EMPLOYMENT LAW · BERLIN
Won a Dismissal Protection Case: Severance Instead of Returning?
Many employees believe that a successful dismissal protection claim automatically leads to severance pay.
That is not correct.
German dismissal protection law primarily protects the continuation of the employment relationship. If the labour court finds that the dismissal is invalid, the employment relationship generally continues. The employee does not automatically have a statutory right to leave the employment relationship in exchange for severance pay.
In practice, many dismissal protection cases do end with a settlement and severance pay. But that is different from an automatic statutory entitlement.
One special exception is a court dissolution application. In certain cases, the labour court can dissolve the employment relationship despite an invalid dismissal and order the employer to pay severance.
What is a court dissolution application?
A court dissolution application is an application made in a dismissal protection case.
It asks the labour court to end the employment relationship and order the employer to pay appropriate severance.
At first glance, this may sound contradictory: the employee challenges the dismissal but also asks the court, at least in the alternative, to end the employment relationship.
The reason is that sometimes the dismissal is legally invalid, but continuing the employment relationship may still no longer be reasonable.
Dismissal protection primarily protects the job
The starting point is important: dismissal protection primarily means protection of the job.
If the dismissal is invalid, the employment relationship is supposed to continue. The court does not automatically award severance pay just because the employee wins the case.
It is therefore a common misconception that every dismissal protection case must end with severance pay.
What is correct is:
• Many cases end in a settlement.
• Such settlements often include severance pay.
• Without a settlement or a specific statutory basis, severance pay is not automatic.
• A court dissolution application is a special legal option, but only under certain conditions.
When can the employee apply for court dissolution?
The employee can apply for court dissolution if continuing the employment relationship is unreasonable.
This requires more than the mere fact that the employer issued a dismissal. Every dismissal creates tension between employer and employee. That alone is usually not enough.
There must be special circumstances that may make returning to the employment relationship unreasonable.
Such circumstances may relate to the dismissal itself, the employer's conduct or the course of the dismissal protection proceedings.
Examples of possible unreasonableness
Whether continuing the employment relationship is unreasonable always depends on the individual case.
Relevant circumstances may include, for example:
• defamatory or reckless accusations in connection with the dismissal,
• unfounded suspicions,
• discriminatory or degrading statements,
• harassment or unlawful retaliation,
• employer conduct seriously damaging trust,
• serious disparagement during the court proceedings,
• circumstances that make future cooperation appear unrealistic.
The employee's simple wish not to return is usually not enough.
The fact that the employee has found a new job is also not in itself a typical reason for court dissolution. There is a separate statutory rule for that situation.
Can the employer also apply for court dissolution?
Yes. The employer can also apply for the labour court to dissolve the employment relationship and order severance pay under certain conditions.
However, the requirements are strict.
The employer must show reasons why future cooperation serving the employer's operational purposes cannot be expected. It is not enough that the employer simply does not want the employee back.
The employer also generally cannot rely on circumstances that the employer itself caused or provoked in bad faith.
When does the court decide on the dissolution application?
The dissolution application only becomes relevant if the court considers the dismissal invalid.
If the court considers the dismissal valid, the dismissal protection claim is dismissed. The dissolution application then does not matter.
If the court considers the dismissal invalid, it examines whether the requirements for court dissolution are met.
The court may then:
• dismiss the employee's dismissal protection claim,
• uphold the dismissal protection claim and reject the dissolution application,
• or uphold the dismissal protection claim and dissolve the employment relationship against severance pay.
When can the dissolution application be made?
The dissolution application can generally be made until the end of the last oral hearing in the appeal instance.
For employees, however, it is important to consider early whether such an application makes sense. It changes the litigation strategy.
Someone who wants to keep the job follows a different strategy from someone who wants a court-ordered termination with severance pay.
How much severance can the court award?
If the court dissolves the employment relationship, it must also determine severance pay.
The amount depends on the statutory framework and the circumstances of the individual case. An exact prediction is difficult.
Relevant factors may include:
• gross monthly salary,
• length of employment,
• age of the employee,
• prospects on the labour market,
• economic consequences of termination,
• reasons for court dissolution.
In practice, severance negotiations often roughly use half a gross monthly salary per year of employment as an orientation point. This is not a fixed rule for every case.
Difference from a severance settlement
A court dissolution application should not be confused with a court settlement.
In a settlement, employee and employer agree to end the employment relationship on a certain date in exchange for severance pay.
With a court dissolution application, the court decides by judgment. The court dissolves the employment relationship and sets the severance amount if the legal requirements are met.
In practice, severance settlements are much more common than court dissolution judgments.
Difference from a settlement agreement
A settlement agreement is also different.
A settlement agreement is concluded out of court between employer and employee. Both sides voluntarily agree to end the employment relationship.
A court dissolution application, by contrast, requires a dismissal protection case. There must be an employer dismissal that is challenged in court.
Why is court dissolution important for employees?
Court dissolution is important because it shows that a dismissal protection case does not always mean that the employee actually wants or has to return to the workplace.
In special cases, the employee may say:
The dismissal was invalid. Nevertheless, returning is no longer reasonable. The court should end the employment relationship and set severance pay.
This is not the standard route for every dismissal protection case. The application should only be made after the requirements and strategic consequences have been reviewed.
What should employees check before applying for court dissolution?
Employees should check in particular:
1. Is the dismissal likely invalid?
2. Are there special reasons that make returning unreasonable?
3. Are these reasons connected to the dismissal or the court proceedings?
4. Is there evidence for these circumstances?
5. Is court dissolution economically sensible?
6. What severance amount may be realistic?
7. Would a settlement be the better route?
8. Has the employee already found a new job?
9. What are the consequences for default-of-acceptance pay?
10. What litigation risks exist?
Conclusion
A court dissolution application is a special option in a dismissal protection case.
German dismissal protection law primarily protects the job. A successful dismissal protection claim therefore does not automatically lead to severance pay.
In special cases, however, the labour court can dissolve the employment relationship despite an invalid dismissal and order severance pay. Special reasons are required.
For employees, court dissolution may make sense if returning to the employer is no longer reasonable. It should not be requested too quickly, but should be assessed as part of the overall litigation and negotiation strategy.