Receiving a Notice of Termination for Change

1. What is a notice of termination with proposed changes?

If your employer terminates your current employment relationship and, in connection with the termination, offers to continue it under revised terms, this is known as a “termination with the option of continued employment under revised terms.” The new terms generally take effect after the notice period has expired.

This means that a notice of termination with proposed changes always includes a notice of termination of the contract under the previous terms.

Anyone who rejects the offer of modified terms or fails to accept it in a timely manner must expect the employment relationship to end as a result of the notice of termination that has already been given. The labor court can determine whether the termination is valid. The modification of the terms of the employment relationship can involve various changes.

These may include:

• changes to working hours,
• adjustments to job duties,
• relocation of the workplace,
• or revocation of a company car
• Elimination of agreed-upon additional benefits such as vacation pay, Christmas bonuses, or other bonus payments
• Adjustments to salary

Generally, the company may, within the scope of its managerial authority, specify the employees’ obligations regarding work duties, working hours, and the place of work. However, if these are sufficiently specified in the employment contract, the company has little leeway for changes and will, if necessary, proceed with a notice of amendment.

Conflicts arise particularly frequently when companies use instructions to strip employees of managerial functions or personnel responsibility, or to order a change in hierarchical level. In practice, employers often assume they can implement this solely through their right to issue instructions. However, if the previous managerial role, personnel responsibility, or hierarchical position is contractually stipulated or defines the nature of the work to be performed, an instruction alone is generally insufficient; in such cases, a notice of termination with the option of amended terms may be required. Whether this applies in a specific case depends primarily on the wording of the employment contract and the previous job description.

If this is the case, the company may issue a notice of termination with the intent to modify the employment contract in order to avoid a termination due to illness or operational reasons, or to reorganize the internal structure.

Of course, the company can only modify the contractual relationship under certain conditions. To the extent that general protection against termination applies, the change in working conditions must be socially justified (Sections 1 and 2 of the German Employment Protection Act (KSchG)). Whether this protection applies depends in particular on the length of employment and the size of the company.

This means that a notice of termination with the option to modify terms, like any other termination, can be challenged and reviewed in court. Here, too, the general deadline for filing a lawsuit is three weeks after receipt of the written notice of termination. The legal basis is § 4 KSchG.

It is crucial to note that raising a reservation with the employer and filing a lawsuit for protection against changes in employment conditions with the court are two separate steps. Stating a reservation does not replace filing a lawsuit. In cases with a short notice period, there may be less than three weeks to raise the reservation.

It frequently happens that notices of termination with a proposed change of employment terms do not withstand legal scrutiny and fail to meet one of the following requirements:

• The notice of termination with the option to accept modified terms must be in writing; electronic form is not permitted (§ 623 BGB).
• To the extent that general protection against termination applies, the company must prove that the change is justified by reasons related to the employee, their conduct, or operational needs, and that it is limited to the necessary adjustments. In particular, it must be examined whether continued employment under the previous terms is possible or whether another, less severe measure is available. This also applies to reasons related to the employee, such as chronic illnesses.
• The statutory notice periods (or those specified in the employment contract or collective bargaining agreement) must be observed.
• The new contract offer must be reasonable and may relate only to the unavoidable changes. The new terms and conditions must be precise, clear, and easily recognizable.
• Special protection against termination must be observed. If there is a competent works council, it must be duly consulted before the notice of termination with modification is issued. This follows from Section 102(1) of the Works Constitution Act (BetrVG).

To determine legally whether all requirements have been met, please seek legal advice.

2. Receiving a Notice of Modification: Here’s What You Can Do

First of all: We advise you not to accept the offer of modified employment terms too hastily. However, it is imperative that you consult promptly with an experienced certified specialist lawyer in employment law, as—just as with a termination notice—a 3-week deadline for filing a lawsuit applies here as well!

2.1 An important option: Accepting the offer of modification with reservations

If you receive a notice of termination with proposed changes, do not reject it hastily. Otherwise, it must be determined whether the termination notice that has already been issued effectively terminates the employment relationship.

One important option is to accept the offer of modification subject to the condition that the change in working conditions is not socially unjustified. Whether this approach is possible and advisable in your case should be examined promptly. Two steps must be distinguished here: The reservation must be communicated to the employer within the notice period, but no later than three weeks after receipt of the notice of termination (Section 2, Sentence 2 of the German Employment Protection Act (KSchG)). In addition, an action for protection against dismissal must generally be filed with the labor court within three weeks of receiving the written notice of termination. If the notice period is shorter than three weeks, there may be less time available to make the declaration of reservation.

Seek assistance from experienced certified specialist lawyers in employment law when drafting the notice of reservation.

The reservation of rights should be sent in such a way that proof of its timely receipt by the employer can be provided. Merely sending it is not sufficient; registered mail alone does not guarantee timely receipt in every case.

Practical Tip: Lay out your current contract, the new offer, and your most recent pay stubs side by side. Note any changes to your duties, working hours, work location, base salary, and bonuses. Also, record when the notice of termination was received and when the employer received the declaration of reservation. This will make the scope and financial implications of the offer clear.

If you receive a notice of termination with proposed changes, we recommend that you seek legal advice immediately to discuss the next steps and your options. This is essential, if only because of the ongoing deadline for filing a lawsuit and the deadline for accepting the offer. You can then have the legal validity reviewed by a labor court and file a lawsuit for protection against wrongful termination.

If you have validly accepted the offer of modification subject to conditions and lose the legal dispute, the employment relationship will continue under the new terms. You should never file an action for protection against termination without legal advice and support from a certified specialist lawyer in employment law.

Please note: The lawsuit must be filed within the three-week filing deadline.

Read more about claims challenging a dismissal in this article

2.2 The second option: Rejecting the notice of termination with an offer of amended terms

Are you rejecting the offer of change contained in the notice of termination with proposed changes? In that case, the sole issue is whether the termination notice contained in the notice of termination with proposed changes is valid or not.

The same rule applies here: For the termination not to be considered valid under the law, an action for protection against dismissal must be filed within three weeks. This is a statutory deadline. If this deadline is missed, the termination is generally considered valid.

There will always be cases in which employees may have been waiting for this “sign” and view a notice of termination with a proposed change in duties as an impetus to change. In practice, this is often followed by negotiations regarding a mutual termination agreement.

Dissatisfaction with one’s duties, work environment, or career prospects is not a good foundation for a balanced and fulfilling working relationship. Sometimes, a small nudge is all it takes. If you decide to reject the notice of termination with the offer of alternative terms, there may be understandable, personal reasons for doing so. In many cases, however, it can be helpful to speak with a trusted person beforehand.

2.3 Your third option: Accepting the notice of change

As a third option, you naturally have the choice to accept the changed terms immediately and continue your employment under the adjusted conditions once the notice period has expired.

This will likely be the case especially if your working conditions change—or must change—due to an illness, because certain tasks can no longer be performed. Responsible employers will hold preliminary discussions and try to find a mutual solution.

3. Can a notice of termination with proposed changes result in a lower salary?

In many cases, a notice of termination with a change in employment terms is also accompanied by a reduction in salary. Since negative changes in salary have significant consequences for the employee, even stricter requirements apply in such cases.

A mere reduction in salary, with the employee’s duties otherwise remaining unchanged, is almost never permissible under the protection of the Unfair Dismissal Protection Act. It may only be considered as a last resort in strictly limited exceptional cases. The employer must therefore provide a very specific explanation of why the salary reduction is unavoidable and why less severe measures would not suffice.

Companies seek to implement salary cuts particularly when their very existence is threatened. If the issue involves solely a reduction in pay while the employee’s duties remain otherwise unchanged—and general protection against dismissal applies—the employer must demonstrate that the particularly strict requirements for such a restructuring measure are met. This must be distinguished from a “change-of- contract notice,” in which a different, lower-paying position is offered due to changes in employment opportunities.

A mere reference to economic difficulties is not sufficient. For a valid notice of change of employment aimed solely at reducing pay, the Federal Labor Court requires, among other things, that

• the existing personnel cost structure would lead to further losses that the business can no longer absorb,
• these losses would foreseeably result in staff reductions or even a plant closure,
• a comprehensive restructuring plan is in place that exhausts less drastic measures,
• the proposed change is appropriate and necessary and does not go beyond what is required to achieve the intended purpose.

According to case law, particularly strict requirements apply to a mere reduction in pay. It is conceivable only as a last resort if a concrete economic emergency is clearly demonstrated and less severe measures are insufficient.

As you can see, a salary reduction as part of a modification notice based on economic grounds is not straightforward; while it is, in principle, possible as a last resort, it is very difficult for the company to enforce.

4. An Overview of the Notice of Change

4.1 Extraordinary (immediate) notice of change

An extraordinary—that is, immediate—notice of change is also possible in principle. However, it requires good cause: It must be unreasonable for the employer to continue the employment relationship under the previous terms until the end of the regular notice period. The mere desire to change the contract on short notice is generally not sufficient for this. In practice, a contract amendment is rarely so urgent that it can be enforced without observing a notice period. Extraordinary termination with modification is therefore generally conceivable only in exceptional cases and must be subject to particularly strict legal scrutiny.

• A notice of termination with an offer to amend combines a termination with an offer to continue the employment relationship under amended terms
• Terminations with an offer of amended terms may concern various aspects of the employment
• relationship The legal requirements must be met
• A mere reduction in pay via a notice of termination with an offer to amend the contract must meet particularly strict requirements
• Carefully weigh your options for responding while acting promptly. The deadline for filing a lawsuit is generally three weeks from receipt; a separate deadline applies for a conditional acceptance.
• The options: acceptance, acceptance with reservation, and rejection
• It is recommended that you consult with an employment lawyer as soon as possible due to the ongoing deadlines.

5. FAQ

5.1 What is a notice of termination with an offer of amended terms?

A notice of termination with an offer to amend combines a termination of the employment relationship with an offer to continue it under amended terms. The offer is made in connection with the termination; the new terms are generally intended to take effect after the notice period expires. The changes may affect various aspects of the employment relationship.

5.2 What can you do if you have received a notice of termination with an offer of amended terms?

One important option is to accept the offer of modified terms with a reservation. You should promptly assess whether this is possible and advisable in your case. The reservation must be communicated to the employer within the notice period, no later than three weeks after receiving the notice of termination. In addition, an action for protection against termination must generally be filed within three weeks of receiving the written notice of termination. It is important to seek legal advice in a timely manner.

The second option would be to reject the notice of termination with an offer of amended terms. If you reject the offer of amended terms contained in the notice, the sole issue then becomes whether the termination notice contained therein is valid or not.

Your third option is to accept the notice of termination with proposed changes. If you accept the notice, you may continue your employment under the revised terms after the notice period has expired.

5.3 Can a notice of termination with a change in terms result in a lower salary?

Yes, notices of termination with proposed changes may involve salary reductions. Whether this is permissible depends on the position offered and the reason for the change. If general protection against dismissal applies, particularly strict requirements govern a mere reduction in pay for the purpose of restructuring; less severe measures must first be exhausted.

6. Key Legal Provisions for Further Reading

• § 1 KSchGand§ 2 KSchG :Social protection against dismissal and acceptance subject to reservation
• § 4 KSchG :Three-week deadline for filing a lawsuit
• § 623 BGB :Written Form of Termination
• Section 102 of the Works Constitution Act (BetrVG) :Consultation with the Works Council
• § 106 of the Trade Regulation Act (GewO) :Employer’s Right to Issue Instructions
• § 7 KSchG :Consequences of Missing the Deadline for Filing a Lawsuit

7. Relevant case law on the classification of notices of termination with the offer of amended terms

Federal Labor Court (BAG), Judgment of January 26, 2017: 2 AZR 68/16 : Ambiguous notice of termination with the offer of modified employment: The offer of modified employment must be sufficiently specific so that employees can recognize what work they are expected to perform in the future. If this clarity is lacking, the modification may be socially unjustified.

Federal Labor Court (BAG), Judgment of January 26, 2012: 2 AZR 102/11: “Superfluous” Notice of Modification: If the desired change is already covered by the employer’s managerial authority, the employer does not need to issue a notice of modification. The proposed terms are then already in effect; an action for protection against modification is not the appropriate legal remedy in this regard.

Federal Labor Court (BAG), Judgment of May 18, 2017: 2 AZR 606/16: Necessity and Proportionality: The proposed changes must be appropriate and necessary and must not deviate from the previous terms of the contract any further than is necessary to achieve the objective.