The Kündigungsschutzgesetz (KSchG), or Dismissal Protection Act, is the central German statute governing the termination of employment relationships. It applies once an employee has completed six months of continuous service and the employer regularly employs more than ten full-time equivalent workers. Below these thresholds, the general civil-law rules of the Bürgerliches Gesetzbuch (BGB) continue to apply, offering considerably weaker protection.
Under the KSchG, a dismissal is only socially justified (sozial gerechtfertigt) if grounded in one of three categories: reasons relating to the person (personenbedingte Kündigung), reasons relating to conduct (verhaltensbedingte Kündigung), or compelling operational requirements (betriebsbedingte Kündigung). Employers must also observe proper notice periods and, where a Betriebsrat (works council) exists, consult it before issuing any dismissal notice.
Employees who believe a dismissal is unlawful must file a claim with the Arbeitsgericht (labour court) within three weeks of receiving written notice. If the employer fails to demonstrate social justification, the court may order reinstatement or award a compensatory severance payment (Abfindung). Multinational employers operating in Germany should factor these obligations into workforce planning from the outset.