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EMPLOYMENT

10 golden rules to know if you lose your job in Germany

Nobody wants to get the sack, but it can happen to us all. We look in detail at the rights you have if you are given a dreaded job dismissal.

10 golden rules to know if you lose your job in Germany
Photo: DPA

Thankfully, the German economy is purring along at the moment and unemployment is at record low levels. This means that the usual reasons for mass layoffs, such as companies cutting budgets out of fear for the future, aren’t there.

Nonetheless, the Air Berlin bankruptcy last year showed that even in the best of times, badly run businesses can still go belly up.

That's why we are bringing you the rules that you need to know if you are told by your employer that you won’t be needed anymore.  

You have three weeks to appeal your sacking

If you think that your dismissal has breached the terms of your contract, then you have three weeks to file a legal complaint. This complaint, known as a Kündigungsschutzklage, must be made at your local labour court. If you don’t appeal within that time frame, then it’s too late.

You should also remember that the termination of your contract is only valid if it comes in writing. If your boss is like Donald Trump and likes to fire people via Twitter, don't worry – that's not legally valid.

Your dismissal needs to come on official company paper and be signed by your boss, otherwise for all legally relevant purposes you can ignore it.

Knowing how your contract has been terminated

There are several ways you can be sacked in Germany. You could receive a Kündigung (dismissal) that is either personenbedingt, verhaltensbedingt or betriebsbedingt.

If your termination is personenbedingt, it means that your employer judges that you can no longer perform a key requirement of the job. For example, if you need to be able to drive for your work but lose your licence, this could be grounds for a personenbedingte Kündigung.

If your termination is verhaltensbedingt, your employer believes that you have broken the terms of your contract though improper conduct.

Lastly, a betriebsbedingte Kündigung is justified through imperatives of the company – basically they can’t afford to keep you anymore.

Photo: DPA

Knowing your Frist

If you read your contract you will come across the key words Kündigungsfrist. This will tell you the amount of notice your employer needs to give you when they sack you.

Three months is a standard length of a Frist, but the Frist generally becomes longer the longer you have been employed by the company. Thus, if you have worked for a firm for ten years, you have the right to a Frist of four months, whereas if you have been there 20 years you have a right to seven months.

You should note, though, that if you are still in your Probezeit (trial period), your employer only needs to give you two weeks' notice. The maximum length of a Probezeit is six months.

Signing on for welfare

If you lose your job, you need to let the Federal Employment Agency (BA) know about it within a day of receiving an official letter of dismissal. It is vital that you tell them the day on which you will become unemployed.

Failure to do so may result in them delaying your first payment and reducing the payment you receive. When you first inform the BA that you have lost your job, you can do so via email or on the phone.

But you also have to go to your local BA office in person on a second occasion, and you need to do this at the latest on your first day of unemployment.

Why you have to inform them once on the phone and once in person is a mystery. But, as is the case with most German bureaucracy, you just have to bite the bullet and do it.

Knowing what Arbeitslosengeld is

The silver lining to the cloud of dismissal is that you are entitled to a fairly decent amount of money over the next year.

As someone in full-time employment, you have been paying into joblessness insurance and you have a right to withdraw this over a 12-month period.

The only requirement for receiving this money is that you have been in a job which is subject to compulsory insurance payments for 12 of the last 24 months. There are also allowances made if you have had to take time off work to care for a newborn child or because you were sick.

In plain English, if you have had a regular job for at least one of the past two years and that job pays more than a mini-job, you have a right to Arbeitslosengeld.

Photo: DPA

Knowing how much you get

The BA will start paying you Arbeitslosengeld from the first day of your unemployment and it normally amounts to 60 percent of your last after-tax salary.

If you have children, you will get 67 percent of your post-tax salary. There are other variables which affect the size of your joblessness payments. Luckily the BA has a handy calculator which allows you to work out how much you are entitled to.

Germany also recognizes that for some people – particularly parents – receiving two thirds of one’s salary isn’t enough to cover all your expenses.

For that reason they allow you to work a Nebenjob (side job) for a maximum of 14 hours and 59 minutes per week. They stress though that anyone who works a single minute longer completely loses their right to Arbeitslosengeld.

Doing a Nebenjob could also affect how much joblessness money you are entitled to, so it definitely makes sense to talk it through with your case worker at the BA first.

Being sacked also opens up opportunities for developing your skills. You can get the BA to pay for a course that will help your job prospects. For foreigners this could mean doing a German course to take your language skills up to the next level.

Knowing how long you get payments for

You generally have a right to these payments for 12 months, but this is also partly dependant on how long you were in employment beforehand.

It is also important to note here that you have a right to Arbeitslosengeld for nine months if you quit your job, but you have to wait three months for the payments to begin. 

The BA also warns that, if you lost your job because of your behaviour (a verhaltensbedingt Kündigung), they can block payments for up to 12 weeks.

If you have still not found a job after 12 months, you lose your right to receive Arbeitslosengeld. The BA then starts to pay you Hartz IV, which is a paltry €419 a month.

Your obligations during joblessness

There are certain things that the BA requires you to do when you are in the first 12 months of unemployment. But these are fairly lax in comparison with the strict requirements they place on the long-term unemployed.

The BA threatens on its website that it will block your payments if you do not take on a job that they have found for you, do not participate in training courses they put on, or do not prove that you are trying to find a job.

In practice, you have to show them that you have applied for five jobs every month. As many qualified people will want to wait for the right job to come along, the reality is that you will end up sending out applications just to jump through this hoop. 

You also have to go into your local BA office for three meetings through the 12-month period.

You don’t need to be in Germany

A particularly important rule of joblessness for readers of The Local to know about is that you don’t have to be in Germany when you receive your payments.

The BA states that EU citizens can still receive the payments as long as they are looking for employment in other EU countries or in Switzerland.

All you need to do to be eligible for this is to register as jobless in Germany in the normal way and to officially inform the BA that you are going to be looking for work abroad.

You can delay picking up your first payment

If you feel like taking time off, you can delay picking up your joblessness money.

As mentioned above, a requirement for being eligible for payments is that you have been in a compulsory insurance-based job for 12 months in the past two years. That means that if you were employed for a full year before you lost your job, you can take a year to do whatever you want. When you come back you still have a right to 12 months of payments.

FIND A JOB: Browse thousands of English-language vacancies in Germany

For members

WORKING IN GERMANY

7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network. 

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