When does legal expenses insurance pay for my dismissal protection claim?
The basic prerequisite for legal expenses insurance to cover the costs of an action for unfair dismissal is that the contract concluded by the policyholder includes the professional law module. If the legal protection insurance only covers traffic law or tenancy law, employees bear the costs themselves. As dismissals for operational reasons are becoming increasingly common due to the many company closures, it is definitely worth reviewing the existing legal protection in this respect and, if necessary, expanding it to include individually tailored occupational cover.
Assumption of costs in professional matters - further requirements
Anyone who assumes that their legal expenses insurance is always liable to pay may be disappointed in individual cases. The same applies to employment law and the filing of an action for unfair dismissal: there must be a certain prospect of success. Wilfully filed actions without any legal basis, for example to annoy the former employer, have no chance of success in court.
If this prospect of success is not sufficiently demonstrated or justified by a lawyer when obtaining the cover note, the legal expenses insurance company may express doubts and, in principle, refuse to cover the costs. Insurance companies also have the option of refusing to cover costs in cases where legal action is to be taken against a dismissal for personal reasons. For example, anyone who has repeatedly stolen from their employer is unlikely to win an action for unfair dismissal unless serious formal errors were made when the dismissal was announced. In this case, there is no reason for the legal expenses insurance to cover the costs incurred.
Assurance of cover for the instances - complaint to the labor court
In the first instance before the labor court, each party bears its own costs, regardless of whether the case is won or lost. Here, cover is usually granted quickly. However, the situation can be different for lawsuits that are to be heard in the second instance. instance. In appeal proceedings, insurance companies understandably attach even more importance to the possibility of a positive outcome for their policyholder. If the policyholder loses the case, the legal expenses insurance must also cover the costs of the other side.
One dismissal / action for unfair dismissal - several invoices
It is not necessarily easy for laypersons to understand that all matters that may be involved in a termination are different proceedings for lawyers, but also for the court, each with its own cost calculation.
Before filing a lawsuit - obtaining the cover note
According to the scale of fees for lawyers, costs are already incurred for obtaining confirmation of cover from the legal expenses insurance company. In many cases, however, obtaining the confirmation of cover is regarded as a service and is only charged for if this undertaking proves to be extensive and difficult. Of course, every policyholder is free to obtain a cover note from their legal expenses insurance themselves. Addressing and clarifying cost issues during the first contact between lawyer and client helps both sides to build a solid relationship of trust.
From the warning to the reference - different procedures
In the event of dismissal for personal reasons, it is possible that an earlier warning may be brought up in the context of dismissal protection proceedings. In court, the decision as to whether the warning was lawful or not is often negotiated during the proceedings, as it can ultimately determine whether the dismissal was lawful. However, this is billed separately by the labor court, and the law on lawyers' fees also sees this as a separate matter that must be billed.
It is also not an isolated case that unpaid vacation entitlements can only be settled in court. The fees for this are calculated on the basis of a separate amount in dispute, namely the court fees as well as the lawyer's fees.
As a final point, the outstanding or unsuitable issue of a reference may add a further matter. Depending on the individual situation, the claim for an appropriate reference may be included in the action for protection against dismissal. Sometimes, however, some time passes after the judgment until it becomes apparent that the promised reference has still not been received by the employee or that the former employer has tried to paint a bad picture of the employee using typical clauses. Both are reason enough to either try to influence the other party out of court or, if necessary, to sue for the reference in court. This will result in the next fee bill.
Deductible in dismissal protection proceedings - the disadvantages
Depending on the insurance company and the clauses for the legal protection insurance taken out, it is quite possible that the deductible will apply for each of these matters, i.e. warnings, dismissal, vacation entitlement and the issuing of certificates. An experienced lawyer will help you to recognize such pitfalls in advance or, even better, to avoid them by advising you before you take out legal expenses insurance.
Other insurance companies, on the other hand, do not calculate the excess according to the individual matters relevant to legal fees, but per case. Policyholders are in a better position here, not least because they can clearly calculate the expenses they will incur despite legal expenses insurance.
Other policies provide for the excess to fall after a certain period of time if no benefits have been claimed. However, if you take out legal expenses insurance without any excess, you will pay higher insurance premiums. However, if you compare these costs with several high excess amounts, even this additional expense pays off in many cases.
Termination of the legal proceedings by settlement - agreeing on the assumption of costs
As already mentioned, it is generally the case that each party bears its own costs in the first instance before the labor court. However, the labor court has another special feature compared to other courts: If the action for unfair dismissal ends with a settlement, no court costs are incurred.
Depending on the position of the plaintiff, it may also be possible to pass on your own legal costs to the other party as part of a settlement. However, any excess already paid to the legal expenses insurance will not be reimbursed in most cases. This also depends on what has been agreed in the insurance contract.
If a severance payment is negotiated in the dismissal protection proceedings, compensation for the deductible can alternatively be included in the settlement agreements. A competent lawyer will weigh up when this is possible and which option is desirable during the course of the proceedings and before the upcoming settlement negotiations.
Legal protection via professional associations and trade unions - not always an alternative
Employees also have the option of having their costs covered if they have legal expenses insurance through professional associations or the trade union. However, there is sometimes a catch with this option. Trade unions in particular rule out a free choice of legal counsel and refer to their own trainee lawyers. However, those who have taken out their own private legal expenses insurance with a contract that is advantageous to them often have a better chance of receiving competent, comprehensive legal representation.
