rights are legally regulated and establish specific rights and obligations for both employers and employees.

In this article, we will take a closer look at the topic of extraordinary termination, examining the reasons, requirements, and consequences of this form of dismissal. Additionally, we will explore possible developments and changes in termination law. Furthermore, reviewing standard termination procedures may also be useful.

I. What is an Extraordinary Termination?

Definition and Explanation of the Term Extraordinary Termination

An extraordinary termination, also known as "immediate termination," is a dismissal issued by an employer without observing the standard notice periods. This is only permissible in specific cases regulated by law, such as a severe breach of duty by the employee or a violation of contractually agreed obligations by the employee.

Extraordinary termination, therefore, requires the presence of a significant reason that justifies the immediate termination of the employment relationship. While the employer can explain the termination verbally or in writing, it must always be done in written form to be legally effective.

Overview of Termination Law in Germany

Termination law in Germany is regulated by the German Civil Code (BGB) and governs the rights and obligations of both employers and employees in the event of termination.

In principle, any employment relationship can be terminated by the employer or employee at any time, provided that the statutory notice periods are observed. These notice periods depend on the length of the employment relationship and whether it is a probationary or permanent contract.

However, extraordinary termination, meaning termination without notice periods, is only permissible in certain cases. According to Section 626 of the German Civil Code (BGB), there must be an important reason that justifies the immediate termination of the employment relationship. Important reasons may include severe breaches of duty by the employee, such as theft or violence, as well as violations of contractually agreed obligations by the employee.

It is important to note that an extraordinary termination must always be carefully examined, as it can be reviewed by labor courts in the event of a dispute. Case law has established that an extraordinary termination can be declared invalid if it is not sufficiently justified or deemed inappropriate.

II. Which Reasons Can Justify an Extraordinary Termination?

What are the Reasons for an Extraordinary Termination?

An extraordinary termination is only possible if there is an important reason that justifies the immediate termination of the employment relationship. Several reasons may be considered for such a termination, including:

1. Serious Breach of Duty by the Employee: A key reason for extraordinary termination can be a serious breach of duty by the employee. This includes, for example, theft, fraud, violence, or sexual harassment in the workplace. Accepting bribes or possessing drugs in the workplace can also be considered serious breaches of duty.
   
2. Violation of Contractual Obligations: Another important reason for extraordinary termination can be the violation of contractually agreed obligations by the employee. This could occur, for example, if the employee repeatedly fails to meet performance requirements or acts with gross negligence. Failure to follow instructions or the disclosure of confidential information to third parties can also be viewed as a breach of duty.
3. Frequent Illness or Long-Term Absences Due to Illness: In some cases, frequent illness or long-term absences due to illness: can also be a reason for extraordinary termination. However, it is important to note that termination due to illness is only possible if the illness significantly affects the employment relationship and continuing the employment becomes unreasonable. This could be the case if the employee is repeatedly on sick leave for an extended period or if their illness leads to continuous performance declines.

When Can an Extraordinary Behavior-Related Termination Be Justified? Our Top 15 Reasons:

1. Theft or Fraud Related to Employment (Federal Labor Court [BGH], ruling dated May 11, 2016, Case No. 2 AZR 719/14)
2. Severe Insults or Threats Against the Employer or Colleagues (BGH, ruling dated May 12, 2016, Case No. 2 AZR 359/15)
3. Physical Assaults or Violence at the Workplace (Regional Labor Court [LAG] Schleswig-Holstein, ruling dated March 7, 2017, Case No. 3 Sa 461/16)
4. Breach of Trade Secrets or Business Secrets (BGH, ruling dated November 29, 2017, Case No. 2 AZR 674/16)
5. Unauthorized Disclosure of Customer Data or Business Information (LAG Düsseldorf, ruling dated December 13, 2018, Case No. 11 Sa 573/17)
6. Breach of Duty Related to Work Performance (BGH, ruling dated November 29, 2017, Case No. 2 AZR 564/16)
7. Repeated Violations of the Working Hours Act (LAG Munich, ruling dated March 16, 2016, Case No. 6 Sa 853/15)
8. Violations of the Narcotics Act in Connection with Work (LAG Schleswig-Holstein, ruling dated May 5, 2015, Case No. 3 Sa 31/15)
9. Severe Breach of Duty During Business Trips (LAG Düsseldorf, ruling dated November 29, 2016, Case No. 9 Sa 1315/16)
10. Serious Violation of Data Protection Regulations (LAG Düsseldorf, ruling dated October 18, 2018, Case No. 11 Sa 634/17)
11. Unauthorized Removal of Company Equipment or Property (LAG Hamburg, ruling dated January 22, 2020, Case No. 3 Sa 38/19)
12. Frequent Illness or Long-Term Absences Due to Illness (BGH, ruling dated June 27, 2018, Case No. 2 AZR 835/17)
13. Violation of Contractually Agreed Obligations (BGH, ruling dated January 24, 2019, Case No. 2 AZR 322/18)
14. Inadequate Performance Despite Warnings (LAG Düsseldorf, ruling dated May 17, 2017, Case No. 9 Sa 935/16)
15. Failure to Follow Company Rules or Instructions (LAG Düsseldorf, ruling dated May 17, 2018, Case No. 9 Sa 489/17)

III. What Are the Requirements for an Extraordinary Termination?

For an extraordinary termination to be legally effective, several conditions must be met. These include:

1. Existence of an Important Reason: According to Section 626 of the German Civil Code (BGB), an extraordinary termination requires an important reason that justifies the immediate end of the employment relationship. Examples include serious breaches of duty by the employee or violations of contractually agreed obligations. It is essential to carefully assess these reasons, as they can be reviewed by labor courts in the event of a dispute.
2. Observing Time Limits: Although extraordinary termination does not require adherence to notice periods, there are still legal requirements that must be followed. Under Section 626 BGB, the termination must be issued within two weeks of the employer becoming aware of the important reason. If this deadline is missed, the termination may be deemed invalid.
3. Compliance with Formalities: According to Section 623 BGB, a termination is only valid if it is made in writing and signed. Verbal terminations, or those communicated via WhatsApp or email, do not meet formal legal requirements and are therefore invalid. Even if the employer signs the termination and sends the employee a photo of the signed document, this is not sufficient. In a ruling by the Munich Regional Labor Court on October 28, 2021 (Case No. 3 Sa 362/21), it was clarified that such practices are insufficient, even if the employee's current address is not known. To ensure the termination meets formal requirements, termination letters are typically delivered in person with witnesses or sent via registered mail.
   
4. Possible Involvement of the Works Council: In some cases, the works council must be involved in the termination process. This is particularly relevant in cases of terminations for operational reasons, such as redundancies. In such instances, the works council must be consulted, and it can decide whether to approve the termination or not. If approval is not granted, the employer cannot proceed with an ordinary termination but may still pursue an extraordinary termination if the grounds are strong enough.
5. Employee Consent: In some situations, employee consent may be required, such as when a mutual termination agreement (Aufhebungsvertrag) is negotiated. This involves the voluntary termination of the employment relationship by the employee, with the employer’s consent and often accompanied by severance pay. In these cases, the termination must also be in written form and signed by the employee to be valid.
6. It is important to note that employee resignations must be submitted at the end of the month, and the resignation must be provided at least two weeks in advance, unless a shorter notice period has been agreed in writing. The resignation must also be in writing and signed by the employer to be valid.

If an extraordinary termination is deemed invalid, the employee may file claims for damages. This can occur if the termination was not sufficiently justified, the time limits were not met, or the required formalities were not observed.

Who Can Issue Extraordinary Terminations?

Typically, the employer is the party who can issue an extraordinary termination. This applies to all employment relationships, whether it is a standard employment contract or an employment relationship under the German Crafts Code (Handwerksordnung, HwO).

However, there are exceptions where an extraordinary termination can be issued by someone else. For example, an extraordinary termination can be issued by a legal representative, such as a parent, if the employee is not yet of legal age at the time of termination.

Additionally, in certain industries, such as the public sector, there are special regulations where other individuals, such as department heads or ministries, are authorized to issue extraordinary terminations. These specific rules allow certain officials to exercise the authority to terminate an employment relationship in particular circumstances.

Are You at Risk of a Waiting Period After an Extraordinary Termination?

Yes, following an extraordinary termination, you may face a waiting period (Sperrzeit) during which you are not entitled to unemployment benefits. This happens if you are deemed responsible for the termination of your employment relationship.

The waiting period is regulated by Section 159, Paragraph 1, Sentence 1 of the Second Book of the Social Code (SGB II) and typically lasts one month. However, if you have already been subject to a waiting period due to an extraordinary termination within the previous three years, the waiting period may extend to three months.

However, there are exceptions to the waiting period. For example, if you are seriously ill, if the termination occurs for reasons beyond your control, or if you terminated the employment relationship with proper notice, the waiting period can be shortened or even waived entirely.

IV. What Are the Consequences of an Extraordinary Termination?

An extraordinary termination typically has serious consequences for the employee, as it is issued without notice and can lead to an immediate loss of employment.

1. Compensation Claims of the Employee: According to Section 626 of the German Civil Code (BGB), if an extraordinary termination is found to be invalid, the employee may be entitled to compensation. This compensation covers the period from when the termination was issued to the point when the employment relationship is legally terminated.
   
   Generally, the compensation amount corresponds to the wages the employee would have earned during the notice period that would apply in the case of an ordinary termination. However, the compensation could be higher or lower, depending on how the employment would have been terminated if the extraordinary dismissal had been valid.
2. Judicial Review Options: If the employee believes that the extraordinary termination is invalid, they can challenge the dismissal in a labor court. The court will then examine whether the conditions for an extraordinary termination were met and if the dismissal is legally valid.
3. If the labor court concludes that the termination is invalid, the employee may be entitled to reinstatement and could also claim damages. However, it is important to note that judicial review of a termination can involve significant effort and costs, and may not be advisable in every case.
4. Therefore, it is highly recommended to seek legal advice when in doubt to evaluate the potential risks and benefits of pursuing a court challenge.

Template for an Extraordinary Termination

Below is a template for a lawful extraordinary termination, which can serve as a guide.

[Employer's Name]
[Company Name]
[Address]

[Date]

To:
[Employee's Name]
[Address]

Dear [Employee's Name],

I hereby terminate the employment relationship between us with immediate effect and, as a precautionary measure, at the earliest possible date, due to a serious breach of duty on your part.

As I have already informed you in writing several times, it is your responsibility to appear at work punctually and reliably. Despite repeated warnings, you have been consistently late, thereby seriously violating your duties.

Additionally, your serious breach of duty includes the fact that you have repeatedly left early or arrived late without permission in the past.

Your behavior has irreparably damaged the trust between us, making the continuation of the employment relationship impossible.

This termination is being issued within the required two weeks after becoming aware of the important reason.

Please return all company property and equipment in your possession by no later than [date].

Sincerely,
[Employer's Name]
[Employer's Position]

What Happens in the Case of an Extraordinary Termination?

An extraordinary termination is a dismissal issued by the employer for an important reason and is allowed without adhering to notice periods. The employer may issue this type of termination when the employee has committed severe breaches of duty, such as theft, fraud, physical assault, or violence in the workplace.

When an employer issues an extraordinary termination, it means that the employment relationship is terminated immediately, without any notice period. In such cases, the employee is not entitled to severance pay or continued payment of wages during sick leave. However, the employee can claim compensation if the extraordinary termination is deemed invalid. The validity of the extraordinary termination can be reviewed in court if challenged by the employee.

Is a Warning Required Before an Extraordinary Termination?

Whether a warning is required before an extraordinary termination depends on several factors. Typically, a warning is not required when there is a so-called “catastrophic breach of trust”.

This includes, for example, criminal actions related to the employment, such as theft or fraud, or serious insults or threats directed at the employer or colleagues. In such cases, an extraordinary termination can be issued without a prior warning.

In all other cases, however, a warning is usually required before an extraordinary termination can be issued. This applies, for instance, to repeated breaches of duty or other serious violations of the employment contract, which may not be severe enough to justify immediate termination but still significantly damage the trust between the employer and employee.

In such cases, the employer must first issue a warning, giving the employee the opportunity to correct their behavior. Only if the employee continues to violate their duties despite the warning can an extraordinary termination be issued.

"In many cases, unfortunately, a warning is not enough to make an employee understand that their behavior is unacceptable. In such situations, the employer often has no choice but to issue an extraordinary termination to end the employment relationship."

(Attorney Dr. M. Petershausen)

What to Do After Receiving an Immediate (Fristlose) Termination

If you have received an immediate termination, it's crucial to act quickly. The following steps can help you protect your rights and respond effectively to the situation:

1. Read the Termination Letter Carefully: Go through the termination letter thoroughly and check if all formal requirements are met. Ensure that the termination is provided in written form, is signed, and clearly states the reason for the termination.
2. Stay Calm: It’s natural to feel upset in this situation. However, it’s important to stay calm and avoid making decisions driven by emotion.
3. Consult an Employment Lawyer: Seek immediate professional help from a lawyer specializing in employment law. They can assist in securing your rights and advising you on your options
4. Assess Your Financial Situation: Evaluate how long you can manage without an income and whether you can rely on financial support from family or state benefits.
5. Decide Whether to Contest the Termination: It's essential to decide with your lawyer if you want to contest the immediate termination. According to Sections 4(1) and 13(1)(2) of the German Employment Protection Act (KSchG), this decision must be made within three weeks of receiving the termination. If this deadline is missed, it will be assumed that the termination was justified, and the employer respected the two-week timeframe to issue the dismissal (Section 7 KSchG). Therefore, timely action is critical.

If, as an employee, you receive an extraordinary termination and believe it to be unjustified, you have the option to file an unfair dismissal claim (Unfair dismissal lawsuit). This claim can be submitted to a labor court and aims to assess the validity of the termination and potentially declare it invalid.

The unfair dismissal claim must be filed within three weeks of receiving the termination, as per Section 4 of the Employment Protection Act (KSchG). It must be submitted in writing to the labor court that has jurisdiction over the district where the employer's office is located. It is crucial to adhere to this deadline, as failing to do so will result in the claim being considered inadmissible, meaning you will lose any chance of success.

An example of a successful unfair dismissal claim is the ruling by the Düsseldorf Regional Labor Court (LAG) on March 27, 2018 (Case No. 8 Sa 812/17). In this case, the employee received an extraordinary termination after repeatedly failing to report absences from work without an excuse. However, the LAG Düsseldorf ruled that the termination was invalid because the employer had not issued the employee a prior warning, which is typically required in such cases. As a result, the absence of a warning could not be considered a sufficient reason for the extraordinary termination.

What Are Not Considered Valid Reasons for an Extraordinary Termination?

Some reasons that are not recognized as valid grounds for an extraordinary termination include:

• Personal Disagreements or Conflicts Between Employer and Employee: Personal differences or disputes alone are insufficient to justify an extraordinary termination. There must be a serious incident that fundamentally damages the trust between the parties.
  
• Performance Issues: Performance deficiencies do not qualify as valid grounds for an extraordinary termination, unless they are severe and the employee has been previously warned about the performance issues. For example, in the case of "Termination Due to Poor Performance," the Munich Regional Labor Court ruled that poor performance is not considered a valid reason for extraordinary termination (Judgment of October 28, 2021, Case No. 3 Sa 362/21).
• Pregnancy: Pregnancy is not a valid reason for extraordinary termination. Termination during pregnancy and parental leave is prohibited under Section 9 of the Maternity Protection Act (Mutterschutzgesetz), which protects pregnant employees. Termination due to pregnancy is also considered a serious violation of the General Equal Treatment Act (AGG).
• Short Employment Duration: The short duration of an employment relationship alone is not a valid reason for extraordinary termination. The Federal Constitutional Court (BVerfG) ruled that terminating an employee simply because they have been with the company for a short period (in this case, less than a year) is disproportionate and therefore invalid (Judgment of April 27, 1995, Case No. 1 BvL 10/91).
• Illness: Illness itself is not a valid reason for extraordinary termination. However, long-term illness may become a valid reason if it significantly impacts the employment relationship, such as when the company faces serious difficulties due to the employee's absence. Even in such cases, the employer must first attempt to maintain the employment relationship by taking measures such as hiring temporary replacements or reassigning duties. In the case of "Termination Due to Illness," the Düsseldorf Regional Labor Court ruled that long-term illness alone does not constitute a valid reason for extraordinary termination (Judgment of December 19, 2021, Case No. 2 Sa 633/21).
  

Are There Vacation Entitlements After an Extraordinary Termination?

When an employer issues an extraordinary termination, the affected employee generally loses the right to paid vacation for the current vacation year. However, there are some exceptions:If the employee was unable to take their vacation due to a serious illness, or If the termination was due to a serious breach of duty by the employer.

In such cases, the employee might still be entitled to paid vacation, even after the termination has been issued

For a detailed overview, please refer to: Vacation Entitlement in Termination Cases.

V. Conclusion and Outlook

An extraordinary termination is a dismissal without observing notice periods, issued for an important reason. Employers can issue it if the employee has committed serious breaches of duty, such as theft, fraud, physical assault, or violence in the workplace.

The validity of an extraordinary termination can be legally challenged by the employee. If the termination is found to be invalid, the employee may be entitled to compensation.

Certain conditions must be met for an extraordinary termination, including the presence of a significant reason and adherence to formalities such as written form and notification of the works council.

When an extraordinary termination is issued, the employment relationship ends immediately. In this case, the employee has no right to severance pay or continued wage payments during sick leave. However, the employee can file an unfair dismissal claim to contest the validity of the termination.

In some cases, an extraordinary termination may result in a waiting period during which the employee is not entitled to unemployment benefits.

For further reading on termination matters, please refer to the articles on operational terminations and extraordinary terminations.