Employment Law for Employees in Germany

Employment Contract Review

Reviewing an employment contract before signing is significantly more effective than challenging individual clauses after employment has begun. Key areas: the scope of duties and the employer’s instruction rights (§ 106 GewO); remuneration structure and variable components; working time, overtime, and compensation; probationary period length and notice provisions; fixed-term clauses and their legal basis; post-contractual non-compete obligations; confidentiality and intellectual property assignment; and the applicable collective agreement, if any.

Since 1 August 2022, the Nachweisgesetz has required employers to document and provide the essential conditions of employment. Since 1 January 2025, the information may in many cases be provided electronically in text form, provided that the document is accessible, can be saved and printed, and the employer requests confirmation of receipt. The employee may still request a written record, and the electronic option does not apply without exception in every sector. Failure to comply does not automatically invalidate the agreed employment terms, but it may result in regulatory consequences and may affect the evidentiary position in a later dispute.

We review employment contracts for employees and senior executives. Managing director service agreements require a separate assessment because the corporate office and the underlying service relationship are governed by different rules. Further detail is on our employment contracts page.

Day-to-Day Employment Rights

During the employment relationship, employees have rights that employers cannot simply exclude by contract: the right to continued remuneration during sickness under § 3 EFZG, generally for up to six weeks, subject to the statutory rules governing repeated incapacity caused by the same illness; maternity protection, maternity pay and the employer supplement under the applicable provisions of the MuSchG and SGB V; parental leave and parental allowance under the BEEG; protection from discrimination under the AGG; and statutory working time limits under the ArbZG.

Employees with a recognised severe disability, and employees with equivalent status, benefit from additional dismissal protection under the SGB IX. Subject to statutory exceptions — including, in particular, the initial six months of employment — the employer generally requires the prior consent of the competent Integrationsamt before giving notice.

Warning Letters — What to Do

A warning from the employer is a serious personnel measure and may become relevant to a later conduct-related dismissal. A valid prior warning is generally required before an ordinary conduct-related dismissal where the employee could reasonably be expected to change the relevant behaviour. The employee has the right to submit a counter-statement (Gegendarstellung) to the personnel file. Beyond that, the employee can seek removal of the Abmahnung from the personnel file where it is factually incorrect, legally flawed, or disproportionate — either by agreement or through court proceedings. The appropriate response — a counter-statement, a request for removal, court proceedings or no immediate formal action — depends on the content of the warning and the employee’s strategic position. Further detail is on our warning letter page.

Termination Protection — KSchG

Where the KSchG applies — generally where the employee has completed more than six months’ service and the establishment regularly employs more than ten employees under the statutory weighting and transitional rules of § 23 KSchG — a dismissal without social justification is invalid. An employee who wishes to challenge a written dismissal must generally file a Kündigungsschutzklage with the competent labour court within three weeks of receiving the notice. This deadline is not limited to employees who qualify for general termination protection under § 1 KSchG — it generally also applies where the dismissal is challenged on other legal grounds under §§ 4 and 7 KSchG. The deadline continues to run while severance discussions are taking place.

If the deadline is missed, the dismissal is generally deemed legally effective from the outset under § 7 KSchG, even where it may originally have been legally defective. Late admission is possible only in exceptional cases under the narrow conditions of § 5 KSchG.

Received a termination notice? The three-week filing period continues to run even while severance discussions are taking place. Contact us promptly for an initial legal assessment.

Even where general KSchG protection does not apply — smaller establishments, employees in the first six months — dismissals remain subject to notice periods, special protection rules, anti-discrimination law, and good-faith limits. The three-week deadline under §§ 4 and 7 KSchG should still generally be observed. Further detail is on our termination protection page.

Termination Agreements — Aufhebungsvertrag

A termination agreement ends the employment by mutual consent and requires written form under § 623 BGB; electronic form is excluded. Employees should not sign without legal review.

A termination agreement may avoid a Sperrzeit only if the employee has an important reason within the meaning of § 159 SGB III. A threatened employer dismissal, the reason for that dismissal, the agreed termination date, compliance with the applicable notice period and the amount and structure of any severance payment may all be relevant. Compliance with the notice period alone does not automatically prevent a Sperrzeit. A separate question is whether unemployment benefits may temporarily remain unpaid under § 158 SGB III because the employment ended before the applicable employer notice period expired. The final assessment is made by the employment agency, not by the parties to the termination agreement. Further detail is on our termination agreement page.

Severance Pay

There is no general statutory right to severance pay for employees. Severance typically arises through negotiation in the context of a termination agreement, a court settlement in Kündigungsschutz proceedings, or — in the specific case of an employer offer under § 1a KSchG following an operational dismissal — under that statutory provision. The conventional negotiation reference is 0.5 gross monthly salaries per year of service, but the actual amount depends on the legal strength of the dismissal, the litigation risk for the employer, the length of service, the employee’s age, and the commercial circumstances. Further detail is on our severance pay page.

Non-Compete Obligations

A post-contractual non-compete clause is only binding on the employee if it meets the statutory requirements under §§ 74 ff. HGB: written form, compensation of at least 50% of the employee’s most recent contractual remuneration and benefits for the duration of the restriction, duration not exceeding two years, and a scope justified by the employer’s legitimate business interests.

The legal consequences of a defective clause depend on the specific defect. A clause that contains no promise of compensation is generally void. A clause that provides insufficient compensation may be non-binding on the employee. Restrictions that go beyond the employer’s legitimate business interests or are excessive in geographical, substantive or temporal scope may be non-binding in whole or in part. The consequences should therefore be assessed individually before the employee decides whether to comply.

Before the employment ends, the employer may waive the non-compete by written declaration. The employee is then released from the competitive restriction. However, under § 75a HGB, the employer is generally released from the obligation to pay compensation only one year after the waiver declaration.

Executives and Managing Directors

Managing directors are generally not treated as ordinary employees. Their removal from corporate office and the termination of their service agreement are separate legal steps. General KSchG protection and the ordinary employment-law requirement of a prior warning before many conduct-related dismissals will usually not apply in the same way. The corporate appointment, the service agreement and the individual circumstances must therefore be reviewed separately.

Foreign Employees and Residence Permits

For foreign employees, a dismissal or material change to the employment relationship may also have immigration-law consequences. The effect depends on the specific residence title and any employment-related restrictions stated in the permit or supplementary sheet. The loss of employment does not necessarily terminate the residence title immediately, but it may trigger notification duties and may lead the immigration authority to review, amend or shorten the title. Holders of relevant employment-based residence permits are generally required to notify the immigration authority promptly, usually within two weeks, if the employment ends prematurely. The employment-law and immigration-law consequences should therefore be reviewed together. Further detail is on our managing director residence permit page, EU Blue Card page and skilled worker visa page.

Advice by Alexander Kagan, Attorney at Law, admitted to the Hanseatic Bar Association Hamburg. As of: June 2026.

The contents of this page are for general information only and do not constitute legal advice. A mandate is established only upon express acceptance.