The Dismissal Protection Act (Kündigungsschutzgesetz – KSchG) grants employees general protection against dismissal after six months of employment if the company employs more than ten employees in Germany. Only then is a legally recognized reason for dismissal needed. Otherwise, and this will be the case for most startups at the start, generally dismissal protection won’t apply: The startup can terminate employment without special reason. The termination may not, of course, be immoral or arbitrary or violate non-discrimination rules under the AGG.
Attention: As soon as the startup has more than ten employees, the rules of the game have changed, for all employees.