Termination Letter: Tips and a template for a legally secure separation intiated by the employer

An important requirement for the termination of an employment relationship by the employer is the existence of a legally effective letter of termination. If an employee is to leave the company, the question therefore often arises as to which legal requirements the employer's letter of termination must meet in order to be effective. Time and again, there are legal disputes between employee and employer as to whether the formal requirements for a letter of termination have been met at all. Even if the dismissal is justified and well-founded, it may happen that the labor court rules against the employer. Formal or substantive errors can therefore be costly for the employer.

In this article, we go into more detail about the employer's letter of termination. We explain which formal requirements it must meet, point out typical sources of error and provide HR managers and employers with a free template for a  termination letterto download.

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What is a letter of dismissal from the employer?

A letter of termination from the employer is a unilateral declaration of intent that requires receipt, which is intended to end the employment relationship with the employee in the future. Unilateral means that the termination of the employment relationship is terminated solely by the declaration of a contracting party, in this case the employer. Confirmation of the dismissal by the employee is therefore generally not required. Requiring receipt means that the dismissal only becomes effective when the letter of termination has been received lawfully by the employee.

The requirements for legal dismissal by the employer are regulated by employment law, in particular the Civil Code (BGB) and the Dismissal Protection Act (KSchG).

What are the employer's notice periods?

The notice period also begins upon receipt of the letter of termination, provided that it is a ordinary termination acts. However, the employment relationship itself only ends upon expiry of the notice period. It is therefore very important that the employer determines the correct period of notice before giving notice. The date on which the employment relationship ends also determines, among other things, when the employee to be terminated must register with the employment agency as a jobseeker or when he can start a new job.

To do so, the employer must comply with the notice periods agreed in the employment contract or collective agreement. If there is no contractual provision, the statutory notice periods, which are regulated in Section 622 BGB, apply. Thereafter, the employer can in principle terminate the employment relationship with a notice period of four weeks (28 days) on the 15th or at the end of a month (Section 622 (1) BGB). However, the notice period is extended with the duration of the employment relationship.

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The employer must consider when the employee should leave the company in order to be able to determine the last legal day. To do this, he must look at the employment contract to see which notice periods are regulated there. Where reference is made to the law there, the above regulations always apply. By the way, these notice periods also apply if nothing is agreed in the contract. If a collective agreement applies, this must also be used.

Good to know: The start or end of the notice period can fall on both a weekend and a public holiday.

Formal requirements for a letter of termination from the employer

A letter of termination from the employer must meet various formal requirements in order to be legally effective:

• Written form: A notice of termination must Always in writing in accordance with Section 623 BGB take place in order to be legally effective.
• Signature of the right person: The proper written form also includes that the employer or a person entitled to dismiss the Letter of termination signed by hand with name signature; it is also possible to sign by means of a notarized hand sign (Section 126 (1) BGB).
• Name and address of both parties: In order for both the employer and the employee to be clearly identified, their names and addresses must be provided on the letterhead of the letter of dismissal.
• Compliance with the notice period: As mentioned, the employer must take into account the statutory or contractually agreed notice periods.
• Proper notice of termination: In the notice of termination, unequivocally express that the employer wants to end the employment relationship. It must leave no room for interpretation or misunderstandings. It is therefore advisable to mention the word “termination” in the subject line. The letter must also clearly state At what point in time (specific date) the employment relationship is to be terminated. Contractually agreed or statutory deadlines must be taken into account here. However, as there may be errors when calculating deadlines, the employer should always Alternatively, cancel “as soon as possible”. How important it is to have clear and unambiguous wording in the letter of termination is also shown by a recent verdict from LAG Hamm.
• Note on the reporting requirement: The termination should include a reference to the reporting requirement (Section 38 (1) SGB III). In order to avoid a reduction or blocking period of unemployment benefits, the dismissed employee should be notified that he must register as a jobseeker. Failure to provide this notice does not invalidate the termination, but may retroactively establish a claim for compensation against the employer.
• Note on remaining vacation or overtime: In the letter of termination, it is advisable to also refer to the remaining vacation entitlement or the compensation for overtime.
• Receipt of notice: Since a dismissal is a Declaration of intent required to be received Is, will she first effective when received by the employee (Section 130 (1) p. 1 BGB), that is, when it comes into his sphere of control and he has the opportunity to become aware of it. On receipt of the letter of termination from the employer, the notice period and the three-week period within which the employee can file an action for protection against dismissal (§ 4 KSchG) begin.

Although the employer must in principle give reasons for an ordinary dismissal as soon as the Dismissal Protection Act applies to the employment relationship, he is not required to state a reason for termination in the letter of termination. He must therefore in Letter of termination not explain whether he terminates the employment relationship for personal, behavioral or operational reasons. Exceptions apply, among other things, if the termination concerns an apprenticeship following the probationary period (Section 22 (3) Vocational Training Act (BBiG)) or if the collective agreement requires a justification. However, if the employee requires the reason for termination, the employer is obliged to inform the employee of this in writing.

Good to know: If an ineffective dismissal is given, the employee concerned may file an action against the company for protection against dismissal within three weeks of receipt of the notice of termination. At this stage, however, it is important to understand that the usual period of action of three weeks in accordance with Section 4 S. 1 KSchG does not apply to the employee if the employer does not give notice of termination in writing. This is because this period only applies to cancellations made in writing. If this form is missing, the deadline cannot begin and therefore cannot be missed.

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Free download: Termination letter template for employers 

A well-formulated letter of termination is an essential part of a legally secure termination. Employees in Germany are comprehensively protected against ineffective dismissals and a number of important legal requirements must be met so that an employer's dismissal in the event of a dispute before the labor court is valid.

In the event of dismissal, HR managers or employers often use a template or sample to write the letter of termination in a legally secure manner. However, this requires certain legal knowledge, as a pattern should not be readily adopted, but must always be adapted to the individual case of the employee to be dismissed.

To make your job a bit easier, twinwin has created a template for a termination letterfor employers in Germany, which you can download for free and can adapt to your needs. With the TwinWin template Do you make sure that

... the letter of termination is clearly and precisely formulated and has no room for faase interpretations.

... the letter of termination meets legal requirements and the risk of legal disputes is minimized.

... the letter of termination allows forindividual adjustments with regard to the compensation of remaining vacation and overtime.

For which cases is the TwinWin template suitable?

The twinwin template is suitable for terminating employment contracts on time. It can also be used for ordinary termination of employment contracts with working students, mini-jobbers or part-time employees.

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How do I adapt a sample template to my own requirements?

HR managers should always adapt a template in employment law to the specific application and ensure that the template complies with legal requirements. The following points are therefore important when a termination template is adopted for your own HR work:

• The cancellation template is suitable for the application.
• The information about the employer and the employee has been added.
• The letter of termination contains the date from which the termination is effective or the reference to termination “as soon as possible”.
• The letter of termination was signed personally by a person entitled to cancel.

If applicable in the application:

• The reference to remaining vacation days or overtime is included and has been adjusted.
• The reference to the return of work equipment is included.
• The reference to the reporting requirement is included.
• The reference to the proper consultation of the works council before giving notice of dismissal is included.

Tip: The TwinWin template for a letter of termination contains helpful comments to adapt to the individual case. If you want to be on the safe side, you can also seek legal assistance, for example through a Twinwin partner lawyer.

Typical mistakes when drafting a termination letter

Substantive or formal errors in a dismissal increase the risk that a dismissal protection action against the employer before the labor court will be successful. The employer should therefore check the letter of termination for substantive and formal errors before handing it over or serving it to the employee or have it reviewed by employment law experts. Because such mistakes can cost the employer dearly. If the dismissal is ineffective due to a formal or content error, the employer must generally continue to pay the employee the salary. Even if, for example, a second legally effective letter of termination has been issued in the meantime and the employee has received it in a legally secure manner, wage claims may arise for this period.

Neglecting written form

Since termination must always be made in writing in accordance with Section 623 BGB, it is not sufficient for the employer to send the notice to the employee verbally or in electronic form (e.g. in text form via e-mail or WhatsApp). If the employer does not comply with the written form required by law, the termination is formally void (Section 125 BGB) and therefore legally ineffective.

In addition, as already mentioned, the letter of termination must be signed by hand. This means that, for example, a stamp, a scanned signature or a name abbreviation are not enough.

Unauthorized signator

A notice of termination signed by a person who is not entitled to dismiss (e.g. employer or a person with a proxy certificate from the employer) can be rejected by the terminated employee in accordance with Section 174 BGB. According to the Federal Labour Court, however, this must be done immediately, i.e. within one week of receipt of the letter of dismissal.

The actual notice of termination was not submitted

The employee must receive the original notice of termination with an original signature, which is generally not possible by e-mail or fax, for example. In this case, the employee could sue the employment court for the invalidity of the dismissal.

Delivery not verifiable

The date of receipt of the letter of dismissal by the employer is important for two reasons: On the one hand, this triggers the notice period, and on the other hand, the employee has three weeks from receipt of the notice to file an action for protection against dismissal.

As already mentioned, according to German case law, the dismissal is considered received if it has reached the employee's “sphere of control”, for example in the mailbox, and the employee was able to take notice of it. Nevertheless, there are always labor court disputes between employer and employee as to whether the dismissal was received at all or in good time. Important: In the event of a dispute, the employer bears the burden of proof. It is therefore advisable to hand over the notice in person in the presence of witnesses or to deliver it by drop letter.

Failure to comply with the notice period

If the employer fails to comply with the statutory or contractually agreed notice periods when giving notice, the employee can take action against the dismissal with a dismissal protection action — and is highly likely to be right.

Failure to hear the works council

Before giving ordinary dismissal, companies in which a works council has been elected must be consulted (Section 102 Works Constitution Act (BetrVG). Termination without prior hearing is ineffective.

Failure to comply with special protection against dismissal

Certain groups of workers enjoy special protection against dismissal, which means that ordinary dismissal is not possible or is only possible with the consent of the respective authority. Groups of workers with special protection against dismissal include pregnant women, workers on parental or care leave, or severely disabled people. 

If the employer does not obtain the approval of the competent authority before giving notice of termination, the dismissal is ineffective.

Social selection mistakes

Arrive at a Operational termination If several employees are concerned, the employer must carry out a social selection and take social criteria into account so that the dismissal for operational reasons is Section 1 (3) to (5) Consumer Protection Act is socially justified. If this social selection is incorrect or is not carried out correctly, this may result in the termination being ineffective. For example, the Düsseldorf Regional Labor Court (LAG) came to this conclusion in a recent ruling (Article dated 9.1.2024, 3 Sa 529/23).

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Dismissal during the probationary period: What does the employer have to consider when writing a letter of termination?

If the employer wishes to dismiss an employee during the probationary period, a reduced notice period of two weeks (Section 622 (3) BGB). During the contractually agreed trial period, the employer can therefore end the employment relationship within two weeks at any given day, i.e. even on the last day of the probationary period. However, it is important that Letter of termination is legally received by the employee before the end of the probationary period. It is therefore advisable to hand over the letter of termination in the presence of a witness or to send it by drop in letter.

Ordinary termination during the trial period can also be given without any qualified reason. However, this does not mean that a Dismissal during the probationary period by the employer may be arbitrary or immoral.

Even during the trial period, a termination is only effective if it in writing carried out (§ 623 BGB). In addition, in the case of termination of a probationary period, the letter of termination should include the following important information include:

• Name and address of both parties
• clear wording that the employment relationship will be terminated during the probationary period
• Note that the termination will be made in due time and an indication of the calculated termination date
• handwritten signature of the employer or a person entitled to dismiss (power of attorney, if applicable)

Note: The sample letter of termination offered for free download above is not suitable if the employer wishes to end the employment relationship during the trial period. For trial period cancellations, Twinwin Create your own legally compliant template, which you can find in the template pool. If the termination of a trial period is a current issue in your HR department and you need assistance in preparing the letter of termination, you are welcome to contact the twinwin team.

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What should HR consider when preparing a letter of termination in the event of termination without notice?

A letter of termination for an extraordinary termination without notice is subject to different requirements than an ordinary timely termination of an employment relationship. The TwinWin template for termination letters is therefore not suitable for immediate cancellations.

In the event of termination without notice, the employer does not have to comply with a notice period. In this case, the employment relationship ends on the day on which the employee lawfully receives the dismissal. However, an extraordinary termination without notice must also be made in accordance with Section 623 BGB always in writing, that means on paper and signed by hand, be explained. In addition, there are other formal requirements and legal deadlines that apply when preparing an indiscriminate termination letters for employers to be considered:

• name and Address of employer and employee must be mentioned.
• In addition, should Date and place of termination be specified.
• The notice of termination should Clearly formulated and it should be clear from it that the employment relationship will be terminated without notice and with immediate effect.
• A An important reason must be objectively present, which entitles the employer to terminate the employment relationship extraordinarily and without notice. However, this reason must not be mentioned in the letter of terminationunless the employment or collective agreement provides otherwise. There are also exceptions for trainees or workers on maternity leave.
• Termination without notice must within two weeks of becoming aware of the important reason be explained (keyword: notice period; Section 626 (2) BGB).
• A Note on the reporting requirement should be included (see above).

If you would like to find out more about how you can proceed in the event of a termination without notice, then read our Blog post about extraordinary terminations through. If you have any questions about immediate or ordinary termination, you can also contact twinwin directly. Our modules are tailored precisely to the requirements of HR work. The Breakup manager offers you immediate help with high-risk topics such as termination. So if you just need to create a ltermination letter as an employer, we highly recommend that you use Separation Manager to get additional information, useful tips, and best practices.