What is a release from work and when is it necessary?
Releasing an employee from work (Freistellung) means the employee is temporarily or permanently released from the duty to work while the employment relationship itself continues. There are many possible reasons for a release:
Common reasons for a release:
- Suspected breaches of duty or criminal offences
- Conflicts of interest involving managing directors or senior employees
- Protecting the company from reputational damage
- Unfair dismissal proceedings during the notice period
- Restructuring for operational reasons
- Maternity protection and parental leave
Modern payroll software can help document and process the different types of release correctly. This is a big advantage in complex cases.
The different types of release at a glance
1. Release with continued pay
With this type of release, the employee continues to receive their full salary even though they do not have to work. It is often used during notice periods or where there are well-founded suspicions.
Payroll aspects:
- Normal continued salary payment in digital payroll
- Social security contributions continue
- Holiday entitlements remain
- Tax treatment as normal pay
2. Release without continued pay
This type is legally delicate and only permitted in very specific circumstances. The employee receives no salary during the release.
Legal requirements:
- Serious breach of duty by the employee
- Continued employment cannot reasonably be expected
- Proportionality of the measure
In this case, online payroll needs special settings to document the suspension of salary correctly.
3. Irrevocable release
Here the employer permanently waives the employee's work, usually as part of a mutual separation or a dismissal.
Legal requirements for an effective release
The employer's unilateral right to release
A unilateral right to release generally only exists in exceptional cases. Without a contractual basis or a legitimate interest, a release is legally invalid.
Legitimate interests can include:
- Protecting trade secrets when someone moves to a competitor
- Avoiding disruption to operations
- Protecting against possible damage caused by the employee
Contractual release clauses
Modern employment contracts often contain clauses that give the employer a right to release. These must be worded so they are valid under the law on standard terms and conditions (AGB).
Key wording aspects:
- Transparency about the requirements
- Proportionality of the provision
- No unreasonable disadvantage to the employee
Professional payroll software should support different contract types and release clauses to ensure compliant payroll.
Step-by-step guide to a legally sound release
Step 1: Legal review and preparation
Before you release an employee, check the following points:
- Is there a legitimate interest?
- Is there a contractual basis?
- Is the release proportionate?
- What employment law consequences can be expected?
Step 2: Documentation and justification
Proper documentation is essential:
- Written statement of the release
- Detailed justification
- Period of the release
- Details of pay
- Rules on ancillary obligations
Step 3: Adjusting payroll
Digital payroll must be adjusted accordingly:
- Flagging the release in the system
- Adjusting the salary components
- Correct handling of social security contributions
- Documentation for the tax authorities
Modern online payroll systems often offer predefined workflows that make the process much simpler.
Step 4: Communication and implementation
- Personal meeting with the employee concerned
- Written confirmation of the release
- Informing relevant departments (HR, IT, accounting)
- Adjusting the payroll software settings accordingly
Avoiding common mistakes when releasing employees
Mistake 1: Insufficient legal basis
Many employers underestimate the legal hurdles of a release. Without sufficient justification, a release can be invalid and lead to damages claims.
Mistake 2: Incorrect processing in digital payroll accounting
Incorrect settings in the payroll software can lead to:
- Incorrect social security contributions
- Tax problems
- Problems with holiday pay calculations
- Incorrect notifications to authorities
Mistake 3: Incomplete documentation
Poor documentation can cause problems in later legal disputes.
Special situations when releasing employees
Release during the notice period
After an ordinary dismissal, the employer can release the employee under certain conditions:
- Protection against competitor espionage
- Avoiding demotivation in the team
- Preventing sabotage
In this case, online payroll must include normal pay until the end of the notice period.
Dismissal on suspicion and release
Where there are serious suspicions, an immediate release may be necessary:
- Suspected theft or fraud
- Possible danger to other employees
- Protection against further damage
Here it is particularly important that digital payroll is flexible enough to process changes quickly.
Effects on social security and tax
Social security treatment
With a release with continued pay:
- Social security contributions are paid as normal
- Notifications to the health insurance funds remain unchanged
- Unemployment insurance continues
Modern payroll software automates these processes and prevents errors in notifications.
Tax aspects
- Wage tax is paid as normal
- Allowances remain in place
- Watch for special rules with longer releases
Digital solutions for handling releases
Benefits of professional payroll software
Modern online payroll systems offer several advantages when handling releases:
Automation and fewer errors:
- Predefined workflows for different types of release
- Automatic calculation of social security contributions
- Correct tax treatment
Documentation and compliance:
- Complete documentation of all transactions
- Audit trail as legal evidence
- Compliance with statutory reporting obligations
Efficiency and time savings:
- Quick adjustment when status changes
- Automatic notifications to relevant departments
- Integration with other HR systems
Outsourcing payroll accounting for complex cases
For complex release cases in particular, outsourcing digital payroll to specialist providers can make sense:
Benefits of outsourcing:
- Expertise in special legal cases
- Current case law is taken into account
- Lower compliance risks
- Cost efficiency for rare special cases
Practical tips for a legally sound release
Release checklist
Before the release:
- [ ] Check the legal basis
- [ ] Weigh up the interests
- [ ] Assess proportionality
- [ ] Prepare documentation
During the release:
- [ ] Draw up a written statement
- [ ] Hold a personal meeting
- [ ] Adjust the payroll software
- [ ] Inform relevant departments
After the release:
- [ ] Review the situation regularly
- [ ] Monitor correct payroll
- [ ] Keep documentation up to date
- [ ] Follow legal developments
Integration into existing HR processes
A successful release needs to be integrated into existing HR processes:
- Define clear responsibilities
- Set communication channels
- Build digital payroll into the workflow
- Regular training for HR staff
Case law and current developments
Key rulings on releasing employees
Case law on releasing employees keeps evolving. Decisions on the following are particularly relevant:
- Limits of the unilateral right to release
- Requirements for the justification
- Proportionality of release measures
Effects on digital payroll
New legal developments often require adjustments to the payroll software:
- Updates to the calculation logic
- New documentation requirements
- Changes to reporting procedures
Conclusion:
A legally sound release requires solid knowledge of employment law and reliable digital payroll. The complex interplay of employment law, social security and tax law makes professional systems and advice a necessity.
The key success factors:
- Careful legal review before every release
- Complete and traceable documentation
- Reliable online payroll that reflects the current legal position
- Regular training for the employees responsible
Modern payroll software and specialist providers can help meet legal requirements and avoid costly mistakes. Investing in professional systems and advice pays off especially for complex cases or frequent releases.
Digitising payroll accounting brings efficiency gains here. It also adds legal certainty through automated compliance checks and up-to-date case law updates. Companies that invest in modern digital payroll are much better prepared for the challenges of releasing employees in a legally sound way.
This article is for general information only and does not replace individual legal advice. In specific release cases, always consult a specialist employment lawyer.
