A settlement makes financial sense when its specific terms compare favourably with realistic alternatives. The assessment includes severance pay, potential pay liabilities, the employer's own costs, time and the implications for the business.

Compare settlement with continuing the proceedings

The starting point is the legal assessment: Which facts can be proved, where are the uncertainties and which legal questions remain open? Simply feeling that you are right is not a sound basis for a decision.

Together, we compare the consequences of success, partial defeat and complete defeat. These include monetary claims, the possible continuation of employment and the burden on the business. Settlement proposals are measured against these alternatives.

Which costs and risks belong in the calculation?

In first-instance labour court judgment proceedings, there is generally no right to recover your own legal fees from the other party, even if you win. This is governed by § 12a ArbGG. Different cost rules apply to later instances. The costs of a settlement, including possible additional fees, must also be considered.

In dismissal disputes, pay for the intervening period may also be at issue. Whether such claims exist, and their amount, depend in part on the requirements for default in acceptance and statutory offsets. A flat monthly figure without assessing these conditions would be misleading.

A settlement involves more than severance pay

  • Termination date and final pay up to that date.
  • Any severance payment, due date and payment terms.
  • Release from duties, holiday and time credits.
  • Employment reference, return of work equipment and access to company systems.
  • Which claims are settled and which are expressly left open.

These points must fit together. An apparently favourable settlement may trigger new disputes if its scope or implementation remains unclear. Tax and social security implications require separate assessment where necessary.

When is continuing the proceedings preferable?

A settlement is not an end in itself. If the concessions sought are too great or the dispute concerns a recurring workplace issue, continuing the proceedings may make sense. This requires a sound legal position and evidence.

I explain the assessment and represent the approach agreed with you. Read more in the article Defending legal positions before the labour courts.

Legal bases

This information explains typical situations. The specific agreements and facts determine the assessment of your case.