Suspicion-Based Dismissal – Definition, Requirements & Practical Tips

A suspicion-based dismissal (Verdachtskündigung) is a termination issued by an employer because there is a strong suspicion that the employee has committed a serious breach of duty — even if the act itself has not yet been proven. It is only legally valid if certain conditions are met: the suspicion must be based on objective facts, the employee must be heard before the dismissal is issued, and a balancing of interests must have taken place. If even one of these conditions is missing, the dismissal is generally invalid.

What Is a Suspicion-Based Dismissal?

A suspicion-based dismissal is a specific form of conduct-related termination under German labour law. It applies in situations where the employer cannot fully prove a breach of duty, but is seriously convinced — on the basis of concrete facts — that the employee has committed a serious misconduct. The Federal Labour Court (Bundesarbeitsgericht, BAG) has recognised this legal concept in consistent case law and clearly defined its requirements.

Typical grounds for a suspicion-based dismissal include: suspected theft or embezzlement of company funds, fraud against the employer, sexual misconduct in the workplace, or other serious violations of contractual duties.

Distinction from Fact-Based Dismissal

Suspicion-based dismissal and fact-based dismissal (Tatkündigung) are often confused, but they are legally distinct:

• Fact-based dismissal (Tatkündigung): The breach of duty has been proven. The employer dismisses the employee on the basis of the established act.
• Suspicion-based dismissal (Verdachtskündigung): The act has not (yet) been proven. The employer dismisses because the strong suspicion alone has so severely undermined trust in the employee that continued employment appears unreasonable.

Both types of dismissal may be issued simultaneously — the suspicion-based dismissal then serving as a so-called alternative dismissal (Hilfskündigung) in the event that the fact-based dismissal fails in court.

Requirements for a Valid Suspicion-Based Dismissal

The BAG has established clear requirements for suspicion-based dismissals across numerous rulings. All four conditions must be met cumulatively.

1. Strong Suspicion Based on Objective Facts

The suspicion must be "strong" — meaning it must be grounded in concrete, objectively verifiable facts. Rumours, speculation, or mere conjecture are not sufficient. The suspicion must be strong enough that a reasonable, unbiased employer would be genuinely convinced that the employee is responsible for the alleged misconduct.

Furthermore, the suspicion must be capable of fundamentally destroying the trust that is essential to the employment relationship. This is particularly the case with property offences, fraud, or serious breaches of the duty of loyalty.

2. Employee Hearing (Mandatory!)

Before issuing a suspicion-based dismissal, the employer must unconditionally hear the employee concerned. This obligation to hold a hearing is not a mere formality — it is a substantive condition for the dismissal's validity. The BAG reaffirmed this in its landmark ruling of 29 November 2007 (Ref. 2 AZR 724/06).

What the hearing must include:

• The employee receives a concrete description of the alleged offence.
• A reasonable period is granted for the employee to respond.
• The hearing and its outcome are documented in writing.
• There must be no element of surprise: the employee must understand exactly what is being alleged.

Once the employee has responded, the employer must genuinely consider that statement. If it contains exculpatory information, this may prevent the dismissal from going ahead.

3. Balancing of Interests

Even in cases of strong suspicion and a properly conducted hearing, the employer must carry out a balancing of interests. This weighs the employer's interest in terminating the employment relationship against the employee's interest in retaining their position.

Relevant factors include, among others:

• Length of service with the company
• Previous performance and conduct record
• Severity of the suspicion and potential damage
• Employee's personal circumstances (dependants, age)
• Whether a formal warning (Abmahnung) would be a sufficient and milder measure

In cases involving particularly serious suspicions — for example, suspected significant embezzlement — the balance frequently tips in favour of dismissal, even after long periods of service.

4. Works Council Consultation (§ 102 BetrVG)

Where a works council (Betriebsrat) exists, its consultation pursuant to § 102 of the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) is mandatory before every dismissal — including a suspicion-based dismissal. The employer must inform the works council of all facts relevant to the dismissal. A dismissal issued without a proper works council consultation, or one based on incomplete information, is invalid regardless of how strong the suspicion may be.

Ordinary vs. Extraordinary Suspicion-Based Dismissal

Suspicion-based dismissals may be issued either as ordinary dismissals (with a notice period) or as extraordinary dismissals (without notice).

Extraordinary suspicion-based dismissal (without notice):The more common variant. It is based on § 626 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) and requires an important reason (wichtiger Grund). In the context of a suspicion-based dismissal, this threshold is met when the suspicion is so strong and trust so fundamentally undermined that even adhering to a notice period would be unreasonable. Important: the two-week deadline under § 626 Para. 2 BGB must be observed (see FAQ for details).

Ordinary suspicion-based dismissal (with notice period):Possible when the conditions for an extraordinary dismissal are not fully met, or as an alternative dismissal alongside the without-notice termination. An ordinary suspicion-based dismissal must be socially justified within the meaning of § 1 of the Protection Against Dismissal Act (Kündigungsschutzgesetz, KSchG).

In practice, it is advisable to issue both variants simultaneously: the extraordinary dismissal as the primary termination and the ordinary dismissal as a precautionary alternative — in order to minimise the risk of the dismissal being entirely invalidated.

Step by Step: How to Proceed as an HR Professional

The following checklist will help you prepare a suspicion-based dismissal in a legally sound manner:

Step 1: Clarify the factsGather all available evidence. Review documents, witness statements, and records. Put everything in writing. The more complete the documentation, the stronger your position.

Step 2: Seek legal adviceInvolve a specialist employment lawyer at an early stage. Suspicion-based dismissals are procedurally complex — a single misstep can render the entire dismissal invalid.

Step 3: Conduct the employee hearingInvite the employee to a formal meeting. Present the specific allegation. Allow a reasonable deadline for the employee to respond. Document the meeting in writing and have it signed.

Step 4: Review the response and conduct the balancing of interestsTake the employee's statement seriously. Carry out the balancing of interests. Only then decide whether — and which type of — dismissal will be issued.

Step 5: Consult the works councilInform the works council fully and in accordance with § 102 BetrVG. Observe the statutory deadlines for the works council's response.

Step 6: Issue the dismissalIssue the dismissal in writing. For extraordinary dismissal: ensure compliance with the two-week deadline under § 626 Para. 2 BGB.

Step 7: Secure the documentationRetain all records in a manner suitable for audit purposes: the hearing minutes, the works council's statement, evidence, and internal communications.

Common Mistakes and Their Consequences

Mistake 1: Inadequate or Missing Employee Hearing

This is the most frequent reason for suspicion-based dismissals being declared invalid. If the hearing is too vague, given too little time, or not conducted at all, the dismissal is generally invalid — regardless of how strong the suspicion is.

Consequence: Claim for reinstatement; potential liability for back pay covering the period following dismissal.

Mistake 2: Suspicion Too Weak or Too Vague

General statements such as "There are rumours that..." or unsubstantiated assumptions are not sufficient. If the objective factual basis is lacking, the dismissal will fail before the labour court.

Consequence: Dismissal declared invalid; employee's right to continued employment reinstated.

Mistake 3: Two-Week Deadline Under § 626 Para. 2 BGB Missed

For an extraordinary dismissal, the two-week period begins as soon as the employer has knowledge of all relevant facts — not from the moment the employee hearing concludes. If this deadline is missed, the without-notice dismissal is automatically invalid.

Consequence: Only an ordinary dismissal (with notice period) remains possible, provided it is socially justified.

Mistake 4: Works Council Not Informed, or Informed Incompletely

A dismissal issued without proper works council consultation is invalid under § 102 Para. 1 Sentence 3 BetrVG. Incomplete information — for example, if key facts are withheld — can equally lead to invalidity.

Consequence: Dismissal is void from the outset.

Frequently Asked Questions About Suspicion-Based Dismissal

What is the difference between a suspicion-based dismissal and a fact-based dismissal?

In a fact-based dismissal (Tatkündigung), the breach of duty has been proven; in a suspicion-based dismissal (Verdachtskündigung), a strong suspicion based on objective facts is sufficient. Both forms may be issued as ordinary (with notice) or extraordinary (without notice) dismissals, and in practice they are frequently issued simultaneously.

What conditions must a suspicion-based dismissal fulfil?

Four cumulative conditions apply: (1) a strong suspicion grounded in objective facts, (2) the employee must be heard before the dismissal is issued, (3) a balancing of interests must be conducted, and (4) the works council must be consulted pursuant to § 102 BetrVG, provided one exists.

What must the employee hearing include?

The hearing must set out the specific allegation and allow the employee a reasonable period to respond. Written documentation is strongly recommended. The employee must know exactly what is being alleged — generalised accusations are not sufficient.

How long does the employer have to issue a without-notice suspicion-based dismissal?

The deadline is two weeks from the point at which the employer has knowledge of all relevant facts (§ 626 Para. 2 BGB). This period begins as soon as the grounds for dismissal become known — not only after the hearing has concluded. If the deadline is missed, the extraordinary dismissal is invalid.

What happens if the suspicion later turns out to be unfounded?

The dismissal may nonetheless have been valid at the time it was issued, if the suspicion was strong and the hearing was properly conducted. However, if the suspicion is later found to be unsubstantiated, the employee may have a right to reinstatement. Claims for damages are possible if the dismissal was based on inadequate investigation of the facts.

Must the works council be consulted for a suspicion-based dismissal?

Yes, without exception. Under § 102 BetrVG, the works council must be consulted before every dismissal — including a suspicion-based dismissal. The employer must provide full disclosure of all facts relevant to the decision. A dismissal issued without this consultation is invalid.

Can a suspicion-based dismissal also be issued as an ordinary dismissal?

Yes. An ordinary suspicion-based dismissal is possible, in particular where the conditions for a without-notice dismissal are not fully met. It must be socially justified under § 1 KSchG. In practice, it is frequently issued as an alternative dismissal alongside the extraordinary dismissal.

Conclusion

The suspicion-based dismissal is one of the most legally demanding instruments in German dismissal law. It allows employers to act even without full proof of misconduct — but in return imposes a strict procedural framework. Neglecting the obligation to hold a hearing, overlooking the works council, or missing the two-week deadline all risk rendering the dismissal invalid, with all the attendant legal consequences.

As an HR professional, the key principle applies: thorough investigation of the facts, comprehensive documentation, and early legal advice are not optional — they are mandatory.

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Sources

• German Civil Code (BGB) § 626 – Termination without notice for good cause. Federal Ministry of Justice. https://www.gesetze-im-internet.de/bgb/__626.html
• Protection Against Dismissal Act (KSchG) § 1 – Socially unjustified dismissal. Federal Ministry of Justice. https://www.gesetze-im-internet.de/kschg/__1.html
• Works Constitution Act (BetrVG) § 102 – Co-determination in dismissals. Federal Ministry of Justice. https://www.gesetze-im-internet.de/betrvg/__102.html
• Federal Labour Court (BAG), Judgment of 29 November 2007 – Ref. 2 AZR 724/06 (leading ruling on the obligation to hold a hearing). https://www.bundesarbeitsgericht.de/
• Federal Labour Court (BAG), Judgment of 23 May 2013 – Ref. 2 AZR 102/12 (requirements for the strength of suspicion). https://www.bundesarbeitsgericht.de/
• Federal Ministry of Labour and Social Affairs (BMAS): Dismissal – Information for Employers. https://www.bmas.de/DE/Arbeit/Arbeitsrecht/Kuendigung/kuendigung.html
• Personio GmbH: HR Lexicon "Verdachtskündigung". https://www.personio.de/hr-lexikon/verdachtskuendigung/