Note: This article is for general information only and does not replace individual legal advice. Every termination is different. Have your case reviewed by a lawyer before the three-week deadline expires.

Three weeks. That's how much time you have after your dismissal notice is received. Three weeks to file a lawsuit with the labour court. If you miss this deadline, the dismissal will become effective. Finally. Even if it was unlawful.

This is the toughest rule in dismissal protection law. But it has a flip side: those who act in good time have a strong hand. Around half of all unfair dismissal claims end in a settlement and a Severance payment. In many other cases, the termination will be declared invalid.

This article explains how an unfair dismissal claim works, when it's worthwhile, what it costs, and which mistakes on the employer's side can improve your chances of success.

Was ist eine Kündigungsschutzklage?

An unfair dismissal claim is a claim for a declaration of invalidity under Section 4 of the Protection Against Dismissal Act (KSchG). Its aim is to have it judicially determined that a dismissal is invalid and that the employment relationship continues.

Simply put: You go to the employment tribunal and say, "This dismissal is unlawful. Please review it.".

The lawsuit can be directed against any type of termination: ordinary dismissals (with notice periods), extraordinary dismissals (without notice, pursuant to Section 626 of the German Civil Code - BGB) and dismissals with changes to terms of employment. A dismissal during the probationary period or in a small business can also be challenged, albeit with a restricted scope of review.

Prerequisites: When does protection against dismissal apply?

The Dismissal Protection Act sets out two conditions:

1. Company size The company regularly employs more than ten full-time staff members (§ 23 para. 1 KSchG). Part-time staff are counted proportionally: up to 20 hours per week count as 0.5, up to 30 hours count as 0.75. Trainees and managing directors are not included in the count.
2. Period of employment: The employment relationship has existed without interruption for more than six months (§ 1 para. 1 KSchG).

Both requirements must be met. The employee bears the burden of presentation and proof.

Protection against dismissal in small businesses and during the probationary period

Even if the Protection Against Dismissal Act (KSchG) does not apply, legal action is not hopeless. This is because a dismissal can also be invalid outside the scope of the KSchG:

• Formal violations Termination must be in writing (Section 623 of the German Civil Code - BGB). Terminations given via email, WhatsApp or verbally are void.
• Discrimination Dismissal on grounds of sex, ethnic origin, religion, age or disability is a breach of the AGG.
• Special protection against dismissal Pregnancy (§ 17 MuSchG), parental leave (§ 18 BEEG), severe disability (approval of the integration office required), works council membership (§ 15 KSchG).
• Arbitrariness and immorality: Dismissals that violate the prohibition against retaliation (§ 612a BGB), good faith (§ 242 BGB) or public policy (§ 138 BGB).

This means that resignation during the probationary period is not automatically unassailable. And even in a company with five employees, there are limits.

Special case: Change notice

In the case of a termination with a proposal for changes, the employer terminates the existing employment relationship and simultaneously offers to continue it under changed conditions, for example: lower salary, different place of work, different duties.

The employee has three options: accept the offer, reject it (in which case the employment relationship ends), or the offer with reservation and at the same time file an action for protection against dismissal (Section 2 KSchG). The third option is often the wisest: you keep your job while the court examines whether the change was socially justified. If it turns out that it was not, the old conditions continue to apply.

Operational, conduct-related, person-related: The three reasons for dismissal

If the Dismissal Protection Act (KSchG) applies, the employer must justify the dismissal with a recognised reason. The law distinguishes between three categories:

Reason for cancellation	What does that mean?	Typical attack vectors
Operational	Job loss (e.g. site closure, restructuring, decline in orders)	Incorrect social selection. No vacant position offered within the company. Urgency not proven.
Behavioural	Breach of duty by employee (e.g. refusal to work, theft, repeated lateness)	None or faulty Warning letter. Violation not sufficiently documented. Proportionality not observed.
Due to staff shortages	Personal characteristics (e.g. long-term illness, loss of driving licence, lack of work permit)	Negative health prognosis not substantiated. No integrated company integration management (BEM) carried out. Continued employment in a different role possible.

 

Social selection is one of the most common errors in dismissals for operational reasons. The employer must dismiss the employee who is least in need of social protection among comparable employees. Criteria: length of service, age, maintenance obligations, and severe disability (§ 1(3) of the German Dismissal Protection Act (KSchG)). You can find more details in our article on Social selection in redundancies.

When it comes to dismissals due to conduct, the following applies: dismissal is only permissible in exceptional cases without prior warning. More on this in our article on termination for misconduct.

The three-week period: § 4 German Protection Against Dismissal Act

The period for bringing an action is three weeks from receipt of the Written Termination (Section 4, Paragraph 1 of the Protection Against Dismissal Act). It's not the date on the termination letter that counts, but the day you actually receive it.

Calculation example: The termination will be delivered to your letterbox on Friday, 4th April 2026. The deadline begins on 5th April and ends on 25th April 2026 at 24:00. If the last day falls on a Saturday, Sunday or public holiday, the deadline is extended to the next working day (§ 193 BGB).

After this period expires, the termination shall be considered effective. This is the most costly mistake employees make: doing nothing.

Exceptions and Special Cases

• Late admission (Section 5 KSchG): Possible in case of severe illness or late-detected pregnancy. Application within two weeks of the impediment ceasing. An absolute exception.
• Termination without written form A termination by email, WhatsApp or verbally is void according to § 623 BGB. The three-week period does not start here. Nevertheless, legal action is recommended to establish clarity.
• Immediate dismissal plus, in the alternative, ordinary dismissal If the employer states both, you must proceed against both dismissals within the deadline.

Court proceedings before the Labour Court

Phase 1: Filing the lawsuit

The claim must be submitted in writing or lodged with the legal aid office of the competent Labour Court. In Cologne, the Labour Court of Cologne is responsible. In the first instance, there is no mandatory legal representation before the Labour Court. Therefore, you can also file the claim yourself, for example, through the court's legal aid office, which will help you with the wording.

Legal representation is nevertheless strongly recommended. The employer side is almost always represented by lawyers. Mistakes in the application or negotiation cannot be corrected later.

Phase 2: Conciliation hearing

Within two to four weeks of the claim being filed, the court will schedule a conciliation hearing (§ 54 ArbGG). What happens there specifically? The judge sits alone (without lay judges), hears briefly from both sides, and gives an initial assessment of the legal situation. Then they ask: Is there an opportunity to reach an agreement?

If the judge considers the dismissal to be challengeable, the employer immediately feels the repercussions. The typical settlement proposal then looks like this: termination of the employment relationship at a specific date (often later than the notice period), payment of severance pay, issuance of a qualified employment reference with an agreed-upon grade, and release from duties until the termination date with continued payment of remuneration.

Settlement is not defeat. It is often the most economically sensible outcome: you receive severance pay, a good reference, and avoid months of waiting for the court hearing. Furthermore, court costs are completely waived in a settlement.

Phase 3: Court Hearing

If no agreement is reached at the conciliation hearing, a chamber hearing will follow four to six months later. The court will then be fully constituted: a professional judge and two lay judges (one each from the employer and employee side). Evidence will be taken and witnesses heard. The atmosphere is more formal than at the conciliation hearing, but the court often still attempts to bring about a settlement at this stage.

For the employee, the court hearing is often the moment when the real strength of their position becomes apparent. Has the employer not properly documented the social selection? Is the works council consultation missing? Was the warning issued only a few days before the dismissal? All of this now comes to light.

Here too, many proceedings still end in a settlement. Judgments are rarer than most people think: Only about 10 to 15 percent of all unfair dismissal lawsuits are decided by judgment.

Timeline

Phase	Period	What's happening
Legal advice on tenancy bonds and rent increases	Tag 0	Termination is sent to you. Deadline begins.
Immediate measures	Day 1–3	Report being unemployed. Contact a solicitor. Secure documents.
Filing a lawsuit	Within 3 weeks	Claim at the Labour Court. Failure to meet deadline = termination effective.
Conciliation hearing	2–4 weeks after filing a lawsuit	First court date. Judge assesses the situation. Offers settlement proposal.
Chamber appointment	4–6 months after the conciliation hearing	Full hearing with evidence.
Outcome	3–9 months total	Comparison with severance pay or judgment (continued employment/dismissal).

 

Prospects of success: Why dismissals fail

Most employers don't lose due to one big mistake. They lose because small mistakes add up. The main points of attack:

• Missing or incorrect warning in cases of conduct-related dismissals. Without a prior warning, the dismissal will almost never stand up in court.
• Flawed social selection in the case of redundancies. One of the most common reasons for ineffectiveness.
• Works council not properly consulted (§ 102 BetrVG). Any termination without consultation of the works council is invalid. Contentual deficiencies are also sufficient.
• Protection against dismissal disregarded: Pregnant women, parental leave entitlement holders, severely disabled individuals, works council members, data protection officers.
• Form error Termination not signed by the authorised person, delivered without original power of attorney, or termination period incorrectly calculated.
• Incorrect mass redundancy notice According to § 17 of the German Dismissal Protection Act (KSchG), employers must inform the employment agency in advance of larger waves of dismissals. Errors in the notification (incorrect information, late reporting, failure to consult the works council) can render all dismissals within the affected wave invalid.
• No corporate integration management (BEM) in the event of termination due to illness. If the employee has been unable to work for more than six weeks within a twelve-month period, the employer must offer a BEM (§ 167(2) SGB IX). If they fail to do so, they bear an increased burden of proof in court proceedings.

Even a single one of these mistakes can be enough to overturn the termination. Our contribution to Suspicious dismissal shows how strictly the courts examine the requirements for this particular form of termination.

Is it worth suing?

That's the question that's really on your mind. Not: What is a declaratory judgment? But: Should I do it?

The honest answer: It depends on three factors.

1. What is the strength of your legal position? Has the employer made any formal errors? Is the warning letter missing? Is the social selection correct? The more challengeable the dismissal, the greater the pressure on the employer to reach a settlement.
2. What is financially at stake? With a gross salary of 4,000 Euros and eight years of service, the severance pay orientation amounts to 16,000 Euros. The legal costs are between 2,000 and 2,500 Euros. The correlation is clear.
3. Do you want to go back or out? If you want to remain employed, fight for your job. If the relationship of trust has been destroyed, a lawsuit is a lever for the best possible severance package. Both are legitimate.

When is a lawsuit not worthwhile? If the dismissal is obviously justified (e.g. proven theft, repeated warnings with clear documentation) and there are no formal errors. Then the chances of success are low and the legal costs are disproportionate to the expected outcome.

When in doubt, it's better to have it checked and then decide, rather than letting the deadline pass and having no choice at all.

Severance Pay: Amount, Negotiation and Taxes

To begin with: There is no legal entitlement to severance pay. It is the result of negotiation.

Why do employers pay anyway? Because the risk of losing a lawsuit is expensive. If the employer loses, they must re-employ the employee and pay the full salary for the duration of the proceedings (arrears of wages). With a six-month legal process and a gross salary of €4,000, that's €24,000. This risk makes it comparable.

The rule of thumb

The orientation figure is 0.5 gross monthly salaries per year of employment (§ 1a para. 2 KSchG). This is a guideline, not a legal entitlement.

Calculation example: Gross salary 4,000 Euros, 8 years of service. Benchmark value: 4,000 × 0.5 × 8 = 16,000 Euros. If the legal position is strong (gross errors by the employer, long service, special protection against dismissal), the severance pay can also be a factor of 1.0 or higher.

Severance payment and taxes

Severance payments are taxable income. From 2025, the fifths-rule will no longer apply to income tax deductions by the employer. However, it can still be claimed via the income tax return (§ 34 EStG). Depending on your tax bracket and annual income, this can make a difference of several thousand euros. Seek tax advice on this matter.

Detailed information on the calculation of severance pay can be found in our article on Severance pay in labour law.

Termination agreement or unfair dismissal claim?

Many employers offer a termination agreement (or dismissal agreement) after termination (or instead of it). This sounds like a clean solution: amicable separation, severance pay, a good reference. But be careful.

The lockout risk Anyone who signs a settlement agreement risks a waiting period for unemployment benefit of up to twelve weeks (§ 159(1)(1) SGB III). The Employment Agency considers agreeing to the termination of the employment relationship as a voluntary resignation. Twelve weeks without unemployment benefit on a net income of €2,500 means an income loss of €7,500. This can quickly eat into the severance pay offered.

Exceptions exist: If a termination agreement is concluded to avoid an imminent dismissal on grounds of operational requirements that was otherwise imminent, and the severance pay does not exceed 0.5 gross monthly salaries per year of employment, the waiting period may be waived. However, the prerequisites are strict and the assessment by the Employment Agency is rigorous.

Even if a claim against dismissal ends in a settlement, there is generally no waiting period. The reason for this is that you did not accept the dismissal, but rather defended yourself against it. The settlement agreement is assessed differently by the Employment Agency than voluntary consent to a termination agreement. This is one of the most important practical advantages of legal action compared to a termination agreement.

Rule of thumb Never sign a termination agreement without legal review. And never under time pressure. If your employer is pushing you („You have to decide by tomorrow“), that's not a good sign. It usually means they fear a wrongful termination lawsuit.

The unfair dismissal claim is often the better route than a termination agreement: it gives you negotiating power without the risk of a waiting period. And it keeps all options open, as you can agree to a settlement at any time during ongoing court proceedings.

What does a legal challenge against dismissal cost?

The costs comprise court fees and legal fees. Both are based on the value of the dispute, which is regularly equivalent to three gross monthly salaries.

Key feature In the first instance, each party bears their own legal costs (§ 12a ArbGG). Even if you lose, you do not have to pay the employer's lawyer. And in the case of a settlement, court costs are entirely waived.

Cost Example (Gross Salary €3,000, Dispute Value €9,000)

Cost item	When comparing	By judgment
Own legal costs	approx. £2,100	Appr. 1,500 €
Court costs	0 € (excluded)	approx. €490
Total employee costs	approx. £2,100	Approx. £1,990

 

Indicative values based on the RVG fee schedule. Actual costs depend on the progress of the proceedings.

Cost coverage

• Legal expenses insurance Covers all legal and court costs. Submit a request for cover immediately upon receipt of the termination.
• Legal aid If you have a low income and there are reasonable prospects of success, the state will cover the costs (§ 114 ZPO). Caution: Legal aid is a loan; repayment in instalments may be ordered if your income situation improves.
• Trade union Trade union members generally receive free legal protection through DGB Rechtsschutz.

Legal and court costs for a dismissal protection lawsuit are tax-deductible as income-related expenses.

The deciding calculation for whether the lawsuit is economically worthwhile: With a settlement of €16,000 and legal costs of €2,100, you will have significantly more than €10,000 net. And if you win the case, you will also receive your full wages backdated for the duration of the proceedings. Even if you lose, your cost risk in the first instance is just under €2,000. The risk-to-reward ratio is almost always favourable.

The first steps after termination

The termination notice is in front of you. What now?

1. Record access date. The day on which you received the letter. Not the date on the letter. This date determines the start of the deadline.
2. Report as unemployed. At the Employment Agency, at the latest three months before the end of the employment relationship. In the case of immediate termination: within three days.
3. Contact a lawyer. Best on the same day. The three-week deadline is running, and your lawyer needs time.
4. Secure documents. Employment contract, payslips, warnings, emails, termination letters in original.
5. Do not sign anything. Termination agreements, release forms, settlement agreements: not without legal review.

Frequently asked questions about unfair dismissal claims

Do I need a lawyer?

Legally, no; in the first instance, there is no compulsory legal representation before the labour court. The court's legal application office will accept your lawsuit even without a lawyer. However, the opposing party is almost always represented by a lawyer. Mistakes made when filing the application or during settlement negotiations cannot be corrected later.

Do I have to continue working during the procedure?

If no period of notice has been granted: yes. In the case of immediate termination: no. When in doubt, you should declare your willingness to work in writing to your employer. This secures your right to wages in the event that the termination is later declared invalid.

Can I claim unemployment benefit while the lawsuit is ongoing?

Yes. Register with the employment agency in good time. If you win the case, the employer will reimburse the employment agency for the unemployment benefit and then pay you your full salary.

What happens if I win the lawsuit?

The employment relationship continues. You are entitled to continued employment and back payment of wages for the entire duration of the proceedings. However, the parties often agree on severance pay afterwards because the employment relationship is practically irreconcilable. More on this in our article on Entitlement to employment after ineffective dismissal.

Is a lawsuit worthwhile in the case of immediate dismissal?

Indeed, often particularly so. The demands on the employer are high: there must be an important reason (§ 626 BGB), the two-week period must be observed, and an employee hearing is regularly required. If the extraordinary termination fails, the employee also faces a waiting period of up to twelve weeks for unemployment benefit. Legal action can prevent this.

Can I also sue during the probationary period?

Yes. The KSchG only applies after six months, but a probationary period termination can also be invalid: in case of formal defects (§ 623 BGB), violation of anti-discrimination prohibitions (AGG) or disregard of special protection against dismissal. Pregnant women are protected from day one Protection against dismissal in accordance with § 17 MuSchG, irrespective of the probationary period.

Even if the termination is formally permissible, by filing a lawsuit, you secure proof that you contested the termination. This can be relevant for avoiding a waiting period for unemployment benefits.

What is the severance pay?

No fixed entitlement. Guideline: 0.5 gross monthly salaries per year of employment. The actual amount depends on the legal position of both parties, negotiations and the employer's litigation risk. For detailed information, please refer to our article on Severance pay in labour law.

Received a termination notice? We'll examine your situation.

The cost of an initial legal review is disproportionate to what is at stake. And the three-week deadline is ticking.

What you will receive from us: An assessment of whether the termination is contestable. A realistic evaluation of the chances of success and the potential severance pay. A clear recommendation on whether legal action or negotiation is the better course of action. And, if necessary, the immediate filing of a lawsuit within the deadline.

The consultation also covers whether a current termination agreement is acceptable or if you can achieve better terms. We examine your contract, your notice period, your special protection against dismissal, and any errors made by the employer. An initial consultation is possible at short notice, including by telephone.