Termination with Offer of Continued Employment on Amended Terms
Termination with Offer of Continued Employment on Amended Terms / Änderungskündigung
April 03, 2026
A termination with offer of continued employment on amended terms (Änderungskündigung) is a termination of the existing employment relationship combined with an offer to continue that relationship on amended working conditions. It is typically relevant where employers can no longer unilaterally alter essential contractual terms by exercising their managerial prerogative. In practice, this often concerns changes of workplace, adjustments to the scope of duties, reductions in working time, the removal of variable remuneration components, or changes to the remuneration structure. For employees and employers alike, a dismissal with amended terms is of considerable legal and economic significance, not least because it often has to be reviewed and strategically assessed under substantial time pressure.
Requirements for a Dismissal with Amended Terms
As a general rule, a dismissal with amended terms is subject to the same dismissal-law requirements as a dismissal aimed at bringing the employment relationship to an end. Where the Protection against Dismissal Act (Kündigungsschutzgesetz, KSchG) applies, the dismissal must be socially justified, meaning that it must be based on operational reasons, reasons relating to the employee’s person, or conduct-related reasons.
There is, however, an additional hurdle of particular importance: not only the dismissal itself, but also the proposed contractual amendments must be legally sustainable. Employers may therefore not impose changes that go beyond what is necessary to achieve the objective pursued. The new terms offered must represent the least intrusive suitable means.
Equally important is the certainty of the offer of amended terms. The employee must be able to identify clearly the specific conditions on which the employment relationship is to continue. Offers that are unclear, contradictory, or merely vague are vulnerable to challenge. In addition, the notice of termination and the offer of amended terms must be combined in a single declaration.
Typical Scenarios in Practice
Dismissals with amended terms are particularly common in the context of restructuring measures driven by economic or organisational considerations. Typical examples include:
- transfers to another place of work
- changes to the scope of duties
- reductions in working time
- interventions in remuneration, bonus arrangements, or special payments
- adjustments to leadership and responsibility structures
Particularly during restructuring phases, under cost pressure, or in the course of strategic realignments, companies should carefully assess whether a proposed measure is still covered by the employment contract and the managerial prerogative, or whether a dismissal with amended terms is required. Misjudging that distinction can quickly give rise to significant litigation and liability risks.
Acceptance, Rejection, or Acceptance Subject to Reservation
If an employee receives a dismissal with amended terms, there are, in principle, three possible responses: the employee may accept the offer, reject it, or accept it subject to reservation.
Acceptance subject to reservation is especially important in practice. In that case, the employee initially accepts the amended working conditions while reserving the right to have their social justification reviewed by the Labour Court. This often provides the decisive balance between preserving the employment relationship and managing litigation risk.
The reservation must be declared within three weeks of receipt of the dismissal with amended terms. Within the same period, an action for protection against the amendment must also be brought before the Labour Court. Missing this deadline can significantly weaken the employee’s legal position.
For employees, this option is often strategically advisable because the employment relationship can initially continue while the court reviews the validity of the amendments. Anyone who rejects the offer altogether assumes a substantially greater risk: if the court upholds the dismissal, the employment relationship comes to an end in its entirety.
Dismissal with Amended Terms and the Protection against Dismissal Act
Where the employee is protected by the Protection against Dismissal Act (Kündigungsschutzgesetz, KSchG), the Labour Court examines whether the amendment of the working conditions is socially justified. As a rule, this requires the proposed amendment to be supported by sustainable dismissal-law grounds and to be proportionate.
Not every entrepreneurial decision automatically justifies a salary reduction, a change of duties, or a relocation. Employers must be able to explain, in a coherent and comprehensible manner, why the specific amendment proposed is necessary and why less intrusive measures would not suffice. General references to cost-saving measures or reorganisation needs will regularly not be enough.
Outside the scope of application of the KSchG, employee protection is significantly weaker, but by no means entirely absent. Even then, contractual constraints, the principle of good faith, and other grounds of invalidity remain relevant. That is precisely why the validity of a dismissal with amended terms should always be assessed on the specific facts of the individual case.
Distinction from the Managerial Prerogative
Not every change to working conditions requires a dismissal with amended terms. Employers may implement certain adjustments by virtue of their managerial prerogative, provided that the employment contract, works agreements, collective bargaining agreements, or statutory limits do not preclude this.
A dismissal with amended terms becomes necessary only where the employer seeks to interfere with the contractual core of the employment relationship, for example remuneration, place of work, working time, or the duties owed under the contract, in a way that is no longer covered by the existing agreement. In practice, this distinction is often the central point of dispute.
For companies, this distinction is especially important because missteps at this stage can be costly. For employees, it is equally decisive because it often shapes the prospects of success of legal action.
Practical Risks for Employers
For employers, a dismissal with amended terms is a legally sensitive structuring tool. It may be necessary in restructuring situations or conflict scenarios, but it carries considerable formal and substantive risks. Errors in preparation, drafting, or justification frequently result in invalidity.
Particularly critical in practice are the following:
Proportionality of the Proposed Amendments
Courts scrutinise closely whether the proposed amendment is in fact necessary. This applies in particular to salary reductions, downgrading, relocations, or interventions affecting leadership functions. The more far-reaching the proposed change, the more carefully its necessity must be substantiated.
Certainty of the Offer
The offer of amended terms must be complete and unambiguous. Unclear provisions regarding duties, remuneration, working time, or place of deployment create significant vulnerabilities.
Involvement of the Works Council
Where a works council exists, it must be properly heard before the dismissal with amended terms is issued. The full content of the offer of amended terms must also be communicated to it. A defective hearing of the works council may render the dismissal invalid in its entirety.
Documentation and Strategic Preparation
Companies should document in a clear and comprehensible manner why the amendment is necessary, which alternatives were considered, and why the chosen measure is said to be the least intrusive suitable means. Especially in economically significant employment relationships or in relation to exposed positions, early employment-law structuring is regularly decisive.
Practical Risks for Employees
Employees, too, should not accept or reject a dismissal with amended terms prematurely. In many cases, not only the continuation of the employment relationship is at stake, but also remuneration, career prospects, location ties, and economic planning certainty.
Particularly risky are:
- premature rejection without assessing the prospects of litigation
- missing deadlines for reservation and legal action
- ill-considered acceptance of substantial deteriorations
- misjudging the scope of the managerial prerogative
Particularly for senior employees, specialised professionals, or long-term contractual relationships, an early strategic assessment is advisable.
Distinction from a Dismissal Aimed at Ending the Employment Relationship
A dismissal with amended terms differs from a dismissal aimed at ending the employment relationship in that the employment relationship is intended to continue on amended terms rather than come to an end altogether. In practice, this distinction is highly significant because it has immediate implications for the available responses, litigation strategy, and economic risks.
Why Early Legal Review Is Decisive
A dismissal with amended terms brings together dismissal law, contract structuring, and litigation strategy in a particularly concentrated way. For employers, it will often be robust only if it is carefully prepared, documented, and structured in a proportionate manner. For employees, what matters is choosing the right response within a short period of time.
If you have received a dismissal with amended terms or, as a company, are preparing such a measure, you should have its legal viability reviewed at an early stage. Particularly in economically sensitive or reputation-sensitive situations, a precise employment-law strategy is regularly decisive. Please get in touch with us.
* Where, in the future, we use only the generic masculine or the generic feminine for reasons of readability, this expressly includes all genders.