Reference Letter After Dismissal: Your Right & Grade

Your Right to a Reference Letter (§ 109 GewO)

When you’re dismissed, the severance pay (Abfindung) usually takes centre stage, and the reference letter often gets overlooked. That’s a mistake: a good reference helps decide your next job, and your right to one is protected by law.

Under § 109 of the Trade, Commerce and Industry Regulation Act (GewO), you have a right to a written reference letter when your employment ends, regardless of who gave notice or why. This right also applies to summary dismissal, during your probationary period, and under a termination agreement.

Every reference letter is shaped by two principles: it must be truthful (a duty of truth) and at the same time worded benevolently, so it doesn’t unnecessarily hinder your career. These two principles are in tension with each other, and truth takes priority, which means you have no right to a dishonestly favourable reference. Since 1 January 2025, your reference can also be issued electronically with a qualified electronic signature if you consent (§ 109(3) GewO); without your consent, it remains in paper form.

Simple or Qualified Reference?

The law distinguishes between two levels:

• Simple reference: limited to the type and duration of your employment, meaning which role you held and for how long.
• Qualified reference: at your request, this also covers your performance and conduct during employment. Only this type contains the assessment that matters for job applications.

In practice, you should almost always request the qualified reference. A simple reference says nothing about your performance and tends to work against you in job applications.

Reference Grades and the Crucial Question of the Burden of Proof

References rarely state school-style grades outright. Instead, the assessment is coded through the so-called satisfaction formula. The following scale is common in practice, though not set out in law:

• “… always to our fullest satisfaction” = very good (grade 1)
• “… always to our full satisfaction” = good (grade 2)
• “… to our full satisfaction” (without “always”) = satisfactory (grade 3)
• “… to our satisfaction” = adequate (grade 4)
• “… on the whole to our satisfaction” = poor (grade 5)

The crucial point is the burden of proof. In its landmark ruling of 18 November 2014 (case 9 AZR 584/13), the Federal Labour Court assigned it clearly: the benchmark is the middle grade, “satisfactory”.

• If you want a better grade than “satisfactory” (that is, “good” or “very good”), you must prove that your performance was above average.
• If your employer wants to give a worse grade than “satisfactory”, they must prove that your performance was below average.

Important: the Federal Labour Court doesn’t take into account that many references in practice turn out “good” or “very good”. The legal starting point remains “satisfactory”, as the statistical spread of grades doesn’t shift the burden of proof. That’s why it’s wise to document strong performance while you’re still employed, through appraisals, achieved targets and praise received by email.

Banned Secret Codes and Convoluted Phrasing

Under § 109(2) GewO, a reference must be worded clearly and comprehensibly and may not contain any features or phrasing intended to convey a meaning other than what the wording itself states. Hidden negative messages, the notorious “secret codes”, are therefore unlawful.

In reference-letter language, the following phrases, among others, are considered covertly negative (though interpretation in individual cases is disputed and depends on the overall picture):

• “He endeavoured to meet the requirements”, which hints at a lack of success.
• “Her sociability helped improve the working atmosphere”, which is read as a hint at alcohol consumption.
• Praise limited to self-evident matters (such as punctuality) often signals a lack of substantial recognition.

A special case is the closing formula (thanks, regret at your departure, good wishes for the future): under case law of the Federal Labour Court, there’s generally no enforceable right to it. If it’s missing, this still works against you in practice, which is exactly why it’s almost always expressly included in settlements.

Reference Incorrect or Too Harsh? Correction and Legal Action

If your reference is incomplete, untruthful, or contains hidden put-downs, you can demand a correction or a fresh reference. If your employer doesn’t respond, you can take the claim to the labour court (a claim for issuing or correcting the reference). The same burden-of-proof rules described above apply to any dispute over the grade.

Deadlines: there’s no fixed statutory deadline for the reference itself, unlike the three-week deadline for an unfair dismissal claim. But be careful:

• Exclusion periods under a collective agreement or your employment contract (often three months) can cause your claim to lapse.
• Your claim can be lost through forfeiture if you wait too long.
• The general limitation period is three years.

So act promptly. And keep the two issues separate: you must challenge the dismissal itself within three weeks by filing an unfair dismissal claim; this deadline is strict and can only be extended in rare exceptional cases.

The Reference in a Settlement or Termination Agreement

In practice, the reference is almost never fought over in isolation. Instead, it’s negotiated as part of a package together with the severance pay. When an unfair dismissal case ends in a settlement, this typically covers:

• the amount of the severance pay,
• the end date, garden leave and remaining holiday,
• the overall grade of the reference (such as “good” or “very good”),
• the closing formula expressing thanks, regret and good wishes for the future,
• and often the right to draft the reference text yourself (with your employer simply signing it off).

Because the grade can be disputed anyway and a good reputation costs the employer little, the reference is a strong bargaining lever, particularly when combined with negotiations over a termination agreement or settlement.

This is exactly where we come in: Team Abfindung provides litigation funding and works with lawyers specialising in employment law. We fund your case and carry the risk, on a purely success-based basis, with no upfront cost. That way, we secure both your severance pay and your reference letter for you together.