In past years, case law has increasingly dealt with a special form of termination that is largely unknown to the wider public and seldom considered by human resources departments: dismissal on grounds of suspicion.

The Nature of Dismissal on Grounds of Suspicion

In this form of termination, an employee (or a board member such as a managing director or management board member) may be dismissed on grounds that he or she is under suspicion of having committed a serious breach of duty. In many respects, dismissal on the grounds of mere suspicion seems odd, because the dismissed employee may turn out to have been innocent of the allegation. Nevertheless, as grounds for dismissal, suspicion ranks equally with a proven offense. This leads to the core problem pertaining to dismissal on grounds of suspicion: weighing the employee's need to be protected from unjustified accusation and dismissal against the employer's need to facilitate termination of employment when the type and seriousness of the suspected offense make it impossible for the employee to be trusted, even if it is theoretically possible that he or she is innocent. How justice can be achieved in such a case amounts almost to a philosophical question.

Nevertheless, one thing is for sure: this form of termination constitutes a special form of dismissal on grounds of conduct. It usually takes the form of dismissal without notice, and in most cases, an accusation relevant under criminal law has already been made. However, the Federal Labor Court (Bundesarbeitsgericht ; BAG) has emphasized that the deciding factor is not whether a criminal offense has been committed, but whether there has been a violation of a "contractual primary or collateral duty" (BAG, judgment dated June 21, 2012, 2 AZR 694/11—a case, ironically, that dealt with bribery, i.e., a criminal offense).

The Particularities of Dismissal on Grounds of Suspicion

To protect employees against reckless suspicion, the court has held that any suspicion must be strong. This elusive criterion, for which the employer bears the full burden of proof, often causes interpretation problems in practice, since an employer that is certain of its employee's guilt can simply dismiss the employee without notice on grounds of offense. (If the incident under suspicion can realistically be explained just as well by factors that would not justify termination, the dismissal will be invalid (BAG, judgment dated June 21, 2012, 2 AZR 694/11).) In particular, a potential indictment by the public prosecutor's office, the institution of main proceedings, and/or a possible conviction would support the employer's position. At least in the latter case, the employee might as well be terminated on grounds of offense, even if the conviction was made in a trial based on circumstantial evidence.

In contrast to dismissal on grounds of offense, dismissal on grounds of suspicion requires a prior hearing for the employee concerned. In the hearing, it is important for the employee to be confronted with the substantiated criminal charge, because he or she must have the opportunity to respond with a substantiated statement; assessments or overly general accusations are not sufficient. However, the employer is not required to produce evidence or introduce witnesses for the prosecution, and indeed, no formal criteria therefor have been established under case law. Thus, in a recent case in which the employee opted not to make a verbal statement, the BAG did not fault the employer for failing to submit a list of questions in advance or to set a one-week time limit for the submission of a statement (BAG, judgment dated May 24, 2012, 2 AZR 206/11). The BAG did not even require the employer to state explicitly that it planned to terminate the employee; however, the court did hold that any threat to ongoing employment must be recognizable.

The employee, in turn, is not required to submit a statement, but the employer's suspicions are likely to increase if the employee fails to do so or if he or she makes only a general statement (i.e., if the employee categorically rejects the accusation without providing details), despite being confronted with substantiated facts that he or she could address in a more substantiated manner.

Beginning of the Period During Which the Employee May Be Terminated

If the employer considers dismissal without notice on grounds of suspicion, the provisions are basically identical to those for dismissal on grounds of offense: the employer may dismiss the employee without giving notice within two weeks of having learned of the relevant facts (Section 626 Para. 2 of the German Civil Code). In this respect, case law concedes a considerable scope of discretion to the employer. As long as the employer observes the two week period, it may, for instance, terminate the employee after the hearing, which usually concludes the employer's own investigations (with the employer determining for itself when it has obtained sufficient evidence of wrongdoing). Alternatively, the employer may await the result of an investigation by the public prosecutor's office, indictment before the criminal court, or even the institution of main proceedings. According to case law, there may be several points in time when a corresponding period starts to run (e.g., after the hearing of the employee, upon the employee's indictment by the prosecution, or upon the criminal court's acceptance of the indictment), and against this background the employer is allowed to serve another termination letter, as the bringing of a criminal charge is recognized as a way of "strengthening the suspicion" (BAG, judgment dated January 27, 2011, 2 AZR 825/09).

Considerations of Procedural Tactics

According to the foregoing, in many cases it may be reasonable for the employer to exercise the option of serving another termination letter. Furthermore, there may be cases in which the employer actually considers the commission of the offense to have been proved but, as a precaution, intends additionally to dismiss the employee on grounds of suspicion. This is possible in principle, but it may involve additional challenges, since commission of an offense and suspicion thereof are formally deemed to be different reasons for termination.

In such cases, if a works council exists, it must be heard with respect to dismissal on both grounds. In addition, with regard to dismissal on grounds of suspicion, the works council must be informed about the statement submitted by the employee during his or her hearing—which can necessitate a separate timeline. Depending on the circumstances, the employer may wish to hear the employee with respect to the potential termination on grounds of offense so that synchronization of dismissal on either ground may be procured. After all, employers do not have to worry that dismissal on grounds of suspicion might have been the wrong choice if it is almost certain that the employee has committed the offense, as case law assumes that the two dismissal options do not coexist without connection.

If the court is convinced of the commission of the offense, it will consider dismissal on grounds of suspicion to be effective. However, the other prerequisites in this regard must be satisfied. For instance, it would be fatal for the employer if the employee committed the offense and the court was convinced thereof, but the employer dismissed the employee only on grounds of suspicion—without the required hearing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.