When is a termination letter legally signed?

 Hamm State Labor Court rules on initials as signature.

Dennis Gonta, LL.M.

When is a termination letter legally signed?

A notice of termination must fulfill formal requirements to be effective. The Hamm State Labor Court has ruled that initials, i.e. a short, handwritten sign, do not satisfy the formal requirements for a letter of termination (decision dated June 28, 2022 - Ref. 17 Sa 1400/21).

The new Law of Proof of Substantial Conditions Applicable to the Employment Relationship (Nachweisgesetz) caused a great deal of discussion in the middle of last year. German lawmakers continued to insist on the strict written form requirement for employment contracts, and as evidence of key working conditions instead addressing digitalization and daring to be progressive. We have already reported on this. However, not only the form requirements for electronic signatures raise questions. Employers and employees continue to dispute the effectiveness of conventional signatures due to the written form requirement for a termination, for example.

This issue arose in the case before the Hamm State Labor Court. The validity of two letters of termination was contested. Both termination letters contained machine printed names on the signature line. Above each was a handwritten sign which consisted of a nearly vertical line and a short wavy line. The terminated employee filed a complaint against unfair dismissal, arguing violation of the written form requirement for notices of termination.

A signature shortened to a few signs is insufficient

The judges of the Hamm State Labor Court shared the plaintiff’s opinion: The written form requirement means that a letter of termination must be signed correctly. This requires the signature to be written in full. According to the Hamm State Labor Court, the external appearance is decisive when distinguishing between a signature and initials. A vertical line and a short wavy line are insufficient in this regard. At most, this represents an individual letter, but does not reproduce a name with twelve letters. The sign was only 1.0-1.5 cm long, whereas the actual signature on other documents was generally 3.0-3.5 cm long.

Unlike a signature, initials lack sufficient characteristics to ensure adequate authentication. Therefore, signs that can be classified as initials fail to fulfill the formal requirements for a signature on a notice of termination. To minimize the risks of legal action against unfair dismissal, HR managers always need to check whether the document has been signed with a complete signature.