Released from work after dismissal: can your employer stop paying?

In the decided case, 43 vacancies did not replace salary

An employer dismissed a senior consultant with effect from 30 June 2023 and irrevocably released him from duties until then. During the notice period it sent him 43 vacancies. He applied for seven only towards the end of June. The employer withheld June’s salary, arguing that he could already have earned money elsewhere. These are the facts recorded in paragraphs 2 to 8 of BAG judgment 5 AZR 127/24.

The employer’s appeal on points of law failed. The regional labour court’s award of EUR 6,440 gross plus interest remained in place. The decisive issue was this particular release during a continuing employment relationship, not a general rule that failing to apply for jobs never has consequences.

Why the notice period matters

Under section 615, sentence 1, of the German Civil Code, agreed remuneration may remain payable when the employer does not accept the work owed. Sentence 2 provides for deductions, including earnings actually obtained elsewhere and earnings deliberately forgone in bad faith. Release from duties therefore does not automatically mean that all other earnings can be kept on top.

For an employer-imposed release despite a continuing right to work, the BAG focuses on the employer’s own obligations. An employer who fails to provide work during the notice period generally cannot require the employee to reduce its costs by immediately taking another job. In this case, the employer had not presented facts making continued employment unreasonable. See paragraphs 20 to 23 of judgment 5 AZR 127/24.

Three limits to keep in mind

The judgment concerns the running notice period. The BAG expressly left open whether delayed applications could affect claims for the period afterwards, paragraph 25. It is therefore not advice to stop job hunting or ignore employment agency referrals.

The contract and release letter also matter. In paragraphs 12 to 16, the BAG discusses whether the particular agreement already excluded deductions for merely hypothetical earnings in the employee’s favour. It did not need to decide that interpretation conclusively. An agreed release should therefore not automatically be treated like a unilateral instruction.

Finally, an irrevocable release does not by itself authorise a move to a competitor. In paragraph 19, the BAG states that the non-compete obligation under section 60 of the German Commercial Code continues during a release unless the employer expressly waives it. Clarify any proposed move and possible deduction first.

What the more recent 2026 judgment adds

On 25 March 2026, in 5 AZR 108/25, the BAG considered a blanket release clause and the withdrawal of private use of a company car. It held a standard-form clause allowing release whenever notice is given, without regard to the specific interests involved, to be invalid, paragraphs 19 to 32.

That does not mean that every release is unlawful or compensation is automatically due. Overriding legitimate interests of the employer may justify a unilateral release. Because necessary findings were missing, the BAG remitted the company-car case, paragraphs 33 to 36. The pay question still depends on the specific circumstances.

If payment stops: organise the documents first

Our own example: after dismissal by your employer, you are sent home for the final two months of your contract. In month two, your salary is missing and HR points only to vacancy links it sent. In our assessment, the first issues to check are the relevant period, the reason for release and the deduction clause. The number of links alone does not answer them.

Keep payment claims and deadlines separate. If you wish to challenge the dismissal, section 4, sentence 1, of the German Protection Against Dismissal Act generally requires proceedings within three weeks of receiving the written notice. An enquiry to a law firm or a discussion about unpaid salary does not replace that claim. Separately, have any contractual or collective-agreement deadlines affecting the salary claim checked.

• Employment contract, amendments and any applicable collective agreement.
• Dismissal notice with receipt date and the complete release letter.
• Payslips, missing payments and the employer’s response.
• Vacancies sent to you, your applications and any earnings actually received elsewhere.