Both the employer and the employee may end an employment relationship at any time by giving notice of termination. However, the end date of the employment is not an arbitrary one, e.g. the date when notice of termination is given. This will be the case only if the employment is terminated for an important reason by a so-called extraordinary termination or a termination without notice.
In any other case, both parties to an employment agreement normally have to comply with the statutory or contractually agreed notice periods. The notice period is granted to give each party sufficient time to prepare for the termination of the employment relationship. The notice period allows the employee to seek a new employment and the employer to find a successor for the upcoming vacancy.
The minimum statutory notice period for both parties is four weeks taking effect either on the fifteenth day or the end of a calendar month. Thereafter, the notice period for a dismissal by an employer increases in line with the length of an employee's employment:
- 2 years employed: 1-month notice period taking effect at the end of a month
- 5 years employed: 2-month notice period taking effect at the end of a month
- 8 years employed: 3-month notice period taking effect at the end of a month
- 10 years employed: 4-month notice period taking effect at the end of a month
- 12 years employed: 5-month notice period taking effect at the end of a month
- 15 years employed: 6-month notice period taking effect at the end of a month
- 20 years employed: 7-month notice period taking effect at the end of a month
During the notice period the employment relationship continues unchanged. The employer must continue to pay the wage. In case the employee terminates the employment, on the contrary, the minimum notice period of four weeks taking effect either on the fifteenth day or the end of the calendar month applies no matter how long he/she was employed with the company. In order to have enough time to find a successor, the employer should therefore ensure that the employee's contract stipulates a longer notice period, which may not be longer, however, than the notice period to be observed by the employer.
However, there is no legally effective way for the contracting parties to agree on shorter than the statutory notice periods.
A shorter notice period of no less than two weeks only applies in case of an agreed probationary period, which must not exceed six months. In this case, the notice period starts to run immediately after notice of termination has been given. The contracting parties may also agree on shorter notice periods for short-term or marginal employments, e.g. in case of casual workers.
The statutory notice periods do basically not apply to managing directors of limited liability companies under German Law (GmbH) and to board members of stock corporations (AG). The law contains special provisions for notice periods applying to the members of a legal entity's executive bodies.
The statutory notice periods may be applicable in individual cases only to a GmbH's managing director holding only an insignificant share or no share at all in the company's capital. In many cases, however, employment agreements of members of a company's executive bodies already contain very generously tailored notice periods that take precedence.
Notice periods are especially important even after the end of the employment. If the parties to an employment agreement choose to terminate the employment at any time before the end of the actually applicable notice period, e.g. based on a cancellation contract, the employment agency may impose a blocking period, during which the former employee does not receive any unemployment benefits.
Employment Law: Recent blog posts
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