On February 12, 2015, the German Federal Labor Court had to deal with the basic requirements for termination on grounds of suspicion and set new benchmarks for a valid termination (Case 6 AZR 845/13).

General Principles for Termination on Grounds of Suspicion

According to German law it is legal to base a termination of an employee solely on suspicion of unlawful behavior of the respective employee. This however, is only possible, if the employee is under suspicion of committing a crime or to have caused a serious infringement of the contract. A termination on these grounds is justified, if the suspicion is of severe nature and if it is highly likely that the terminated employee has actually infringed the contract. The suspicion needs to be grounded upon facts which objectively ensure the accused behavior in the eyes of a fair and prudent employer.

If employers intend to give notice of termination on grounds of suspicion, thus notice of termination in cases in which it is not (yet) definite that there have been breaches of contract, they must investigate the cases thoroughly. They may not look into only the circumstances that incriminate the employees, but must also take exonerating circumstances into account. They must therefore interview the employees before giving notice of termination on grounds of suspicion and give them the opportunity to defend themselves against the accusations and to present their views on the matter. If this is not done, the termination will already be invalid because of this formal deficiency.

Mandatory Interview before Termination

The employee must, as a rule, be interviewed one week after the circumstances establishing the suspicion have become known, so the employer is also under (time) pressure. The interview must not be delayed. In the exceptional cases that an employee refuses to participate, prevents the interview (for example, by calling in sick several times) or is even in investigative custody, the interview can be dispensed with. The employer may then not "rest", however, because the two-week period for giving notice of dismissal is then not suspended.

Prerequisites for a Proper Interview – Court Provides Clear Guidelines

It has been debated to date in case law and legal commentary whether an employer must inform an employee being summoned to an interview in preparation of termination on grounds of suspicion of the reason for the interview. According to one view, the employer's summons to an interview before termination on grounds of suspicion must include the subject matter of the interview and also make it possible for the employee to be accompanied by a trusted third party to the interview.

Apprentice was Suspected to Steal Money

In the case at hand, an apprentice training to become a banker had been instructed to count the money in the branch's night depository boxes. The bank later discovered a deficit of €500. When the apprentice was confronted with this in an employee interview, he mentioned, according to the bank, the amount of the deficit of his own accord, although up to this time only an indefinite teller difference had been mentioned. The bank then terminated the training relationship on grounds of the suspicion that the apprentice had stolen the missing amount, based on the disclosure of perpetrator's knowledge.

The apprentice brought an action objecting to the dismissal, claiming that a training relationship could not be terminated on grounds of suspicion. Moreover, he had not been properly interviewed, because he had not been informed before the interview in question that he was to be confronted with a teller difference. The possibility of having a trusted third party attend the interview had also not been pointed out to him.

Termination was valid

The court rejected his appeal. The judge came to the conclusion that a training relationship could also be terminated on grounds of suspicion. This applies in any case when the suspicion would make it objectively unreasonable to expect the employer to continue the training, even when the particularities of a training relationship were taken into account. This was the case here. The interview did not have any formal deficiencies. Neither a previous disclosure of the subject matter of the interview nor a reference that it was possible to contact a trusted third party was necessary.

Practical Tips

In the future, employers will not have the "burden" of having to inform employees to be terminated of specific accusations before they are interviewed and also of having to give employees the opportunity to have a trusted third party present at the interviews. This can prevent, in particular, a situation in which employees – after being informed of the subject matter of the interview, it thus being clear to them what is "looming" – "disguise" the facts by attempting to cover their tracks or elude the interview and thus put the employers in the awkward position of having to decide whether they have done everything necessary to clarify the facts and the interview has "failed" only because of the employees' lack of cooperation, because only in this exceptional case is the interview unnecessary.  It is still not permissible, however, to summon an employee to an interview under false pretenses (e.g. to discuss overtime).