Termination of Employment for Cause: The Grounds

It is an exception and is rarely invoked: termination for cause. The regular and proper termination of a continuing contractual relationship is the more common form of termination. But what do you need to keep in mind when it comes to termination for cause? Your tax advisor in Düsseldorf and Oberhausen has taken a look at the regulations.

Extraordinary termination means that a termination ends the employment relationship prematurely and without observing the otherwise applicable notice period. As a rule, it is without notice. However, this is not mandatory, as the terminating party may also grant a certain notice period even in the case of extraordinary termination. However, this must be specifically noted. It is important here to explicitly avoid giving the impression that this is an ordinary termination. In practice, extraordinary terminations are usually issued as terminations without notice.

Extraordinary termination cannot be ruled out

Regardless of whether the employment contract is permanent or fixed-term, extraordinary termination is generally possible. This also applies to fixed-term probationary employment relationships and to employment relationships in which ordinary termination is excluded. This is because the right to terminate a contract for cause cannot be excluded by either party to the employment contract.

An exception

Extraordinary termination is an exception. For this reason, the factual conditions are narrowly defined. The central requirement is that there must be good cause. Only then is extraordinary termination permissible. This cause must also meet several additional requirements: The termination must be an isolated incident. Furthermore, after a corresponding balancing of interests, the continuation of the employment relationship must be unreasonable. In conclusion, this means that these criteria must be demonstrated in a two-step assessment. First, the just cause must be clearly articulated as such, and then the balancing of interests must be made clear in the specific case.

Extraordinary Termination as a Common Phenomenon

It turns out that although extraordinary termination is intended to be an exception, it is an integral part of labor law practice. Termination without notice is usually used by the employer when there is a serious breach by the employee of their obligations under the employment contract. After issuing the termination without notice, the burden of proof lies with the employer. This means they must demonstrate that the extraordinary termination was justified. Following this, a two-week period for providing an explanation must be observed after becoming aware of the relevant facts.

Conduct Justifying Termination

For extraordinary termination to be legally valid, it often faces significant practical challenges. First, it must be ensured that the employee’s misconduct in question is “in itself” sufficient grounds for extraordinary termination. This means the misconduct must constitute a valid reason for termination without notice.

The “good cause”

There must therefore be a “good cause” for extraordinary termination to be lawful. In determining this cause, the employee’s conduct must not be considered in isolation. This means it must be viewed in the context of the employment relationship’s history and the overall circumstances of the individual case. In the past, absolute grounds for immediate termination were specified in the Commercial Code and the Trade Regulation Act. These no longer exist today, as it always depends on the specific circumstances of the individual case.

However, the former statutory grounds are generally still considered valid grounds for extraordinary termination by employers today. These include:

• Employment fraud
• Permanent or prolonged inability to work
• Refusal to work
• Gross breach of the duty of loyalty
• Violations of the non-compete clause

However, the circumstances that may apply in such cases are highly diverse. It is therefore virtually impossible to present a schematic overview of the relevant circumstances. In any case, the circumstances of the individual case must be met. The focus of the justification should also be correctly established. In this case, it is important to specify the nature of the breach of duty and its severity. The resulting consequences and the degree of fault on the part of the employee should also be emphasized. It is also relevant that, as a general rule, it is not necessary to distinguish whether the breach concerns a primary or secondary duty arising from the employment relationship.

At this point, it should be noted that the courts take the examination of grounds for termination extremely seriously. The courts also take into account the ongoing changes in the world of work. These changes are particularly related to digitalization. It can therefore be assumed that as processes in the workplace change, the scope of employees’ obligations grows accordingly. It is therefore certainly the case that employees must continually comply with new requirements. These include, for example, the handling of data, the use of the internet, social media, and other means of communication. If these duties are knowingly and seriously violated, employers may consider termination without notice.

Additional aspects to consider for effective termination

It is therefore evident that the legal requirements for issuing an extraordinary termination are strict. The distinction between a valid reason for termination and the circumstances of the individual case is intentional. The legislature aims to tighten the requirements in this way. Furthermore, a comprehensive balancing of interests must be conducted.