That's pretty wild. Is that a German employment law or something specific to your company?

It's probably an employment law. My wife's from Tunisia and over there all employment is basically contractual. If your employer lets you go they owe you some kind of fee, and I actually believe the amount might be the remainder of the contact, I'm not sure.

It's employment law.

Germans are so expensive to hire and maintain that companies have offshored German manufacturing to the United States.

(... And God bless Germany for it. Trickle-down theory doesn't work in general in capitalism but it does work in labor negotiations: every right Germans secure for themselves is a right an American company employing Germans and other countries has to abide by when doing business, and it incentivizes the company to minimize their paperwork by treating everyone to the German standard).