Attempted trial fraud as grounds for termination

Lower Saxony Regional Labor Court, judgment of August 13, 2025 – 2 SLa 735/24

Deliberately untruthful statements made by an employee during legal proceedings may justify extraordinary termination without notice.

Facts

The parties disputed the defendant's ordinary termination with notice and then an additional extraordinary termination without notice declared in the proceedings. The defendant was a specialist retailer of e-bikes. The plaintiff had been employed by the defendant as a branch manager since the beginning of 2016. It was undisputed that there was no signed employment contract between the parties. In March 2023, the defendant sent the plaintiff a draft employment contract as an email attachment. In addition to a gross monthly salary for the plaintiff, this draft also provided for a bonus payment of EUR 10,000.00 plus two percent of the branch's profits in the event of a profitable financial year. It is undisputed that this draft contract was not signed by the parties. The defendant terminated the employment relationship in January 2024 with due notice and justified this termination on the grounds that the plaintiff was suspected of having sold bicycles and accessories on his own authority and without accounting for them, and of having retained the cash payments thus obtained. The plaintiff defended himself against this with an action for protection against dismissal filed within the prescribed period. In addition to the application for protection against dismissal, the plaintiff also asserted a claim for bonus payment. As evidence, he introduced a document into the proceedings entitled "Employment Contract (dated January 15, 2016)". This document specified a bonus payment that was similar in content to the terms in the draft employment contract dated March 14, 2023, but was recognizably different in wording. The plaintiff claimed that the parties had agreed on the content of this very document. The defendant disputed this claim as deliberately untrue and, during the proceedings, declared the extraordinary termination without notice of the employment relationship on the grounds of procedural fraud.

The Lingen Labor Court not only upheld the application for protection against dismissal, but also awarded the plaintiff the bonus claim he had asserted.

Reasons for the decision

The Lower Saxony Regional Labor Court considered the admissible appeal to be well-founded.

Insofar as relevant here, the judgment of the lower court was overturned and the action dismissed.
The Lower Saxony Regional Labor Court found that the employment relationship between the parties had been terminated by the defendant's extraordinary termination without notice due to attempted trial fraud.

The important reason required for extraordinary termination pursuant to Section 626 (1) of the German Civil Code (BGB) may also lie in a breach of the contractual duties of consideration pursuant to Section 241 (2) BGB. According to this provision, the parties to the employment contract are obliged to show mutual consideration for the rights, legal interests, and interests of the other party. If the employee knowingly makes untruthful statements in the (unfair dismissal) proceedings, he or she not only violates criminal law provisions, but in any case also violates the ancillary obligation to show consideration for the rights, legal interests, and interests of the employer, which continues to exist despite the termination of the employment relationship. It is irrelevant whether the untruthful statement is relevant to the decision, as it is sufficient that it could have been. In this respect, the (unsuccessful) attempt at trial fraud is equivalent to the completed offense. The wrongfulness of a false statement cannot depend on how obvious it is to the other party or the court, but only on whether the deceiver considers it suitable and intended to bring about a favorable outcome of the proceedings for him.

Only a statement of fact, i.e., a statement whose truth or falsehood can be proven, can be recognizably untrue. A statement is therefore false if it inaccurately reflects reality.

Termination for cause due to (attempted) litigation fraud therefore requires the intentional assertion of untrue facts with the aim of misleading the court, causing it to issue a judgment favorable to the deceiver, which leads to a financial disadvantage for the opposing party.

The assertion of a claim could also constitute conclusive deception about facts. Although legal opinions as value judgments cannot be the subject of deception, if the statements contain a core of facts that can be proven, deception can occur. This is the case if the demand for performance establishes a connection to an inaccurate factual basis or to facts justifying the claim.

The plaintiff sued for a bonus claim. The basis for the claim was to be the document he submitted as an employment contract from 2016. The plaintiff knew that this contract between him and the defendant had not been concluded. By conceding in the proceedings that the agreement submitted by the defendant essentially corresponded to his document, the plaintiff showed that he was aware that both parties had never agreed on the contract he had submitted. In doing so, he indicated that he had at least accepted the incompleteness and inaccuracy of his submission.

As a result, the court considered the plaintiff's statement of facts regarding the allegedly contractually agreed entitlement to bonus payments to be true, going beyond a mere legal opinion and having its factual basis in the contract document. The defendant was therefore able to present and prove both the objective and subjective elements of attempted litigation fraud in the proceedings.

Due to the seriousness of the attempted litigation fraud in the present case, a prior warning was also deemed unnecessary.

Practical tip

This decision shows that the factual basis of a claim – in this case, the contract document submitted by the plaintiff – can also be an assertion of fact and that a claim based on the document therefore not only represents an "erroneous" legal opinion, but also contains a statement of fact that is untrue.

When introducing documents into the (termination) process, employees are advised to ensure that they are accurate.

Employers are advised not to accept deliberately incorrect statements made by employees in court proceedings, but to take further action under labor law. In addition to applying for termination under Section 9 (1) of the German Employment Protection Act (KSchG), this may also include issuing an extraordinary termination without notice. This not only improves the employer's position with regard to the desired termination of the existing employment relationship with the employee, but also improves their position in settlement negotiations and increases the employee's willingness to reach an agreement. It should be noted, however, that the employer bears the burden of proof for any procedural fraud it alleges as grounds for termination. There must therefore be sufficient factual evidence for this, which should be carefully examined by the employer in advance.