Employment protection proceedings: There are legal steps an employee can take to defend himself against dismissal by his employer. The best way to protect oneself from dismissal is to file an action for unfair dismissal.

However, there are some things to consider before filing a lawsuit. The purpose of a dismissal protection action, the typical course of dismissal protection proceedings and important considerations for both employees and employers are discussed in detail.

Dismissal protection proceedings: What is a dismissal protection action?

In cases where an employee challenges his or her dismissal in court, the burden of proof is on the employee, as the law places it squarely on his or her shoulders. To initiate dismissal protection proceedings, a statement of claim is filed with the labour court. In order for a claim to be validly filed, all relevant parties must be identified and their addresses provided.

The action for protection against dismissal must also contain a formal request. To avoid the claim being dismissed, plaintiffs must clearly state their objectives. Remember that you only have three weeks from the date of receipt of the dismissal to file an action for unfair dismissal with the labour court.

The employee’s right to assert the invalidity of the dismissal does not apply if he or she does not file an action for protection against dismissal or does not do so within the applicable time limit. This is a time limit for bringing an action.

If the action is not brought within the time limit, it is unfounded and the dismissal is to be treated as immediately effective (7 KSchG). It is important to consult an employment lawyer as soon as possible after receiving a notice of dismissal.

Legal protection in the case of unfair dismissal at work

An action for unfair dismissal is the most common type of action before the labour court. This is because the dismissal is final if three weeks have passed without an objection being lodged. A lawsuit is therefore necessary to avoid dismissal. Many employees take the path of dismissal protection proceedings.

However, negotiating a severance package can be a strategically smart move. Moreover, in the event of a successful lawsuit, the right to a fixed income could be guaranteed. Here you can find out how to apply for protection against dismissal before the Labour Court.

The most important information about protection against dismissal

The basic idea of an action for protection against dismissal is to have a judge examine whether the dismissal was actually lawful or not. You have to act quickly because time is of the essence: you have three weeks from the date of the dismissal to file a legal challenge before the dismissal becomes final.

If it is declared invalid, you have the choice of keeping your employment or receiving severance pay.

Dismissal protection proceedings – Dismissal protection proceedings

A so-called conciliation hearing takes place after the lawyer has filed the complaint and it has been served on the defendant by the court. An informal conciliation hearing is exactly what it sounds like: a forum for the peaceful settlement of a dispute.

The legal definition of this type of contract is: the parties mutually agree to resolve any disagreement or ambiguity regarding their legal relationship. For example, the parties might agree that the termination of the employment relationship is legally binding, but that the employee will receive compensation for the loss of the job.

If the parties cannot agree at the conciliation hearing, a formal hearing, called a chamber hearing, is scheduled. The chamber is chaired by a professional judge and two honorary judges will also be present. These persons are expected to give their views from the perspective of the workers and the employers.

Again, the parties try to resolve the conflict peacefully by talking about it or taking other measures. If this does not succeed, the next step is the taking of evidence, which may involve questioning witnesses, hearing experts or examining records and other documents. A verdict is then reached at the conclusion of the proceedings.

Successful dismissal proceedings – effects for employees and employers

If an action for protection against dismissal or such is successful, it is established that at the time of the dismissal there was an employment relationship between the parties that was not terminated by a specific notice of dismissal, i.e. that this dismissal was invalid.

If the employee’s action for protection against dismissal is successful, the employee must continue to work and the employer must continue to pay the income or remuneration. An order for payment, on the other hand, is not a judgement in an action for protection against dismissal.

The action for protection against dismissal must be extended to salary claims if the employer is to be obliged to make payments. This is particularly common in the case of a short notice period or an unannounced dismissal, as the company has fallen into arrears with the employee’s current wage claims.

If the parties cannot agree on whether or not an employment relationship exists, for example because the legality of the conclusion of the contract is in question or the nature of the contract is in dispute, one party may apply for a declaration that an employment relationship exists.

It is possible to file both a “general declaratory action” and an “action for protection against dismissal” at the same time. In theory, companies can challenge the dismissal of an employee by applying to an employment tribunal for a declaration that the dismissal was unlawful. In practice, however, this rarely happens.

Who has to pay the costs?

In cases heard by the labour court, there is a special element: each side is responsible for its own legal fees in most cases, regardless of the outcome of the proceedings, as stipulated in section 12a of the Labour Court Act (Arbeitsgerichtsgesetz, ArbGG). The costs associated with legal representation are covered by legal expenses insurance.

Dismissal protection proceedings: When can a dismissal be challenged as invalid?

There are several reasons for a dismissal to be invalid. In the following section we will go into these points.

Termination for cause

When discussing notice periods and grounds for termination, it is important to distinguish between ordinary and extraordinary termination. In the case of an extraordinary termination/termination without notice, an important reason in the sense of 626 BGB is required.

The existence of such a reason must be examined in two stages: The first prerequisite for the existence of good cause is the existence of a reason that is sufficient in itself. In a second step, it must be examined whether the specific termination is justified by considering the particularities of the case and weighing the interests.

In doing so, the main question is whether the employer can reasonably be expected to maintain the employment relationship until the expiry of the ordinary notice period. Good cause exists if there is a serious breach of trust, such as a violent assault by an employee on his employer.

Formal requirements and time limit

First, you should consider the possibility of invalidity due to the lapse of the relevant time limit or the lack of the required formalities. It is generally accepted that a company can dismiss an employee with little more than an email or even a WhatsApp message. But Section 623 of the German Civil Code (BGB) requires the written form.

It is mandatory that the employer appears in person to sign the notice of dismissal. If it lacks any structure, it has no meaning. Unless otherwise stipulated in the employment contract, the notice periods (in the case of ordinary termination) should be stipulated in accordance with 622 BGB. No notice is required in the event of termination, unless there are exceptional circumstances.

Termination for own needs or for operational reasons

Termination for operational reasons requires a four-step assessment procedure. First, it must be determined whether a reduction of jobs is necessary due to operational requirements. In the second stage, the company must determine whether other low-paid, low-skilled or unpaid positions (third stage) are available.

For questions 1-3 to be answered in the affirmative, a social selection must have taken place. In case of doubt, the employer is obliged to dismiss the employee who is least deserving of the company’s protection. Social selection must take into account all the particularities of the individual case and evaluate them legally.

If an employee’s conduct causes irreparable damage to the employment relationship, dismissal on grounds of misconduct may be justified. However, this type of rejection is only acceptable in a social context if no gentler alternatives are available. For this reason, it is common for the employer to give the employee a warning before taking further disciplinary action.

However, there are limits to when a warning can be issued. The warning must accurately describe the nature of the employee’s alleged misconduct. It must also urge the employee to change his or her behaviour in the future and threaten disciplinary action, up to and including dismissal, as permitted by applicable labour law.

The interests of all parties must be carefully weighed and balanced against each other. Protection against dismissal proceedings: If the reasons for the dismissal lie in the person of the employee himself, it is a dismissal for personal reasons. The most common case is a dismissal due to illness of the employee.

Only if the outlook is bleak, operational interests are seriously endangered, no less drastic measures are possible and a balancing of interests shows that the employer’s interest in terminating the employment relationship is to be weighted higher than the employee’s interest in its continuation, can such a dismissal be considered socially justified.

Social selection: Decision factors who stays – who goes?

When employees are dismissed for practical reasons, social selection plays a decisive role. The reason for this is the requirements of the Dismissal Protection Act, which the employer must fulfil. A dismissal for operational reasons is not justified if the employer has not carried out the social selection or has carried it out incorrectly.

If the employer then wants to issue an ordinary dismissal for operational reasons, he must carry out social selection in accordance with the Dismissal Protection Act. This is the case if a company has more than 10 employees and the employees have been employed there for more than six months.

There must be a larger number of affected employees than the required number of notifications. Social selection does not have to be carried out if an employer eliminates a position for which there are no suitable applicants already employed by the company.

Social selection: Which employees are horizontally comparable?

For social selection to work, it must consist of workers who can perform the same tasks if they receive the same instructions from their employer. These workers are similar to each other across departments.

What factors must be taken into account in social selection?

Once the group of people to be dismissed has been narrowed down, the actual social selection must be carried out on the basis of the criteria prescribed by law. These include the duration of the employment relationship, the age of the employee, his or her financial obligations and the severity of any disability.

According to the law, each of these considerations has equal weight. The employer has some leeway in weighting each social factor if neither the collective agreement nor a company agreement or guideline specifies how the criteria are to be weighed against each other. A points system has proved effective in practice.

Legal protection against dismissal Meaning

Pregnant women, new mothers up to the fourth month after childbirth and severely disabled workers are not to be included in social selection, nor are workers who, as works council members, have increased protection against ordinary dismissal.

This also includes employees whose employment relationships enjoy increased protection against ordinary dismissal through special protection against dismissal regulations. However, the employer has the option to include severely disabled workers in the social selection.

If the employer wishes to dismiss a severely disabled employee so that he or she can participate in the social selection, he or she must first obtain the consent of the Integration Office. Pursuant to section 1, paragraph 3 of the KSchG, the impairment of a severely disabled employee is to be taken into account in his or her favour in the social selection.

In order not to make the social selection procedure too confusing, many companies choose to consider only employees who do not have statutory protection against dismissal.

Who is entitled to severance pay?

Dismissal protection proceedings: In most cases, severance pay is not a right but a favour. Nevertheless, the parties usually agree on severance pay to avoid further conflict. To calculate the severance pay, you can use the formula: half a gross monthly wage for each year of employment.

Note, however, that these are only approximate values. The amount of severance pay can also vary greatly.

Do I have to pay tax on my severance pay?

Severance pay must be taxed like any other income. If the regular income is added to the severance pay and then taxed as a whole, the tax burden increases considerably. However, if you fall under one of the categories listed in Section 34 of the Income Tax Act, you can make use of the so-called “quintile rule” (EStG).

This is because 34 para. 2 no. 2 EStG classifies severance pay as unusual income, as it is often granted to an employee as compensation for the loss of a job. If the severance pay is a one-time extraordinary income, the one-fifth rule can help to reduce the tax burden.

Severance payments made after a dismissal are not subject to social security tax. In that case, no contributions to invalidity, unemployment, long-term care or health insurance have to be paid either.

Severance pay in the event of an action for protection against dismissal

When is the earliest date on which an action for protection against dismissal can be filed and severance pay can be paid? An action for protection against dismissal is primarily aimed at preserving the employment relationship.

If the employer does not want to continue employing you under any circumstances and there is a possibility that he or she will lose the case, a settlement can be offered in a so-called conciliation hearing before the labour court. If you accept this offer, it will be considered as a settlement of the legal dispute and the lawsuit will be dismissed.

Is it possible to receive severance pay without filing a lawsuit for wrongful dismissal? According to section 1a of the Unfair Dismissal Act (Kündigungsschutzgesetz, KSchG), an employee is entitled to severance pay if he or she has been dismissed for operational reasons and the employer has informed him or her in the dismissal letter that he or she will receive severance pay if he or she does not take action within the time limit.

In this case, the severance pay is prescribed by law and amounts to half of a monthly salary for each year of employment.

Dismissal protection proceedings: Representation by a lawyer

Dismissal protection proceedings and actions for unfair dismissal are also conducted by labour lawyers, business lawyers with the relevant expertise and, in some cases, general practitioners. The task of the lawyer representing a client in an unfair dismissal case is to help that client get what he or she wants as quickly as possible, preferably by talking to the other side before filing suit.

The lawyer can use the tools of civil litigation to put pressure on the other side, provided he or she is strategic. This requires prioritising the various interests of the persons involved.