What Does an Unfair Dismissal Claim Cost? Fees & Value in Dispute

What does an unfair dismissal claim cost?

Fear of the costs stops many people from challenging a dismissal. Yet the costs are fairly easy to calculate, and employment law has some special rules worth knowing. Broadly, the financial outlay is made up of three parts:

• Lawyer’s fees under the Lawyers’ Fees Act (RVG),
• Court fees under the Court Fees Act (GKG), but only under certain conditions, and
• Expenses such as postage, copies or travel costs.

All three depend on a single figure: the value in dispute. And there’s a special feature of employment law that overrides everything else: in the first instance, each side pays its own lawyer, regardless of outcome. Let’s go through it step by step.

The value in dispute: the basis for all costs

The value in dispute (Streitwert) is the calculated value of what’s being disputed, and it determines both lawyer’s fees and court fees. For an unfair dismissal claim, the court usually applies a quarter’s earnings to the dismissal protection claim, meaning three gross monthly salaries (§ 42 Abs. 2 GKG). This applies largely regardless of how long you’ve worked at the company.

For example: at €4,000 gross per month, the value in dispute is €12,000. If further claims are made, for example for a qualified reference or continued employment, the value in dispute rises accordingly, and so do the fees.

Lawyer’s fees under the RVG

Lawyer’s fees follow the RVG and rise in steps with the value in dispute. In a typical unfair dismissal case, they’re made up of several components:

• A procedural fee for conducting the case,
• A hearing fee for attending court hearings,
• A settlement fee, if the case ends in a settlement,
• A flat-rate expenses allowance, plus statutory VAT.

As a rough guide: at a value in dispute of around €12,000, lawyer’s fees typically fall in the low to mid four-figure range per instance, depending on how the case unfolds. A settlement adds the settlement fee but can save on court costs. These are rough guides: the exact amount follows the RVG fee table and the specific course of events. Your lawyer should give you a proper cost estimate in advance.

Court fees: judgment or settlement?

Here’s some good news. Whether and how much in court fees you’ll pay depends on how the case ends:

• Settlement (the usual outcome): if both sides reach an agreement, court fees are typically reduced to zero. Ending the case by settlement usually means no court fees at all.
• Contested judgment: if the court decides by judgment, court fees follow the value in dispute. The losing party pays them.

Since most unfair dismissal proceedings already end in a settlement at the conciliation hearing, court fees in practice often matter less than many people fear. You can read about how such a settlement comes about under Unfair dismissal claim and Negotiating severance pay.

The § 12a rule: in the first instance, everyone pays their own lawyer

This is the most important, and most surprising, rule in labour court proceedings. Unlike most court cases, here: there’s no right to reimbursement of lawyer’s fees in the first instance, regardless of who wins (§ 12a Abs. 1 ArbGG).

In concrete terms, that means: even if you win the case outright, you won’t get your lawyer’s fees back from the employer. Conversely, if you lose, you don’t have to cover the other side’s lawyer’s fees. Each side pays its own lawyer. This rule applies only to the first instance; on appeal, the usual reimbursement rules apply.

In practice, this cuts both ways: it limits your risk, since you don’t need to fear the other side’s lawyer’s fees if you lose. At the same time, it means you need to budget for your own costs. That’s exactly why the cost question is often folded directly into settlement negotiations, for example through a correspondingly higher severance amount.

More important than any cost question: the 3-week deadline

Before you think about costs, think about time. An unfair dismissal claim must reach the labour court within three weeks of receiving the written dismissal (§ 4 KSchG). This is a strict cut-off deadline. If it passes, the dismissal is generally treated as valid, even if it could otherwise have been challenged. At that point, the cost question no longer matters.

Work out your exact deadline, down to the day: Deadline calculator – how many days do you have left?

How to cover the cost risk

Nobody should have to give up their rights out of fear of the costs. There are three established ways to cover the cost risk:

1) Legal expenses insurance

If you have employment-related legal expenses insurance and the contractual waiting period has passed, it usually covers lawyer’s and court costs, often minus an agreed excess. It’s always worth checking your policy before filing a claim. Important: the insured event usually occurs when you receive the dismissal, so a policy taken out afterwards won’t help in this case.

2) Legal aid (Prozesskostenhilfe)

If your income isn’t enough to cover the proceedings, legal aid may be an option. Depending on your financial circumstances, it covers the costs in full or in instalments, provided the claim has reasonable prospects of success and isn’t frivolous. You apply for it at the labour court.

3) Litigation funding through Team Abfindung

The third option is our litigation funding. You pay nothing upfront, we carry the cost risk and work purely on a success basis. Only if you actually receive a severance payment at the end do we keep an agreed share of it. If the case ends without a result, you pay nothing. That turns the cost question from an obstacle into a minor detail.

What you should do now

1. Note the date you received the dismissal. The 3-week deadline starts running from that day. It takes priority over everything else.
2. Roughly estimate the value in dispute. Three gross monthly salaries give you the rough scale of the costs.
3. Check your legal expenses insurance. Look at your policy to see whether it covers employment law and whether the waiting period has passed.
4. Sort out funding. Without insurance and on a tight budget, check legal aid or litigation funding before the deadline runs out.
5. Get an initial assessment. The severance calculator shows you in 2 minutes what level of severance pay is realistic, the benchmark against which you can weigh the effort.

How can we help you?

Costs are the most common reason people simply accept a dismissal that could have been challenged, and in doing so often leave a severance payment on the table that they could have won through a settlement. That’s exactly the obstacle we remove. We review your case together with lawyers specialising in employment law, file your claim in time, and negotiate on your behalf.

We carry the risk: purely success-based, with no upfront cost. We fund the proceedings, and only if you actually receive a severance payment at the end do we keep an agreed share of it. That way, you never have to choose between your rights and your bank balance. Start with an initial assessment using our severance calculator, it only takes 2 minutes. And remember the 3-week deadline: it starts running on the day you receive the dismissal.