Technological progress offers employees and employers increasing opportunities for flexible employment arrangements. For example, employees can live in Germany and work from home for foreign companies without having to relocate and thus change their entire living circumstances. The consequences of such contractual arrangements under dismissal law are currently illustrated by the ruling of the Rhineland-Palatinate Regional Labor Court (LAG) of September 2, 2025 (Ref.: 4 SLa 200/24).

• Technological advancements enable employees to work remotely for foreign companies without relocating, as illustrated by a recent ruling from a German regional labor court.
• The Rhineland-Palatinate Regional Labor Court ruled that the German Unfair Dismissal Protection Act does not apply to an employee working from home in Germany for a Spanish company, emphasizing the principle of territoriality.
• The decision highlights that exceptions to the territoriality principle in dismissal protection are limited.

Facts of the Case

The employee was employed in the technical department of the employer, a Spanish distributor of manufacturing materials for the production of tiles. He was the only employee working from home in Germany, while his colleagues worked at the headquarters in Spain.

The employer gave the employee notice of ordinary termination. The employee filed an action for unfair dismissal, which was dismissed by the Kaiserslautern Labor Court. The employee appealed against the dismissal of...

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