Munich Labor Court: Covert Side Job Leads to Summary Dismissal
Munich, January 31, 2026 – A recent judgment from the Munich Labor Court underscores that engaging in a covert side activity during working hours can fundamentally destroy the relationship of trust between an employer and an employee, thereby justifying immediate termination of employment. This particular case involved a senior employee whose persistent attempts to conceal a suspected unauthorized side job ultimately led to his summary dismissal.
The employee in question, holding a senior position, had previously received a warning from his employer for sending private documents to his company email address. This action was seen as an indication of an unauthorized side activity during his paid working hours. Instead of altering his behavior, the employee subsequently brought his private laptop to work, which the court interpreted as an attempt to continue his alleged competitive side job and to erase any traces of it. This persistent and deceptive conduct was deemed sufficient to justify an extraordinary termination.
Breach of Trust: The Legal Perspective
Legally, a covert side activity during paid working hours constitutes a severe breach of trust. The employee simulates performing work duties while, in reality, acting in external interests and receiving undue compensation. This violation of duty, often referred to as ‘Arbeitszeitbetrug’ (working time fraud), can constitute an ‘important reason’ under Section 626 of the German Civil Code (BGB), which is a prerequisite for summary dismissal.
The crucial factor here is not merely the duration of the unauthorized activity but primarily the deception involved. The employer is defrauded of the owed performance, which so profoundly damages the basis of trust that further collaboration often becomes unreasonable.
Aggravating Factors: Warning and Concealment Tactics
Whether a summary dismissal is upheld in an individual case depends on a comprehensive balancing of interests. In the Munich judgment, this balance clearly tipped in favor of the employer. Two factors were decisive:
- Previous Warning: The employee had already been warned due to a similar suspicion but chose to ignore this warning.
- Concealing Behavior: The court interpreted the use of a private laptop after the warning as a deliberate attempt to circumvent controls and continue the breach of duty.
This combination demonstrated a lack of willingness to return to contractually compliant behavior. The employer’s interest in immediate termination outweighed the employee’s interest in retaining his job.
Home Office: Increased Risk and Clear Regulations
The rise of mobile work and home office arrangements presents new challenges for both employers and employees. For employees, the temptation to use working time for private projects may increase in the absence of direct supervision. For employers, verification becomes more difficult.
At the same time, digital activities often leave traces. However, the Munich case also shows that employees attempt to avoid these. Companies are therefore well-advised to establish clear guidelines:
- Regulations on the private use of company IT.
- Clear rules for using private devices for business purposes (Bring Your Own Device).
- An open communication culture that prevents mistrust.
Prevention Through Transparency and Clear Contracts
Legal experts recommend a proactive approach for companies. Employment contracts should contain clear clauses regarding the obligation to disclose or obtain approval for side activities. While a blanket prohibition is generally ineffective, employers have significant say in cases of competitive activities or performance impairment.
For employees, the clear message is: transparency protects. Anyone planning a side activity should address it openly. However, it must never be carried out during the working hours dedicated to the primary employer. Current jurisprudence clearly demonstrates that the risk of immediate job loss far outweighs the short-term financial benefit of a covert activity.
The case serves as a crucial reminder for both employers and employees in Munich and beyond regarding the serious consequences of breaching trust through unauthorized side activities during working hours. Employers are encouraged to review and update their employment contracts and internal policies, especially concerning remote work, to mitigate such risks effectively.
Source: Munich Labor Court, boerse-global.de
