Can I receive severance pay through a settlement?

Warning, termination without notice, protection against dismissal, general termination - you've heard it all before. Even for experienced lawyers, the legal possibilities in Germany are sometimes difficult to understand. Therefore, we would like to provide you with an easy-to-understand summary of the topic of termination for operational reasons.

How does a termination for operational reasons occur in the first place?

A dismissal for operational reasons may be declared if the employer is forced to terminate the employment relationship due to urgent operational requirements and the employer believes that the employment relationship cannot be continued.

If your employment relationship falls under the Dismissal Protection Act (Kündigungsschutzgesetz) pursuant to Section 1 KschG, the termination is invalid if it is socially unjustified.

As a rule, protection against dismissal exists if you have worked for your employer for more than 6 months and the employer employs more than 10 people.

The German Dismissal Protection Act (Kündigungsschutzgesetz) prohibits the employer from giving socially unjustified notice of termination. Among other things, a termination is only socially justified if there are either behavioral, personal or operational reasons for termination.

Reasons for termination for conduct include, for example, if an employee does not fulfill his or her duties or if he or she has betrayed the trust of his or her employer.

A person-related dismissal is when the physical ability required to perform the respective job is lost.

Termination for operational reasons can only be given if the following 4 conditions are met:

  1. First of all, there must be operational requirements that would justify termination for operational reasons. This is regularly the case if it can be assumed that a position will be permanently eliminated and will not be filled. For example, due to restructuring in a company or insolvency.
  2. In addition, the dismissal must be "urgent". This means that there must be no possibility of continuing to employ the employee, for example at another workplace or another location.
  3. Next, the interests of both sides must be weighed. Thus, the employer's interest in dismissing the employee must outweigh the employee's interest in keeping his job.
  4. Lastly, social aspects must be taken into account. The employer must carefully consider which employee can be dismissed, because only the employee who is least in need of protection may be dismissed.

When exactly are there operational arguments for termination?

For a termination for operational reasons, the employer must justify - in case of doubt in court - that the loss of jobs was unavoidable due to a company decision. This also includes explicit reasons as to why exactly this job had to be eliminated.

However, reasons based on "necessary savings" or a "decline in sales" are not sufficient for an effective termination. Rather, the employer must explain, based on figures, how the decision to dismiss the respective employee came about. In addition, he must comprehensibly disclose how and by whom the work to be done will be performed in the future.

However, the labor court does not examine how reasonable the employer's business decisions are. It is sufficient to "comprehensibly present" the reasons and thus justify the job cuts.

Since a financially unfavorable operating situation is not required for a termination for operational reasons, permissible terminations can also be issued in the event of restructuring.

Can the employer always refer to an entrepreneurial decision and thus effectively terminate the employment?

No, it is usually the case that a termination for operational reasons is justified by a company decision, even if economic interests are in the foreground.

Nevertheless, it sometimes happens that employment is directly related to the order situation. For example, a company may lose a major order without which the employees cannot be kept in the company.

When is there an urgent termination?

An "urgent" termination for operational reasons does not exist if the employee to be terminated can continue to be employed in the same company in another vacant position.

A job is designated as vacant if it is unoccupied, expected to become vacant or to be created at the time of the termination for operational reasons.

In addition, the vacant job must be comparable to the old one. This is the case if the employer can transfer the employee within the scope of the employment contract without requiring the employee's consent.

Even if there is no job vacancy, a dismissal for operational reasons may be invalid if, according to the German Dismissal Protection Act (Section 1 (2) sentence 3 KSchG), continued employment is possible through reasonable further training or retraining. However, this paragraph only applies if the employee gives his or her consent.

In other words, if you think your employer might terminate you for operational reasons in the near future, you should let them know that you would be up for further training.

Why do my employer's interests take precedence over mine?

In contrast to terminations for behavioral reasons and for personal reasons, your interest in keeping your job is always subordinate in the case of terminations for operational reasons. This means that the operational interests of your employer take precedence. For you, this means that if there is no possibility of continued employment, you are usually only left with the argument of incorrect social selection.

How does social selection work?

In the social selection process, the employer must select the employee who would be least socially disadvantaged by the termination and who is therefore least in need of protection, based on social considerations.

In accordance with Section 1 (3) KschG, this decision takes into account the length of employment, age, possible maintenance obligations and the employee's possible severe disability. Thus, it is more likely that young and short-term employees will be dismissed who are neither liable to pay maintenance nor have a severe disability.

Usually, when a termination is based on a social selection, it is unclear which employees can be compared with each other. In principle, all employees are compared with each other on the same level, i.e. all with the same qualifications and similar fields of activity, which would be interchangeable, so to speak.

When is a termination for operational reasons invalid?

A dismissal for operational reasons is invalid in any case if your employer has not consulted the works council before issuing the notice, provided that a works council exists. In addition, certain groups of employees enjoy special protection.

These include, among others, members of the works council, pregnant women, severely disabled persons and other persons who cannot be dismissed, e.g. by collective agreement.

In addition, permanency can be stipulated in advance in the employment contract.

Am I entitled to severance pay in the event of termination for operational reasons?

Yes, according to § 1a KSchG, the employee has the right to severance pay if he or she was dismissed due to urgency.

In this context, the employee must ensure that he or she does not allow the 3-week period to elapse and, if he or she wishes to engage an attorney for employment law, to inform him or her in good time.

This notice period is not only important if the employee wants to get his job back, but also if he wants to receive a severance pay.

If an employee has legal protection insurance, it will cover most of the costs. In many cases, an action for protection against dismissal gives the employee a chance to receive the desired severance pay. An action for dismissal is not easy to enforce, so the dismissed employee should seek professional advice.

With our severance pay calculator , you can check without obligation whether an action for protection against dismissal is worthwhile for you and whether you are entitled to severance pay. Our lawyers will be happy to provide you with a free and non-binding initial assessment.


It is usually very difficult for the employer to prove his motives for a termination for operational reasons. For this reason, it is always advisable to contest a termination (for operational reasons) and have it examined by the courts.

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