One Wrong Signature, a Million-Euro Burden: How German Courts Are Redefining Termination Risks
Published on 06/18/2026 at 07:17 | Redaktion boerse-global.de
Dismissals in Germany have become a minefield where a single procedural lapse can trigger massive financial penalties. Recent rulings from the country’s top labour and civil courts highlight the growing exposure companies face — from boardroom removals to mass layoffs and employee dishonesty.
The savings bank Sparkasse Pfullendorf-MeĂźkirch is living that nightmare. The Oberlandesgericht Stuttgart ruled in late 2024 that the October 2024 removal of board member Carsten Knaus was unlawful. With a contract running to May 2029, the institution now faces millions in salary, pension contributions and legal fees. The sparkasse has appealed to the Bundesgerichtshof (BGH), but the case already underscores the danger of mismanaging executive departures.
Procedural errors also haunt the legacy of Volkswagen’s diesel scandal. The BGH voided a D&O insurance settlement agreement in September 2025 because the meeting’s agenda had been improperly drafted. Now compensation agreements with former board members must be renegotiated — a costly reset for a company still grappling with the scandal’s fallout.
Mass redundancies are no safer. The European Court of Justice clarified in October 2025 that a failure to properly notify the authorities under Section 17 of the Kündigungsschutzgesetz (dismissal protection law) renders all terminations invalid. A belated notification does not fix the error. German national courts are still weighing the precise consequences, but the ruling immediately raised the stakes for any company planning large-scale job cuts. Notably, the competent local employment agency is determined by where the economic impact of the layoffs is felt, not the company’s headquarters. And collective agreements on business structure carry no weight for the EU definition of a “establishment.”
Meanwhile, the Landesarbeitsgericht Köln stiffened penalties for employees who lie during litigation. In January 2026, the court ruled that knowingly making false statements in a dismissal protection case justifies a fresh — even summary — termination. The deception does not need to have influenced the court’s decision; the mere attempt suffices. Employers now have a powerful tool to challenge dishonest behaviour in the courtroom.
Sick notes are also under greater scrutiny. The Landesarbeitsgericht Schleswig-Holstein held that when a doctor’s certificate covers exactly the notice period following an employee’s own resignation, its evidentiary value collapses. The worker must then prove they were genuinely ill, or the employer may stop paying sick leave.
With stakes that high, choosing between a formal dismissal and a mutual termination agreement (Aufhebungsvertrag) demands careful strategy. A redundancy dismissal requires compelling operational reasons and a proper social selection based on tenure, age, and dependents. Special protection for severely disabled employees, pregnant women, and works council members adds further hurdles. An Aufhebungsvertrag offers speed and legal certainty, but it can trigger up to twelve weeks of blocked unemployment benefits. Lawyers often advise employees to file a wrongful dismissal claim within the three-week deadline – a move that paid off for a woman in Carinthia who, after 38 years of service, secured a net settlement of roughly €33,000.
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