Termination not only needs a reason; it also has to meet formal requirements in order to be effective. With larger employers or those with international structures, a question often arises as to who is entitled to dismiss an employee. This article gives a perspective from Germany.
Termination not only needs a reason; it also has to meet formal requirements in order to be effective. Particularly in the case of larger employers or those with international structures, questions often arise: Who must sign the dismissal, and who is entitled to dismiss? Any superior or just the managing director? Does the worker need to be informed of this hierarchy? If so, how? Below is an overview.
Authorisation to terminate by law
Certain persons may be entitled by law to give notice to an employee:
- the managing director of a limited liability corporation (GmbH);
- members of the board of a public limited company (AG);
- partners of a general commercial partnership (OHG);
- general partners of a limited partnership (KG);
- the partners of a private partnership (GbR) together; or
- an authorised signatory.
Before executing a notice of termination, however, an employer must always check whether the designated person may sign the notice of termination alone or only with others. For example, the managing director of a GmbH may not be authorised to represent the company alone, in which case the termination notice must be jointly signed by several managing directors.
Authorisation to terminate by virtue of position
The right to terminate may be connected to an assigned position, as with an HR manager, for example. However, employees must be adequately informed in such a case; simply giving the person this function is not sufficient. Employees must know who the HR manager is, and that the HR manager is responsible for that location. However, an employee must assume that an HR manager is sufficiently authorised by the nature of the position alone and has the right to issue dismissals.
Authorisation to terminate by proxy with a power of attorney
The right to terminate may also result from a power of attorney that has been granted to the person giving notice of termination. In order to avoid a rejection of the dismissal by the employee, the original power of attorney must be attached to the termination notice.
Authorisation to terminate by proxy with notice
If the termination is to be declared by an authorised representative, the attachment of the original power of attorney can involve considerable administrative effort. Alternatively, then, the employer can 'announce' the proxy's right to terminate just once.
There are no formal requirements for this announcement. The authorisation must be clearly recognisable as an equivalent substitute for the original power of attorney. The announcement can be made publicly or implied. However, simply transferring the authority to terminate is not sufficient. Employees must be informed that the person giving notice of termination actually holds this position, and this must be done before a notice of dismissal is received.
In this respect, there are various ways of informing employees about a person's right to terminate, so in each individual case, employers must check whether the announcement of a proxy meets the requirements for notification.
The announcement can be made, for example, in the employment contract. To do this, the individual given authority to terminate must be specifically identified. It is not sufficient to just say that persons who hold a certain position are allowed to terminate employees. The employee should not have to investigate whether someone has the necessary authorisation.
Alternatively, announcements can be made by posting them on a bulletin board or intranet, with the prerequisite that the employer usually uses this channel for important messages to employees and employees know they can obtain information there. An employee must be able to find out easily who is entitled to terminate before a notice of termination is given. It does not matter whether the employee actually makes use of the resources available.
Before giving any notice of termination, an employer must check carefully to see whether a person signing a notice of termination is entitled to do so. This includes reviewing and, if necessary, adapting existing powers of attorney or internal responsibility regulations. In this way, employers can avoid a scenario where an employee rejects a termination notice due to, for example, a lack of proof of proper authorisation.
Previously published by Kliemt.HR
Originally published 04 May 2020
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.