Second chance by termination

The Higher Labor Court Baden-Württemberg (Landesarbeitsgericht Baden-Württemberg) ruled on 6 May 2015 (ref. no. 4 Sa 94/14) that a termination in the probationary period according to the German Employment Dismissal Act, which extends the applicable notice period, cannot be considered an unlawful circumvention of dismissal protection, where the intention is to give the employee another chance to prove himself.

According to sec. 1 para. 1 of the German dismissal protection law an employee is protected by the law after having completed a six month probationary period. During the probationary period an employer may terminate the employee within the limits of good faith without cause. When an employer terminates the employment within the probationary period but exceeds the applicable notice period the question arises whether the termination should be considered a circumvention of the dismissal protection law.

In the case before the court the employee received notice of termination within the probationary period with a notice period of 3 months in order to give the employee another chance to prove himself.

Both the Lower and the Higher Labor Court did not consider the termination to be a circumvention of the dismissal protection law. A circumvention requires that the employer does not intend to end the employment but only wants to exclude the application of dismissal protection law. In this regard an extremely long notice period which only benefits the employer can be an important indicator. The court found that the termination in question, with a notice period of 3 months, did not unilaterally benefit the employer. The employer explicitly stated in the termination letter that the employee did not successfully finish the probationary period and that the extended notice period was meant to give him another chance to prove himself.

Employers can rely on using an extended notice period of 3 months to extend the probationary period as long as they clearly indicate their intentions. Longer notice periods should only be considered in cases of complex services which require an even more extended period to assess the employee’s performance.