Wednesday, 22. May 2024

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Dismissal protection lawsuits: Basic facts and considerations from the employee´s point of view

One of the main fields of activity for an attorney specialized in employment and labor law is filing complaints against unfair dismissals or terminations.

I will explain the most important issues of such a lawsuit below:

1. Deadline for filing a complaint

Most important: The complaint against an unfair termination must be filed within three weeks after the employee has received notice of termination. That means: Three weeks after receipt of termination, at the latest, the complaint must be filed with the competent labor court. If you miss this deadline, the case is often lost before it even starts because the termination will be deemed legitimate.

2. If a (higher) severance is your goal

Even if the employee´s ultimate goal is to receive a higher severance pay, the complaint cannot and should not specifically ask for it. Under German law, the official aim of a complaint against unfair dismissal is that the court shall determine that notice of termination was unlawful. If it does so, the logical consequence is that the employment relation continues, which means that the employee will continue to be paid but will also have to continue working for the employer. On the other hand, if the court determines that termination was lawful, the employee will have to leave the company without any kind of compensation.

So if this is the case, why do most termination proceedings ultimately end in severance payments?‘ – I will tell you in a minute.

3. Conciliatory hearing and settlement

The first court hearing in labor court proceedings is called conciliatory hearing or Güteverhandlung. Its purpose is to find out if there is a chance to settle the case amicably. And, as a matter of fact, there usually is. Why? Because neither the employer nor the employee really want to continue the employment relation. The adequate solution, therefore, is to end the employment in exchange for an appropriate amount of severance pay. How does the court achieve this? Quite easily by telling the employer (or employer‘s counsel) that there is a high risk that the termination was in fact unlawful while at the same time making the employee (or employee´s counsel) believe that they really have a weak case. Such uncertainty about the outcome of the lawsuit is the source of often successful  settlement negotiations.

As a general rule, lawsuits against unfair dismissals or terminations will be settled. The reason for this is that neither the employer nor the employee cherish the uncertainty of what will be the outcome of the lawsuit in a couple of months or maybe even after the appeals judgment in a year or so. They rather want a quick solution so that they know where they stand and can go on from there.

4. Amount of severance

The basic rule ( in Munich) is: half of a gross monthly salary for each year of employment. That means: If you have worked for the company for six years, you can expect severance pay in the amount of three monthly salaries. That amount may ultimately be higher or lower depending on your case, that means your prospects of winning or losing the lawsuit because the termination – from a legal point of view – was or was not unlawful. And it also depends on the employee´s chances of finding a new employment somewhere else. Older employees who have been with the company for a long time tend to be able to negotiate higher settlements than young, highly qualified employees with good prospects on the labor market.

Ultimately, however, the amount of severance is always a matter of negotiation. A settlement will only happen if both parties agree to it. The court may push them in the direction of a settlement, but it cannot force them to settle the case.

5. Other issues to be included in a settlement agreement

Apart from the amount of severance, the settlement agreement usually contains provisions as to paid relief from work (Freistellung), compensation for vacation not taken (Urlaubsabgeltung), return of the company car and/or documents, work certificate (Zeugnis) and so on.

6. Cost and expenses

Contrary to what is common in other civil proceedings in Germany, in labor court proceedings of the first instance each party bears his or her expenses themselves. This particularly applies to attorneys fees. So even if you „win“ the lawsuit, you will have to pay for your attorney yourself.

Dr. Wolfgang Gottwald
Attorney at Law

Attorney at Law

Leopoldstraße 51
80802 München

Tel.: 089/383 293-10
Fax: 089/383 293-13