How to Terminate a Foreign Manager in Germany: Employer Guide

Terminating a Manager Assigned to Germany: An Employer’s Playbook for Cross-Border Exits

When a foreign executive on assignment in Germany has to leave quickly, the employer faces one of the most legally exposed situations in international employment. The reason may be serious misconduct, a strategic restructuring or a breakdown of trust at the top. In all of these cases the window for a defensible exit is narrow, and German procedural safeguards are demanding. This guide is a practical playbook for employers. It covers an immediate checklist, the statutory framework, works council obligations, evidence preservation, settlement options and preparation for proceedings before the Labour Court (Arbeitsgericht).

Who this is for: HR directors, in-house counsel, international mobility teams and external advisers handling an employer-side dismissal in Germany.

Purpose: A clear sequence of actions, together with the legal background needed to limit exposure and prepare for possible litigation.

The 10-step immediate checklist

The first 24 to 72 hours largely determine how much litigation risk you carry. Use the following checklist as your operational backbone. Assign each step to a responsible owner (legal, HR, IT, security) and document every action with a timestamp.

1. Contain immediate risks (hour 0–2). If people, data or assets are at risk, contain the risk first. Legal strategy comes second.
2. Decide the route: extraordinary dismissal, release from work or ordinary notice (hour 0–6). Assess whether an extraordinary dismissal without notice (fristlose Kündigung) under § 626 BGB is realistically available, or whether releasing the manager from work while you investigate is the better course.
3. Clarify who the employer is (hour 0–6). In many assignments there is a local German contract alongside a dormant home-country contract. Identify which entity must terminate which contract, and under which law.
4. Preserve evidence (hour 0–12). Issue a legal hold and secure HR files, emails, access logs and company devices before material can be altered or deleted.
5. Determine the notice period and special protection (hour 0–12). Check § 622 BGB, the contract, any collective agreement and any special protection against dismissal (for example severe disability, maternity or parental leave).
6. Map the works council position (hour 6–24). Confirm whether a works council (Betriebsrat) exists and must be heard before the dismissal.
7. Check residence and work-permit status (hour 6–24). Confirm the manager’s immigration position and the employer’s notification duties.
8. Plan payroll and benefits (day 1–2). Align the effective date with payroll, benefits and any equity or bonus plans.
9. Prepare communications (day 1–2). Draft internal and external messaging and define escalation triggers.
10. Model a settlement (day 1–3). Prepare a termination agreement (Aufhebungsvertrag) scenario with a realistic severance range.

Throughout all of this: involve German employment counsel from the outset, not after the dismissal letter has been sent. The most expensive mistakes happen in these first hours. Typical examples are acting before evidence is secured, overlooking the works council, missing the two-week deadline or serving an extraordinary dismissal that cannot be proven.

The legal framework

German dismissal law combines statutory protection, contract law and works council participation. Four pillars matter:

• Dismissal Protection Act (Kündigungsschutzgesetz, KSchG). The Act applies once the employment has lasted more than six months and the establishment regularly employs more than ten employees. Where it applies, an ordinary dismissal must be socially justified on person-related, conduct-related or operational grounds.
• § 622 BGB – notice periods. This provision sets the statutory minimum notice periods, which increase with length of service.
• § 626 BGB – extraordinary dismissal. Termination without notice requires an “important reason” and must be declared within two weeks.
• Works Constitution Act (Betriebsverfassungsgesetz, BetrVG). Where a works council exists, it must be heard before every dismissal. If it is not heard properly, the dismissal is invalid for that reason alone.

Is the manager a “senior executive”?

A common assumption in cross-border matters is that a manager falls outside German protective law. That is only partly correct. Managing directors (Geschäftsführer) of a German company are generally not covered by the KSchG. Employees who qualify as senior executives (leitende Angestellte) remain protected by the KSchG, but with modifications:

• Works council: Under § 105 BetrVG the works council only needs to be informed, not formally heard. Where a senior executives’ committee (Sprecherausschuss) exists, however, it must be heard before the dismissal; otherwise the dismissal is invalid (§ 31 SprAuG).
• Dissolution against severance: For managing directors, plant managers and similar senior executives with independent authority to hire or dismiss employees, the employer can ask the court to end the employment against payment of severance without having to justify this request (§ 14(2) KSchG). This is a significant strategic advantage.

The threshold is narrow. Under § 5(3) BetrVG a senior executive must, for example, have independent authority to hire and dismiss, hold a general power of attorney or Prokura of real internal significance, or perform tasks of material importance to the company with considerable decision-making freedom. Many assigned managers do not meet this test despite their title. If you treat a manager as a senior executive and the court disagrees, the missing works council hearing alone invalidates the dismissal. If in doubt, hear the works council as a precaution.

Which law applies?

Assignment documents often choose a foreign governing law. Under Art. 8 of the Rome I Regulation, however, such a choice cannot deprive the employee of the protection afforded by the mandatory rules of the country where he or she habitually works. For a manager who habitually works in Germany, German dismissal protection and works council rules will therefore generally apply. The position is more complex for genuinely temporary secondments, where the habitual place of work may remain abroad. In those cases, and wherever a home-country contract continues alongside a German one, the applicable law should be analysed before any notice is served.

What happens after a dismissal in Germany

A dismissal does not end the relationship cleanly. The employee can file a claim with the Labour Court within three weeks of receiving the written notice (§ 4 KSchG). If the court finds the dismissal invalid, the employment continues. The employer then owes remuneration for the entire period of the proceedings (default of acceptance, § 615 BGB), less any interim earnings. For a senior manager, this back-pay risk can be substantial.

In practice, most dismissal protection claims end in a settlement with a severance payment, often at or shortly after the first court hearing. A disciplined process and well-preserved evidence are therefore valuable: they determine the severance you ultimately pay, or whether you pay any at all.

Notice periods, form and delivery

For an ordinary dismissal, the applicable notice period is generally the one most favourable to the employee among statutory, contractual and collective sources. The statutory base period under § 622 BGB is four weeks to the 15th or to the end of a calendar month. For employer dismissals it extends with length of service, reaching seven months to the end of a month after 20 years. Assignment agreements and executive contracts frequently provide for longer periods.

Points that regularly catch employers out:

• Probation. During an agreed probationary period of up to six months, a two-week notice period applies. Note that the six-month waiting period under the KSchG runs independently of any probation clause.
• Prior group service. If German service builds on earlier service within the group, contracts sometimes credit that service. Check this carefully, as it can affect both notice and severance.
• Written form. Under § 623 BGB a dismissal must be in writing with an original, handwritten signature. Email, fax, scans and e-signatures (including DocuSign) do not satisfy the requirement.
• Authority to sign. If the letter is signed by someone who is not a statutory representative of the employing entity and no original power of attorney is attached, the employee can reject the dismissal without delay under § 174 BGB. It then has no effect. A classic cross-border mistake is a dismissal signed by the HR head of the foreign parent company.
• Delivery and proof of receipt. A dismissal only takes effect on receipt, and both the notice period and the three-week deadline run from that date. Use a method that can be proven in court, ideally delivery by a messenger who has read the letter, places it in an envelope and can testify to the delivery. Plan ahead if the manager is travelling or on home leave abroad.
• Content of the letter. State the type of dismissal and the termination date. For an ordinary dismissal, the reasons generally do not need to be stated in the letter, but must be provable if challenged. Avoid editorialising; over-explaining can create admissions that help the employee’s claim.

Extraordinary dismissal (fristlose Kündigung): standard and risks

An extraordinary dismissal under § 626 BGB is the fastest route and the riskiest. It requires an “important reason” that makes it unreasonable for the employer to continue the employment even until the end of the notice period, taking all circumstances into account and weighing the interests of both sides. The courts apply this standard strictly.

Three features define it:

• The two-week deadline. Under § 626(2) BGB, the dismissal must be received by the employee within two weeks after the person entitled to dismiss has learned of the relevant facts. Miss the deadline and the right to dismiss for that reason is lost. The clock only starts once the facts are reasonably clear, so a prompt investigation can delay its start. But that only works if the investigation is pursued without undue delay. A drifting internal inquiry will not protect you.
• The burden of proof. The employer must prove the facts constituting the important reason.
• Dismissal on suspicion (Verdachtskündigung). Where proof is incomplete, a dismissal may be based on a strong, fact-based suspicion of serious misconduct. This requires a prior hearing of the employee, generally within about a week of the employer learning of the facts.

Grounds that can amount to an important reason include theft, fraud, serious breaches of duty, persistent refusal to work and comparable conduct that fundamentally destroys trust. Even then, the courts examine whether a warning (Abmahnung) or an ordinary dismissal would have been sufficient, unless the breach is so serious that a warning would have been pointless.

If the reason cannot be proven, the dismissal fails. For a senior executive, that can mean continued employment, back pay and a weakened negotiating position. Before serving a fristlose Kündigung, assemble a documentation pack: a dated chronology, evidence for each fact, a record of when the decision-makers learned what (to demonstrate compliance with the two-week deadline), the employee’s hearing where required and the interest-weighing analysis. If that pack is thin, consider serving an alternative ordinary dismissal at the same time (hilfsweise ordentliche Kündigung), or pursue a negotiated exit instead. The works council must be heard on both dismissals.

Releasing the manager from work

Releasing the manager from work (Freistellung) can buy time for an investigation. Note, however, that employees in Germany generally have a right to actually be employed. A unilateral release is therefore only permissible where the employer has an overriding interest, or where the contract contains an effective release clause. Remuneration continues during the release.

Works council: the hearing under § 102 BetrVG

Where a works council exists, it must be heard before every dismissal, ordinary or extraordinary. This is not a formality. A dismissal declared without a proper hearing is invalid, however strong the underlying grounds.

The mechanics:

• Complete information. The employer must inform the works council of the employee’s personal data, including social data such as length of service, age and maintenance obligations, the type of dismissal, the notice period and termination date, and the reasons. Incomplete or misleading information makes the hearing defective.
• Deadlines. The works council has one week to respond to an ordinary dismissal and three days to respond to an extraordinary one. The dismissal must not be declared before the works council has responded or the deadline has expired. For an extraordinary dismissal, these three days must fit within the two-week period under § 626(2) BGB.
• Documentation. Keep a dated record of what was shared, when and how the works council responded. This is the first point the employee’s lawyer will examine.
• The right body. For managers with matrix or group-wide roles, identify early which German establishment, and therefore which works council, is responsible. Hearing the wrong body is as defective as hearing none.

Immigration and residence status

Many residence titles are tied to a specific employment. Ending the employment can therefore affect the manager’s right to stay in Germany. This is more than an administrative detail: it can shape the entire exit strategy.

Confirm the manager’s residence and work-permit status at the outset and establish whether it depends on the current employment. Employers of third-country nationals whose residence title is based on employment must notify the foreigners’ authority (Ausländerbehörde) within four weeks if the employment ends early (§ 4a(5) AufenthG). Where the residence right is at risk, transitional arrangements often become an important element of a fair, negotiated exit. Coordinate with immigration counsel from the start.

Preserving evidence and preparing for the Labour Court

Because the employer bears the burden of proof, evidence is the currency of any dismissal dispute. Preservation must begin before the dismissal is served. As soon as a termination becomes likely, suspend routine deletion cycles for all material connected with the manager and the grounds.

Your preservation checklist should cover:

• the personnel file, including contract, assignment letter, prior warnings, appraisals and disciplinary records;
• relevant emails and messages, secured against alteration;
• system and building access logs that corroborate the chronology;
• company devices, with a documented chain of custody;
• witness statements, taken promptly while recollections are fresh;
• CCTV footage where relevant, before it is overwritten.

Two cautions apply. First, data protection. Accessing emails and device data involves personal data and is subject to the GDPR and the Federal Data Protection Act (BDSG). Where technical monitoring systems are involved, the works council’s co-determination rights must also be observed. Evidence obtained unlawfully may be inadmissible and can trigger separate claims. Involve your data protection officer and keep the exercise proportionate and documented. Second, integrity. Any suggestion that material was deleted or manipulated is damaging in court. A clean, timestamped legal hold and chain-of-custody record protects your case.

Termination agreement (Aufhebungsvertrag)

A termination agreement is often the fastest and most controllable exit for a senior manager. It rests on mutual consent and requires no statutory ground. Because there is no dismissal, there is no works council hearing and no three-week deadline. Like a dismissal, it must be in writing with original signatures (§ 623 BGB).

A well-structured agreement covers:

• Severance. There is no general statutory entitlement to severance. As a reference point, German practice uses the following rule of thumb, which also appears in § 1a KSchG: Severance = 0.5 × gross monthly salary × years of service. For senior managers, negotiated amounts are frequently higher, depending on the litigation risk. If the court dissolves the employment, severance is generally capped at 12 monthly salaries, rising to 15 or 18 for older, longer-serving employees (§ 10 KSchG).
• Termination date and release from work, including the treatment of outstanding holiday.
• Variable remuneration and equity (bonus, LTI, RSUs, virtual shares), which in executive exits is often worth more than the severance itself.
• A settlement clause closing off further claims.
• Confidentiality and non-disparagement.
• Post-contractual non-compete, either confirmed with compensation or expressly waived.
• Reference (Arbeitszeugnis). Agreeing the wording in advance avoids a common later dispute.
• Tax and social security. Severance may benefit from the so-called one-fifth rule (§ 34 EStG); for internationally mobile managers, double taxation treaties may also be relevant. A termination agreement can lead to a blocking period for unemployment benefit (§ 159 SGB III). Recommend that the manager take independent advice.
• Transitional support, such as handover, return of property and support regarding residence status.

In urgent cases, a structured negotiation works best: present the offer against a clear and credible alternative, with the documentation ready for signature. One caution: threatening an extraordinary dismissal that a reasonable employer would not seriously have considered can allow the employee to rescind the agreement (§ 123 BGB). The Federal Labour Court also requires fair negotiations and does not permit the employer to exploit a situation of psychological pressure. A time-limited offer is not unfair in itself, but should be accompanied by a genuine opportunity to consider it.

Communications, operational continuity and reputation

A senior departure is visible, and silence creates its own narrative. Prepare a layered plan before the dismissal is served: a factual message to the immediate team, a controlled internal announcement and holding statements for clients and other external stakeholders. Keep messaging factual and consistent; speculation or disparaging remarks can become evidence or create defamation exposure.

Operationally, revoke system and building access at the moment the termination takes effect, protect confidential information and client relationships, and plan the handover of ongoing matters. Define escalation triggers for media handling in advance.

Timeline: 48 hours, 7 days, 30 days

• Within 48 hours: Contain risks, issue the legal hold, secure files, devices and logs, clarify the employer entity and applicable law, check residence status, instruct German employment counsel and decide on the route.
• Within 7 days: Complete the evidence pack and chronology, conduct and document the works council hearing, finalise the dismissal letter or the termination agreement, prepare communications and model the severance range. For an extraordinary dismissal, keep the two-week deadline in view at all times.
• Within 30 days: Serve the dismissal or sign the agreement, coordinate payroll and benefits, monitor the three-week deadline for a claim, prepare the defence file and make any immigration notifications.

Assign a named owner to each item and keep a single, dated master log.

Comparison: extraordinary dismissal vs. termination agreement

If the manager files a claim

If the manager challenges the dismissal, expect a claim within three weeks of receipt, often combined with claims for continued remuneration. Proceedings before the Labour Court begin with a conciliation hearing (Güteverhandlung), which in dismissal cases is scheduled with priority, usually within a few weeks. If no settlement is reached, a full hearing before the chamber follows.

Your defence file, meaning chronology, evidence, works council documentation and proof of delivery, determines both your litigation prospects and your negotiating leverage. Keep a credible settlement position throughout, because many cases are resolved at the conciliation hearing. Keep the legal hold in place for the duration of the proceedings. In contested executive dismissals, the side with the cleaner, better-documented process usually controls the outcome.

Who to involve

A cross-border executive dismissal is a multidisciplinary exercise. Involve German employment counsel from the start, coordinate with immigration counsel on residence questions, bring in IT and security for access revocation and device capture, consult your data protection officer on evidence handling, and involve tax advisers on the severance structure. Early, coordinated advice costs little compared with a protracted dispute or an invalid dismissal.

Conclusion

Terminating a manager assigned to Germany rewards discipline and punishes improvisation. The KSchG, §§ 622 and 626 BGB and the works council rules of the BetrVG give the employee strong protection, and the burden of proof lies with the employer. Employers who come through these situations with minimal cost and reputational damage are those who secure evidence before acting, respect the works council process, meet the two-week deadline for any extraordinary dismissal, get form, signature authority and delivery right, and keep a credible settlement option open throughout. Treat the first 72 hours as decisive, and bring in coordinated advice on employment, immigration and data protection law from the very beginning.

Sources

1. Kündigungsschutzgesetz (KSchG), statutory text
2. Bürgerliches Gesetzbuch (BGB), §622, §623 and §626
3. Betriebsverfassungsgesetz (BetrVG), works council rules
4. Bundesministerium für Arbeit und Soziales (BMAS)
5. Bundesarbeitsgericht (Federal Labour Court)
6. Bundesamt für Migration und Flüchtlinge (BAMF)
7. Deutscher Anwaltverein (DAV)
8. Max Planck Institute for Comparative and International Private Law
9. Court of Justice of the European Union (CURIA)