Termination Protection Lawsuit Costs: What Should I Expect?

You’ve received a termination notice and are considering taking legal action. Many individuals hesitate due to the seemingly high costs of filing a termination protection lawsuit. But how expensive can such a lawsuit really be?

In this article, you will learn about the potential costs of a termination protection lawsuit and explore ways to minimize them.

Overview:

1. The Costs in Detail
2. Financing Options
3. What Happens in a Settlement?
4. Severance Pay in a Termination Protection Lawsuit
5. Tips to Minimize the Costs of a Termination Protection Lawsuit
6. How Kern+Peters Rechtsanwälte Can Help
7. Conclusion
8. FAQ

1. The Costs in Detail

If you have decided to challenge a termination and seek support from an attorney, the general rule is that each party must cover their own legal costs.

A distinction is made between court costs and attorney fees.

Court costs

Compared to other civil proceedings, court costs in employment law disputes are relatively manageable. In fact, there are certain unique aspects of employment law that help reduce the financial burden on both employers and employees.

The amount of court costs is primarily determined by the gross salary of the employee filing the claim. This is the so-called assessment basis used to calculate the court fees. For example, with a gross salary of €2,000, court costs are approximately €364. A higher salary leads to higher court costs, but these usually remain within a reasonable range. For instance, court costs for a gross salary of €3,000 are around €490.

An interesting feature of employment law is that court costs are completely waived if the parties reach a settlement. This means both parties can avoid court fees by agreeing to an out-of-court solution. Since settlements are common in employment law and are often sought to achieve a quick resolution, this can be a practical option for many employees to reduce costs.

Attorney Fees

While court costs remain manageable, attorney fees can vary depending on the course of the proceedings. However, there are regulations that ensure a certain level of transparency and help employees keep track of the costs.

Attorney fees depend on several factors, particularly the course of the proceedings and the dispute value, which is calculated based on the employee’s annual gross salary. Employment law has a unique rule: in the first instance, each party covers their own attorney fees, regardless of whether the lawsuit is successful or not. This means the employer does not have to pay the employee’s legal fees in the event of a successful lawsuit, and vice versa.

The following can serve as general guidelines for calculating attorney fees:

• For a dispute value of €6,000 (e.g., three monthly salaries of €2,000 each), attorney fees for one instance can range between €1,000 and €1,500.
• If the dispute value rises to €9,000 (e.g., three monthly salaries of €3,000 each), attorney fees per instance often range between €1,500 and €2,000.

These figures are approximate and precise calculations can only be made after the conclusion of the case. The extent of legal services, such as the effort required for drafting legal documents and court appearances, can influence the total fees.

2. Financing Options

Since filing a termination protection lawsuit involves financial risks, many employees wonder how they can cover the costs. Depending on your personal situation, there are various options available.

Legal Expense Insurance

A legal expense insurance policy is highly recommended. It is important to ensure that employment law protection is included in the policy, as not all policies automatically provide this coverage.

Additionally, keep in mind that legal expense insurance for employment law usually includes a three-month waiting period. This means the insurance cannot be used immediately after purchase but only after the waiting period has passed. However, if you are already insured, you can take advantage of this benefit and have the costs for legal representation covered.

Legal Aid

If you do not have legal expense insurance and lack the financial means to file a lawsuit, you can apply for legal aid (Prozesskostenhilfe, PKH). This state support is granted if your financial situation does not allow you to cover the costs of the proceedings and if there is a reasonable chance of success.

Legal aid covers court costs and typically your own attorney fees, but it does not cover the opposing party’s attorney fees in the event of a loss. The application for legal aid must be submitted in a timely and complete manner to ensure approval before the proceedings begin.

3. What Happens in a Settlement?

As mentioned earlier, court costs are completely waived if both parties agree to a settlement. A settlement is often pursued because it offers advantages for both sides: the employee saves on court costs and often receives severance pay, while the employer minimizes the costs and risks of a prolonged court case.

Benefits of a Settlement

For employees, a settlement is often the best way to achieve a resolution quickly and without lengthy proceedings. Typically, the parties agree on severance pay, which helps the employee mitigate the financial impact of the termination. In many cases, the severance payment amounts to about half a month's gross salary for each year of employment, although this can vary significantly depending on the individual case.

However, a settlement is not always the best solution. In some cases, pursuing a lawsuit is the better option, particularly if the chances of success are high and the employee seeks reinstatement or feels unfairly treated. However, the financial risks should always be carefully considered.

4. Severance Pay in a Termination Protection Lawsuit

A severance payment is a one-time compensation that employers are often willing to offer as part of a settlement to avoid lengthy court proceedings. In termination protection lawsuits, many employees not only aim to continue their employment but also hope for an appropriate severance payment. The amount of the severance depends on several factors, such as the length of service, the employee's age, and whether the termination was socially justified.

Calculation

A common rule of thumb is: half a month's gross salary for each year of service as severance pay. For example, an employee who has worked at the company for ten years and earns €3,000 gross per month could expect a severance payment of approximately €15,000. In many cases, employees, with the support of an attorney, negotiate significantly higher severance payments, as the prospect of a lawsuit often poses a risk factor for employers.

Advantages and Disadvantages

A severance payment can be an attractive solution as it provides financial stability and helps the employee bridge the period after termination. However, it’s important to note that severance payments are subject to taxation. The exact tax burden depends on the individual’s financial situation. An experienced attorney can help minimize the tax impact, ensuring the employee gets the most out of the settlement.

5. Tips to Minimize the Costs of a Termination Protection Lawsuit

If you do not have legal expense insurance and are not eligible for legal aid, there are still ways to keep costs as low as possible:

• Take advantage of a consultation: A free initial assessment by a lawyer can help evaluate the chances of success for your lawsuit and avoid unnecessary expenses.
• Aim for an early settlement: An out-of-court agreement can provide a quick resolution and save significant costs.
• Arrange installment payments: Many lawyers offer the option to pay their fees in installments, making it easier to manage the financial burden.

6. How Kern+Peters Rechtsanwälte Can Help

The decision to file a termination protection lawsuit is significant and often challenging. Kern+Peters Attorneys will guide you through this process with comprehensive legal expertise and experience in employment law.

• Free Initial Assessment: We offer a first, no-obligation evaluation of your case, providing clarity on the chances of success and the potential costs of a lawsuit.
• Customized Strategy: Every termination is unique, and we develop a tailored strategy for your case that best protects both your rights and personal interests.
• Negotiations with the Employer: Our experienced attorneys support you in securing fair severance pay or reinstatement. We negotiate professionally and goal-oriented to achieve the best possible outcome for you.
• Court Representation: If out-of-court negotiations do not succeed, we will represent you diligently in court and enforce your rights consistently.
• Advice on Legal Costs and Funding Options: If you are concerned about the costs of a termination protection lawsuit, we assist you in applying for legal aid or clarifying whether your legal expense insurance will cover the costs.

With Kern+Peters Attorneys by your side, you are not alone in this process. Our goal is to support you and ensure you have a fair chance to enforce your rights. Contact us today to discuss your options and receive guidance from our experienced attorneys.

7. Conclusion

• In a termination protection lawsuit, there are two main types of costs to consider: court costs and attorney fees.
• Court Costs: These are relatively low in employment law cases. If a settlement is reached, court costs are completely waived. Costs are based on gross salary (e.g., €364 for a gross salary of €2,000).
• Attorney Fees: These depend on the course of the proceedings and can only be precisely calculated at the end. Generally, each party is responsible for their own attorney fees.
• The goal of a termination protection lawsuit is often to secure severance pay, which typically exceeds the attorney fees.
• First Aid and Support: We offer a free initial assessment for termination and settlement cases. Legal expense insurance and legal aid are also available as options to support you.

8. FAQ

Picture credits: © Andriy Popov | PantherMedia