Legal action against dismissal, severance pay or termination agreement?

In the following, we show what is important when it comes to the question of severance pay in the event of termination and termination agreement. There are certain things that you should pay attention to in order not to reduce the chance of receiving a severance payment. In particular, the right handling of a termination or cancellation agreement plays an important role.

A dismissal is an extraordinarily stressful situation for those affected. Whether you have been employed in the company for many years or have just started a new job - the dismissal brings with it existential fears and many questions.

Especially ask our client:inside this situation:

Will I receive severance pay?

Severance pay in case of termination of employment?

How to deal with a termination?


The purpose of the settlement

Severance pay is intended to bring about an amicable termination of the employment relationship. In this way, employees are compensated for the loss of their job. Accordingly, it is worthwhile to negotiate severance pay in the event of a dismissal or termination agreement.

Legal action against dismissal & severance pay: how long does it take?

Many workers unnecessarily refrain from asserting their rights because they are under the misapprehension that this will entail years of litigation. However, this is not the rule in labour law. Statistically, the vast majority of cases are settled out of court within a few weeks or within a few weeks of filing an action in a conciliation hearing. Hardly any other area of law offers such rapid legal protection as labour law.

Decisive for a good result are very good knowledge of the legal situation and strategic considerations. We have the experience and determination to achieve the best result for you.

As lawyers, we know what is important and where pitfalls lurk. Our experience is your decisive advantage.

You do not know how to deal with the termination? Read our article "how to deal with termination?" here.

What are the three ways of severance pay?

The legislator recognizes three main reasons for termination: termination for operational reasons, termination for personal reasons and termination for behavioral reasons. All three reasons for termination have - as the name suggests - different causes; therefore, the process for severance pay is also different. In addition to the reason for termination, other factors such as salary and length of service also play a role in calculating the severance payment. Last but not least, the amount of severance pay may also depend on how interested a company is in getting the terminated employee out of the company in a reliable and legally secure manner.

However, for any termination of employment, it is not just a question of what a company is able or willing to do, comparative values also count, how severance pay is generally negotiated. This is where the negotiating skills of your lawyers come into play, because it depends on whether you have to settle for an average or even lower severance payment than normal or, with the help of professional negotiation skills, collect your well-deserved severance payment and thus also leave the company with a different feeling.

What are the requirements for legally effective termination?

For employees, receiving a dismissal means a deep cut in their professional life. Especially if there is no new job in sight, the social and financial consequences can be severe. The legislator has therefore created very high requirements so that a dismissal can be declared legally effective.

Notice of termination: This must be observed

Section 623 of the Civil Code requires that any notice of termination must be in writing. This means that the notice of termination must be signed by hand by the employer or a person authorised to represent the employer. An oral notice of termination is therefore invalid. Termination by e-mail or WhatsApp is also invalid.

Ordinary termination, i.e. termination in compliance with the legally prescribed notice periods, is possible, but most ordinary terminations are invalid because the very high requirements of a large number of laws and requirements developed by case law are often not met. It can be terminated for operational reasons, for example due to a change in the company, or for personal or behavioural reasons.

Extraordinary termination is colloquially referred to as termination without notice. It may only be given if the important reasons are so serious that the employer cannot reasonably be expected to continue the employment relationship. The requirements here are much higher than for ordinary dismissal. A balancing of interests must take place.

Only the management or a person authorised by it, such as the personnel management, is entitled to give notice of termination. If, on the basis of company regulations, other persons are to be entitled to give notice of termination, this must be handled in accordance with §§ 164 ff. BGB (German Civil Code). Other persons, for example immediate superiors who are authorised to give instructions in everyday work, are not authorised to terminate an employment relationship without express authorisation to represent them.

If the Dismissal Protection Act applies due to the size of the company, a certain procedure must also be observed. For example, dismissal for reasons of conduct is only permitted in exceptional cases if no warning has been given beforehand. Warnings serve to draw the employee's attention to a breach of duty, to reprimand him or her and to hold out the prospect of consequences under labour law. They are also connected with the request to behave in accordance with the contract in the future. In most cases, the warning contains a threat of dismissal if the behaviour is repeated.

A warning must therefore be given promptly after the misconduct. Only then does the employee have the opportunity to change his or her behaviour in time. However, it also depends on the severity of the violation whether a warning is absolutely necessary or whether termination can take place immediately. Reasons for conduct that must be warned at least once include, among others:

  • Faulty work
  • Unpunctuality
  • Damage to work material
  • Late or non-appearance of sick leave
  • Private use of the internet at work

However, another warning is usually only a reason to carry out the threat of dismissal if it was given due to the same misconduct.

A warning is not required for very serious violations. Depending on the severity of the breach of duty, the employer cannot be expected to issue a warning before giving notice. For example, the following breaches of duty may be considered:

  • Theft or other criminal offences at the workplace
  • Fraud to the disadvantage of the employer
  • Serious insults to the employer or superiors
  • Unauthorised absence from the workplace

Within a waiting period of six months, you can be dismissed without a prior warning and under generally eased conditions, as there does not have to be a reason for dismissal. If you have received a warning, it may make sense to request that it be removed. We will be happy to check for you whether there are justified reasons for the warning. In addition, the same applies here as for the dismissal, the high requirements must be met. We advise you in detail, for example, whether a counterstatement seems reasonable or whether a complaint should be lodged with the works council.

Likewise, legal action can be taken against a warning. This may be the case, for example, if the accusation was correspondingly serious. However, this procedure involves a certain risk, namely that the labor court may determine that the warning was justified. We will explain this risk to you in your personal case and weigh up which course of action makes more sense for you in the long term.[/cz_title][/vc_column][/vc_row]

Termination agreement: negotiating severance pay

A termination agreement terminates the employment relationship mutually and amicably under the negotiated conditions. It is usually offered by employees together with a severance payment if longer notice periods would have to be observed or if the employee would have special protection against dismissal at that time, e.g. due to activity as a works council member, severe disability or during parental leave. The termination agreement must be in writing; verbal agreements have no legal validity.

When negotiating the severance pay, it is important to note that the prospective amount will have an impact on the payment of unemployment benefits, as a blocking period could possibly be imposed. When this is the case and what advantages and disadvantages a termination agreement with severance pay could have individually, we would be happy to clarify this together with you in a detailed consultation.

Severance pay for redundancy: Your chances

A dismissal for operational reasons occurs when the reasons for it do not lie in the person or the behaviour of the employee, but result from an operational requirement. The most common reasons for dismissal for operational reasons include:

  • Omission of the individual workplace
  • Operational changes such as outsourcing or the abandonment of a sub-operation
  • Insolvency and bankruptcy

If the employee has protection against dismissal, he or she is also entitled to severance pay. The statutory protection against dismissal is regulated in section 23 KSchG and depends on the size of the company and the start of the employment relationship in the company. In addition, special regulations apply to persons who are particularly worthy of protection, such as pregnant women, severely disabled persons or works councils. Accordingly, it can be difficult to give these persons notice of termination for operational reasons. Severance pay paid by the company is intended to compensate and bridge the gap until a new job is found.

However, it is not only the size of the company that is decisive for the application of the Dismissal Protection Act, but also the length of service of the employee who is to be dismissed. In order for the Dismissal Protection Act to apply, the employee must have been with the company for at least six months. Only after the expiry of this waiting period, which has its basis in section 1 (1) of the Protection against Dismissal Act, does the employer benefit from the protection against dismissal and can negotiate a severance payment.

Action against dismissal or severance pay?

Since 1 January 2004, the right to severance pay has been regulated by law. According to this, those employees are entitled to a severance payment where operational reasons lead to the end of the employment relationship. The prerequisite for severance pay, however, is that the employee did not file a complaint against dismissal during the statutory three-week period, but allowed it to expire. A later action for protection against dismissal after the 3 weeks, e.g. due to reinstatement in the previous status, also precludes the payment of severance pay.

Furthermore, a note by the employer in the notice of termination is required that operational reasons could not be prevented and that severance pay will be paid in the event that an action for protection against dismissal is waived.

The legal basis for this claim and the prerequisites can be found in section 1a KSchG in conjunction with section 10 KSchG. § Section 1 KSchG is also applicable to dismissals for operational reasons due to a change of employment. The provisions apply if a non-acceptance of the notice of change or a complete rejection of the offer of change results in the employment relationship being terminated as a result.

Employer: Risk an action for unfair dismissal?

It is therefore up to the employer whether he "rewards" a waiver of action by paying a severance payment. However, even if the employer declares this severance payment in writing, there is still no entitlement to a minimum amount of severance pay. It is and remains a matter of negotiation between the individual and his or her lawyers.

Our tip
Social plan benefits are not covered by this provision. They may not be made dependent on whether employees agree to waive an action for protection against dismissal.

It is also important for employees to know that the statutory severance pay claim does not arise if the usual notice period lapses due to termination without notice or if the employee dies before the notice period expires. The claim does not pass to heirs. However, an individual contractual provision can put the employee in a better position, e.g. to the effect that the severance pay is then paid to relatives after all.

However, since dismissals for operational reasons are also made with a view to the insolvency of a company, the insolvency as such could give rise to a risk for the payment of the severance sum. If the insolvency estate does not cover the severance payment, the employee may be left empty-handed despite the notice period. Comprehensive legal advice and assessment of the overall situation will help you to make the right decision here.

Social plan and severance pay: double payment for employees

Sometimes several employees are affected at the same time by redundancies. In such cases - especially in the case of insolvencies - social plans are drawn up. A point system for marital status, age and length of service, among other things, is used to determine how the funds available for the social plan are distributed.

These payments from the social plan are to be made separately. The Federal Labour Court does not see any fundamental competition of claims here. However, this may mean for employers that severance pay amounts have to be paid twice. He will therefore try to limit the amount to be paid for an employee by means of an individual agreement. Collective-law provisions may also exist. Before signing such an individual agreement, you should in any case seek legal advice in order to avoid possible disadvantages.

Amount of severance pay: principle and negotiating skills

If you as an employee agree to accept the employer's offer of severance pay, you are entitled to the legally regulated amount. This amounts to half a gross month's earnings per year that you have been with the company. The gross monthly earnings are also precisely defined by the legislator, namely in § 10 para. 3 KSchG.

However, the employer is not obliged to indicate this severance payment amount, which is based on the statutory regulation, in his offer. He can also propose other models on his own initiative. In this case, however, it is then necessary that he states in the termination declaration what severance pay he wishes to pay. The employer may not go below this amount at a later date.

However, these severance sums are minimum amounts that apply, for example, in the event of insolvency. If the financial situation of a company allows for higher sums to be paid, these should definitely be negotiated. However, you should not expect utopian amounts, but an additional amount for termination for operational reasons can often be negotiated with the appropriate negotiating skills, tactical experience and expertise.

Severance pay and unemployment benefits: Observe the notice period

According to the latest legislation, severance pay as such can no longer be counted towards the receipt of unemployment benefits. However, an exception applies if the severance payment is intended to undermine the statutory notice period. Even if the severance payment is higher than 0.5 gross monthly salary per year of employment, there could be a risk of a blocking period for unemployment benefits. We check the individual requirements arising from your personal case so that you can make the right decisions and avoid a blocking period.

Dismissal for personal reasons: Severance pay instead of action for unfair dismissal

Not only operational but also personal reasons can lead to the termination of the employment relationship. This is the case, for example, if it is foreseeable that the employee will no longer be able to perform the work owed due to illness, a lack of or no longer appropriate qualifications or other personal reasons.

The decision to dismiss for personal reasons does not depend on fault on the part of the employee. Lack of stress resistance - as a cause for mistakes - or frequent sick days cannot necessarily be remedied by the employee. Especially in smaller companies, however, this can become unreasonable for employers, for example, if no other job suitable for performance can be made available or if days of absence disrupt the business.

A warning based on personal reasons therefore does not have to be issued and does not make sense. Since the reason for dismissal lies in the person, but not in a changeable behaviour, it would miss its purpose. However, certain conditions are necessary to give notice here. In summary, these are:

  • Reason which lies in the person of the employee and over which he has no influence
  • a negative future prognosis
  • the adverse effect on operational matters

Economic unreasonableness of the employer to continue the employment relationship

If it can be reasonably assumed that the illness, for example, will last far into the future, dismissal may be considered. If, however, there is a prognosis that after a cure or a reintegration phase, the work performance will foreseeably cease again, even over a longer period of time, there is no reason for dismissal.

In this case, it may be advisable to seek judicial clarification through an action for protection against dismissal. Expert opinions on the probable continuation of the illness could lead to the continuation of the employment relationship. The company's proof that it is not possible to provide a workplace adapted to the employee's performance capacity will also be the subject of an action for protection against dismissal.

The - repeated - absence of an employee can lead to a high financial burden for the employer. The work that has to be done cannot always be seamlessly absorbed by colleagues. And if they do, the additional workload often depresses internal morale in the medium term. In smaller companies, an uninterrupted illness of six weeks - or many individual sick leaves - can therefore be a reason for dismissal for personal reasons if no appropriate reintegration management can be implemented.

However, a strict balancing of interests applies here. It always depends on the circumstances of the individual case whether the dismissal is effective or can be successfully challenged by an action for unfair dismissal. Factors such as age, family (maintenance obligation) and length of service play a significant role here. The principle applies that the dismissal of an employee for personal reasons must be the last available remedy. This is also provided for in SGB IX, in the provisions on rehabilitation and participation of people with disabilities. We will be happy to check for you whether these provisions apply in your case.

If you, as an employee, have little interest in keeping your job, you can negotiate - in or out of court - the payment of a severance package. In return, the dismissal protection action is waived. However, there is no legal entitlement to severance pay, as there is in special cases of dismissal for operational reasons. Further professional - and private - steps should, however, be clarified in detail before accepting a severance payment, for example, whether it makes sense to apply for a pension, whether a reduced earning capacity pension can be considered or whether disadvantages can be expected as a result of the severance payment in the case of unemployment registration.

Receiving severance pay after action for protection against dismissal: dismissal on grounds of conduct

If you have not only received a warning but also a dismissal because of actual, alleged misconduct, you should not necessarily accept it. You have the possibility to file a complaint for protection against dismissal within 3 weeks after receiving the dismissal. This applies in particular if you have been given extraordinary, i.e. immediate, notice of dismissal.

Often, the reasons given are by no means sufficient for this; in many cases, it is possible to obtain a conversion into an ordinary dismissal before the labour court. In addition, it must be checked whether you were previously given an effective warning. Often employers are not - or no longer - in a position to prove reasons of conduct, so the case may well end in your favour. This is particularly important with regard to unemployment benefits. A justified termination without notice would in most cases lead to a suspension of benefits. By taking legal action against dismissal, you not only win a reprieve, but often cash money.

In addition to the lack of a prior warning, other reasons could lead to the dismissal protection action being successful, for example, if the works council was not properly consulted on the termination without notice. Here, too, many pitfalls lurk.

But also with regard to a possible severance payment, it is important that all possibilities are examined and evaluated. It sometimes happens that employees are to be dismissed from the company without there being a relevant reason from the point of view of labour law. In such a case, it is worth considering whether negotiations for a severance package might not be more sensible than suing your way back into the company. After all, employees who have been dismissed for allegedly behavioural reasons can hardly be expected to return to work. In a detailed counselling interview, you will find out under which conditions severance pay can be obtained, how summary dismissal can be converted into ordinary dismissal and what you need to bear in mind when reporting to the employment office.