Germany: Warnings And Dismissals For Employees On Gardening Leave: Practical Tips From Germany

What happens if an employee has been terminated and is on gardening leave when another reason for terminating his or her employment comes to light? This article provides practical tips for employers.

If an employer terminates an employee's employment (e.g. for operational reasons) and releases him or her from the obligation to work for the period until the employment relationship is terminated (often referred to as gardening leave), the employer may become aware of circumstances during the gardening leave period which occurred before the notice of termination was given and which justify a further (often conduct-based) termination or at least a warning (e.g. insulting a colleague). This article will explain to what extent it is possible and reasonable to issue a warning in these circumstances and under which conditions a further dismissal or a so-called 'extension of reasons for dismissal' is possible and reasonable. There may be a need for action in particular in cases in which the notice of termination already given may not stand up to judicial review (for lack of an effective reason for termination).

Warning during gardening leave

In principle, a warning can still be issued to an employee who has already been released from work. In particular, if the employer wants to give a new (conduct-related) notice of termination because the employee has insulted a colleague, for example, a formal prior warning is in most cases (independent of the leave) even mandatory. Only where there are significant breaches of duty or if it is not to be expected that the employee will change his or her behaviour, a warning would not be necessary and a (renewed) termination of the employment relationship would be possible. However, a warning during gardening leave runs the risk of being ineffective, because the purpose of the warning, which is to urge the employee to remedy his or her behaviour,, cannot be fulfilled if the employee is no longer working due to gardening leave. However, the employer should issue a warning in particular if the grounds for dismissal already issued is on 'shaky ground' and there is a possibility that the employee will return to his or her job (possibly after a successful lawsuit against the dismissal). It should be noted, however, that the right to issue a warning notice can be forfeited, so the employer cannot 'keep the warning in its back pocket' for an unlimited period of time.

'Further' dismissal (especially extraordinary dismissal)

For employees who have already been dismissed and released from work, employers can consider a declaration of a 'further dismissal'. If an extraordinary notice of termination is imminent, its legal requirements must be observed. This includes clarifying the facts of the termination and, in case of suspicion, hearing the employee. Gardening leave does not prevent the employee from being heard. In addition, a preclusive period applies for extraordinary termination, meaning that the employer is required to issue the extraordinary dismissal within two weeks. This two-week period begins at the point in time at which the employer becomes aware of the facts relevant to the termination.

Extensions of reasons for dismissal

Circumstances of which the employer subsequently becomes aware could also be used for a so-called 'extension of reasons for dismissal'. For this, the additional reasons for the termination must have already existed at the time of termination. Furthermore, the additional reasons must not have become known until receipt of notice of termination. In terms of litigation, it should be noted that the additional reasons should be introduced into the legal action immediately after the employer becomes aware of them to avoid rejection due to late submission of the facts. These subsequent grounds can be completely different reasons for termination which unrelated to the initial grounds in terms of facts and/or time. However, the extension of reasons for dismissal also create legal hurdles, because the works council must be (re)consulted on the reasons which have become known subsequently.

Practical tips

So what is to be done? As is so often the case, it depends on the individual case. If an employer becomes aware of other reasons for termination after an employee has been given notice of termination and released from work, it is important to examine carefully what options the employer has. The employer should consider a warning or even a 'further notice of termination' (possibly even an extraordinary termination without notice) or the extension of reasons for dismissal.