Prerequisites

The two thresholds of the KSchG

6-month qualification (§ 1 (1) KSchG)

You must have been continuously employed for more than six months with the same employer. The agreed probation period is included. If the dismissal lands before the end of month six, the substantive KSchG protection does not apply — only general rules (good faith, anti-discrimination, special protection) govern.

Small-business threshold (§ 23 (1) KSchG)

The business must regularly employ more than 10 employees (counted with part-time weighting). Apprentices and the employer themselves do not count. Below the threshold the KSchG does not apply — regardless of tenure.

Counting matrix

Who counts toward the threshold?

Not every head counts the same. The following matrix summarises how different groups of staff enter the small-business calculation under § 23 (1) KSchG — based on the settled BAG case law.

GroupStatusNote
Managing director (GmbH) / corporate officersdoes not countExercise employer functions — § 14 (1) KSchG · BAG 2 AZR 540/20
Freelancers (genuine)does not countNo employment relationship — if actually self-employed
Sham self-employedcountsDecisive is the factual integration into the business
Temporary agency workers (permanent need)countsBAG 24.01.2013 – 2 AZR 140/12
Temporary agency workers (peak demand only)does not countMust cover an exceptional, non-regular workload
Part-time staffcountsWith factors 0.5 / 0.75 / 1.0 — see below
Sick leave / long-term illnesscountsRemain part of the workforce
Maternity protectioncountsRemain part of the workforce
Parental leavecountsNo double counting with substitute
Casual/auxiliary workersdependsOnly if the position is regularly staffed
Apprentices / traineesdoes not count§ 23 (1) sentences 2 and 3 KSchG
The dismissed employee themselvescountsEven if the position is not refilled

Managing directors and self-employed

A GmbH managing director performs employer functions and is not considered an employee within the meaning of § 23 KSchG — they are not counted (§ 14 (1) KSchG; see also BAG – 2 AZR 540/20). Genuine freelancers and self-employed persons also remain outside. Different for sham self-employed: anyone who is in fact bound by instructions, personally dependent and integrated into the business is counted — regardless of what the contract calls them.

Temporary agency workers — BAG case law

The Federal Labour Court has resolved a long-running question: temp workers count if they are deployed to cover a regular personnel need of the user business. Pure peak-demand coverage for an exceptional workload does not count.

„Bei der Bestimmung der nach § 23 Abs. 1 Satz 3 KSchG maßgeblichen Beschäftigtenzahl sind im Betrieb eingesetzte Leiharbeitnehmer mitzuzählen, wenn ihr Einsatz auf einem in der Regel vorhandenen Personalbedarf beruht.“
English translation: „When determining the number of employees relevant under § 23 (1) sentence 3 KSchG, temporary agency workers deployed in the business are to be counted if their deployment is based on a personnel need that regularly exists.“ — BAG, judgment of 24 January 2013 – 2 AZR 140/12
— BAG, Urteil vom 24.01.2013 — Az. 2 AZR 140/12

Source: BAG 24.01.2013 – 2 AZR 140/12 on dejure.org →

Part-time weighting

How are part-time employees counted?

§ 23 (1) sentence 4 KSchG prescribes statutory weightings. Decisive is the contractually agreed working time, not the actually worked hours.

Contractual weekly hoursFactor
up to 20 hours0.5
up to 30 hours0.75
more than 30 hours1.0

Calculation example — threshold reached?

A business employs: 8 full-time staff (factor 1.0 each = 8), 3 part-timers at 25 hours/week (0.75 each = 2.25), 2 part-timers at 15 hours/week (0.5 each = 1.0), plus 2 apprentices (do not count). Total: 8 + 2.25 + 1.0 = 11.25. The threshold „more than 10“ is met → the KSchG applies.

Legacy workforce

Pre-1 January 2004 contracts — lowered threshold

For employment relationships that began before 1 January 2004, a transitional rule applies: a lowered small-business threshold of more than 5 employees is sufficient — provided that this number of „legacy employees“ (also from before 1 January 2004) is still regularly employed. The idea: pre-2004 workforce should keep the stronger protection they were originally hired under.

Reference: BAG 21.09.2006 – 2 AZR 840/05 on dejure.org →

Special case

Joint operation of several companies

A joint operation (Gemeinschaftsbetrieb) exists when legally independent companies run a shared business — typical indicators: unified management structure, shared premises, shared HR or accounting, identical management. In that case the employees of all participating companies are added together for the threshold.

According to the settled case law of the Federal Labour Court, a joint operation of several companies within the meaning of § 23 (1) KSchG exists when the material and immaterial operating resources available at an establishment are used jointly by several employers for a uniform work-technical purpose and the deployment of the employees is institutionally regulated through a unified management apparatus.

Consequence: a single company that on its own would be a small business can be drawn into the scope of the KSchG by being embedded in a joint operation — on condition that the joint management is institutionally entrenched and does not only emerge in isolated cases.

Example — KSchG applies through joint operation

Employee A works at X GmbH with 4 full-time staff. X GmbH and its sister company Y GmbH (10 full-time staff) sit in the same premises, share a managing director and share HR and accounting. Result: strong indicators of a joint operation. The workforces are added (14 employees) — the KSchG applies.

Burden of proof

Who bears the burden of proof for the threshold?

In an unfair-dismissal claim the question „does the KSchG apply at all?“ is decisive. The division of the burden of proof is settled:

  • Burden of allegation on the employee: the dismissed worker must first allege, with substance, that the business regularly employs more than 10 staff — identifying names/positions is enough, no complete payroll required.
  • Detailed counter-allegation by the employer: if the employer disputes this, it must plead concretely on the number and structure of the staff employed — e.g. who is classified as a freelancer, managing director or apprentice. The BAG described this allocation in its judgment of 24 February 2005 – 2 AZR 373/03.
  • If the facts cannot be clarified: the uncertainty regularly falls on the employer, because the information lies in its sphere of organisation.

Reference: BAG 24.02.2005 – 2 AZR 373/03 on dejure.org →

In practice

What (non-)applicability of the KSchG means in practice

Even if the KSchG does not apply, you are not left unprotected. Many dismissals still fail on formal or special-protection grounds:

  • Written form: original signature required (§ 623 BGB) — many dismissals fail here alone.
  • Notice periods: § 622 BGB still applies — and the employer must observe it, regardless of KSchG scope.
  • Special dismissal protection: pregnancy, parental leave, severe disability, works-council membership — these protections apply independently of the KSchG.
  • Good faith / anti-discrimination: dismissals violating § 242 BGB or the AGG are invalid even outside KSchG.
  • Apprentices are not counted (§ 23 (1) sentences 2 and 3 KSchG — „excluding those employed solely for vocational training“).
  • The dismissed employee is counted — even if the position is not refilled.
  • Filing deadline still 3 weeks: the deadline under § 4 KSchG applies regardless of whether substantive KSchG protection applies — miss it and you lose the right to challenge.
FAQ

Frequent questions on KSchG applicability

When does the Dismissal Protection Act apply?▾

The KSchG applies when two cumulative conditions are met: (1) the employment relationship has lasted continuously for more than six months at the same employer (§ 1 (1) KSchG), and (2) the business regularly employs more than 10 employees (§ 23 (1) sentence 3 KSchG). For employment relationships that began before 1 January 2004, a lowered threshold of more than five employees applies.

What is the small-business threshold under the KSchG?▾

Since 1 January 2004 the threshold is more than 10 employees measured in full-time equivalents (§ 23 (1) sentence 3 KSchG). Apprentices are not counted. Part-time staff count proportionally: up to 20 hours/week with factor 0.5, up to 30 hours/week with factor 0.75, above that with factor 1.0. Decisive is the regularly employed headcount, not the figure on any given day.

Does the probation period count toward the 6-month qualification?▾

Yes. The 6-month qualification period under § 1 (1) KSchG runs from the beginning of the employment relationship — the agreed probation period is included. The KSchG becomes applicable at the beginning of the seventh month at the earliest. During probation, however, shorter notice periods apply (two weeks under § 622 (3) BGB).

Who is not counted toward the threshold?▾

Not counted: corporate officers (managing directors of a GmbH, management-board members), genuine freelancers and self-employed persons. Also excluded are apprentices (§ 23 (1) sentences 2 and 3 KSchG — "excluding those employed solely for vocational training") and temporary agency workers used only to cover an exceptional, non-regular workload. Sham self-employed persons are counted.

How are part-time employees counted?▾

Part-time staff are counted proportionally under § 23 (1) sentence 4 KSchG: 0.5 for up to 20 hours/week, 0.75 for up to 30 hours/week, 1.0 above 30 hours/week. Decisive is the contractually agreed working time, not the actually worked hours. Overtime is disregarded if only temporary.

What is a joint operation and how does it affect counting?▾

A joint operation (Gemeinschaftsbetrieb) exists when several legally independent companies run a shared business — typically with unified management, a shared HR department, and shared use of resources. In that case the employees of all participating companies are added together. The KSchG can therefore apply even when a single company on its own would not meet the threshold.

What protection do I have if the KSchG does not apply?▾

Even outside the KSchG, formal rules still apply: written form with an original signature (§ 623 BGB), the statutory notice periods (§ 622 BGB), and special dismissal protection (pregnancy, parental leave, severe disability, works-council membership). Dismissals that violate good faith (§ 242 BGB) or anti-discrimination rules (AGG) are also invalid. And the 3-week filing deadline under § 4 KSchG still applies — miss it and you lose the right to challenge.

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