Unfair dismissal severance pay is closely linked to unemployment benefits: a sufficiently high severance package can prevent you from having to rely on state support. A recent case shows how an employee achieved exactly that with €30,000 in severance pay – after the dismissal reason turned out to be fabricated. In this article, you will learn how to fight sham termination reasons and what role severance pay plays when it comes to unemployment benefits (Hartz IV / Bürgergeld).
The Case: €30,000 Severance Pay for a Fabricated Dismissal Reason
An employee is dismissed by their employer. The stated reason: alleged breaches of duty that later prove to be invented. The employee fights back with an unfair dismissal claim and receives a severance payment of €30,000 before the labor court. This amount is enough to cover living expenses for several months – and prevents the need to claim unemployment benefits II.
Such cases are not uncommon. Employers fabricate dismissal reasons to part ways with unwanted employees without observing the statutory hurdles. Yet employees have rights, and a severance payment can be the key to bridging financial hardship. The exact circumstances of the case are not public, but the outcome shows: those who fight back can achieve a substantial severance package.
What Is a Fabricated Dismissal Reason? Examples and Legal Classification
A fabricated dismissal reason exists when the employer invents a pretext to justify a termination. Typical examples include alleged refusal to work, alleged poor performance, alleged disruption of workplace peace, or alleged theft. In reality, these accusations often have no basis – they serve only to provide a formal justification for the dismissal.
Legally, a dismissal is only effective if it is socially justified. This is governed by Section 1 of the Protection Against Dismissal Act (KSchG). If no valid reason exists – such as an operational, personal, or conduct-related dismissal – the termination is invalid. A fabricated reason usually falls under conduct-related dismissal but must actually have occurred. If the employer merely asserts it without being able to prove it, the employee has good prospects in court.
Important: The employer bears the burden of pleading and proof for the dismissal reasons. If the employer cannot substantiate the allegations, the dismissal is generally invalid.
Your Rights: Unfair Dismissal Claim Against a Sham Termination
If you suspect your dismissal reason is fabricated, you should act quickly. The unfair dismissal claim must be filed with the labor court within three weeks of receiving the dismissal notice. Miss this deadline, and the dismissal becomes automatically effective – even if the reason was invented.
The claim aims to establish the invalidity of the dismissal. In many cases, however, the parties agree to terminate the employment relationship in return for a severance payment. This severance is often the pragmatic solution, as it saves both sides time and costs. Learn more about the costs of an unfair dismissal claim in our guide.
A specialist employment lawyer can assess the prospects of success and guide you through the proceedings. If you cannot bear the financial risk of the lawsuit yourself, RechtStark as a litigation funder assesses whether it can cover the costs – so you can enforce your rights even without your own budget.
Unfair Dismissal Severance Pay: How the Severance Protects Against Unemployment Benefits
The unfair dismissal severance pay you negotiate and unemployment benefits are closely connected. Anyone receiving unemployment benefits II must use their assets to cover living expenses. A severance payment counts as assets. However, there are exempt amounts that vary depending on your situation. If the severance is high enough, it can secure your livelihood for a longer period, meaning no entitlement to unemployment benefits II arises.
In the case of the employee with €30,000 severance pay, the sum sufficed to survive several months without state support. This is particularly important because unemployment benefits II come with strict conditions – such as the obligation to accept any reasonable job. A severance package can prevent this dependency and give you time to reorient yourself calmly. How unfair employer conduct can increase the severance amount is explained in our article Unfair Employer Conduct.
Note: The offsetting of severance payments against unemployment benefits II is complex. There are asset exemptions that differ by age and personal situation. Seek advice from a qualified professional on this matter.
How High Can the Severance Pay Be? Factors for Calculation
The amount of a severance payment is not fixed by law – it is a matter of negotiation. As a rule of thumb, Section 1a of the Protection Against Dismissal Act (KSchG) suggests half a month’s salary per year of service. However, this formula only applies if the employer explicitly offers the severance in the dismissal letter. In practice, severance amounts often end up higher or lower depending on negotiation skill and the circumstances of the case.
Key factors include:
- Length of service with the company
- Age of the employee
- Monthly salary
- Any misconduct by the employer
- Prospects in the unfair dismissal proceedings
The longer you were with the company and the higher your salary, the greater the negotiating basis. If the employer has clearly acted wrongly – for instance, by fabricating a dismissal reason – this can increase the severance payment. In our example, €30,000 was apparently an appropriate sum to settle the case.
Practical Steps: How to Proceed Against a Fabricated Dismissal
If you receive a dismissal with a fabricated reason, you should proceed systematically:
- Check the dismissal for formal errors – such as a missing signature or incorrect notice periods.
- Document all details that indicate a fabricated reason.
- Consult a specialist employment lawyer immediately. They can assess your prospects of success.
- File an unfair dismissal claim within three weeks.
- Negotiate a severance payment – this is often the fastest route.
- Have the severance agreement confirmed in writing and review the tax implications.
A lawyer is indispensable, as they know the legal nuances and can represent your interests optimally. If you cannot bear the financial risk of the lawsuit yourself, RechtStark as a litigation funder assesses whether it can cover the costs – so you can enforce your rights even without your own budget.
Conclusion: Don’t Accept Invented Reasons
A fabricated dismissal reason is not a fate you must accept. You have the right to fight back, and a severance payment can give you the financial security you need. Unfair dismissal severance pay and unemployment benefits are two sides of the same coin: a sufficiently high severance package spares you a trip to the job center.
If you are affected, do not hesitate. The three-week deadline is short but decisive. Get professional support and do not let yourself be fobbed off with invented reasons. With an unfair dismissal claim and a strong negotiating position, you can achieve a severance outcome that keeps you financially secure.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.