Monday, 23 June 2014

Notice Periods and Deadlines

After a year of successful trading, I've joined the German-British Chamber of Industry & Commerce, my old employer, to increase the reach for my services and advice.  During the application process, I was reminded that the Chamber has a three month notice period for membership cancellations and it got me thinking about notice periods and deadlines in both the UK and Germany...

In the UK, it's quite usual for services or contracts to be cancelled immediately or with one month's notice.  However, in Germany, a three month notice period can be the norm or a notice period combined with a fixed date by which you should cancel.  For example, if you signed a contract with a German company as of 1 January 2014 with a three month notice period before renewal, you need to cancel the service by the end of September 2014 in order for it not to be automatically extended for another year.  If you cancel in November 2014, your cancellation would be accepted but you are committed for a further year and the contract would only end in December 2015.

Alternatively, you may be able to cancel during the year, but only at the end of the quarter.  You need to look out for phrases such as K├╝ndigungsfrist 6 wochen vor Quartalsende which means a notice period of 6 weeks before the end of the quarter.  So in order to end a contract at the end of Q3 (30 September), you will need to submit a cancellation by 18 August.  Cancellations should be made in writing and deadlines are usually considered met on receipt of the cancellation rather than the date sent.

Why do the Germans do this?  Well it's part of business (and national) culture and I think it helps with forecasting and resource allocation - if you know further in advance how many clients you will need to supply or service, you can plan accordingly.

So if you are thinking of signing a contract with a German company, take a look at their terms & conditions and make sure you understand how and when you can terminate the contract.  I have known many British companies who have found themselves in a position where they are liable for costs of a service they no longer need or want.  And just to be clear, I am not a lawyer and this is not legal advice - you should always get counsel to look over anything before you sign. However, you and your colleagues should be aware of this important aspect of doing business in Germany.

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