If you have received a notice of termination and want to file a lawsuit, you may wonder how managing a lawsuit and new job simultaneously works in practice. Are you legally permitted to accept another position while proceedings are ongoing, and what does this mean for your claim to default of acceptance compensation? In this article, we explain how these elements interact and which legal obligations you must observe under German employment law.
Lawsuit and New Job: What Does Default of Acceptance Mean?
Default of acceptance (Annahmeverzug) is a fundamental concept in German labor law following a dismissal. It describes a situation where the employer refuses to accept the employee’s work performance, even though the employee is able and willing to work. Pursuant to Section 615 of the German Civil Code (BGB), the employer must continue paying the agreed remuneration in this scenario, even if the employee is not actively working.
A key prerequisite is that the employee genuinely offers their labor. This can occur via an explicit written or verbal offer, or implicitly by filing an action for protection against dismissal (Kündigungsschutzklage). By bringing a claim, you clearly signal that you consider the termination invalid and intend to continue working. If the labor court subsequently finds the dismissal unlawful, the employer is deemed in default of acceptance for that duration.
Importantly, default of acceptance only applies for the period during which the employee remains willing to work. Taking on a new role does not automatically forfeit your claim to compensation from the previous employer; however, any new earnings must be offset against that claim. We will explore this mechanism below.
Your Duty to Search for Employment: What the Law Requires
Many employees assume they can simply sit back and wait for the labor court’s decision after receiving a dismissal. This is a misconception. German employment law imposes an obligation on you to actively seek new employment. This duty to mitigate damages arises from Section 254 BGB and applies throughout ongoing court proceedings.
In concrete terms: you must apply for suitable positions, even if you are convinced the dismissal will be overturned. Only if you can demonstrate reasonable job search efforts can you claim the full default of acceptance compensation. Otherwise, you risk the employer reducing or entirely refusing payment on the grounds that you willfully neglected to secure alternative employment.
Taking the job search seriously protects both your legal claims and your financial stability. Securing fresh employment provides income while proceedings continue, and demonstrating proactive applications shows the labor court that you are committed to remaining in the workforce. This often strengthens your bargaining position during settlement discussions.
When applying, securing a benevolent employment reference plays a crucial role. Without a proper reference letter, convincing prospective employers becomes significantly harder. Ensure that you request an interim or final reference promptly.
Starting Work During Proceedings: Is It Permitted?
Pursuing a lawsuit and new job at the same time is entirely lawful—starting new employment during pending court proceedings is explicitly permitted. No legal rule prohibits you from doing so. In fact, it is often advantageous: it secures your livelihood and demonstrates to the court that you are actively engaged in the job market.
However, several rules must be observed. As long as the old employment contract technically persists pending the court’s verdict, you must not engage in conduct that harms your former employer. This notably includes the statutory prohibition against competing with your employer. Accepting a position with a direct competitor could create significant legal complications. When in doubt, consulting an independent specialist employment lawyer is highly advisable.
Furthermore, while you are not strictly required to notify your former employer the moment you start a new role, the details will become relevant during legal proceedings because your new earnings must be offset. Employers have a legitimate legal interest in calculating their potential default of acceptance liability. Maintaining transparent documentation of your earnings is therefore essential.
Offsetting New Income Against Default of Acceptance Pay
If you begin a new job while your former employer is in default of acceptance, the income you earn must be deducted from the remuneration owed to you under Section 615 Sentence 2 BGB. The former employer is only liable to pay the difference between your previous salary and your new income. This deduction principle also applies to income from freelance work or statutory unemployment benefits.
Crucially, offsets can apply not only to actual earnings but also to hypothetical income. If you maliciously fail to pursue reasonable job opportunities, the employer can argue that you could have earned an income elsewhere. In such cases, the court may deduct hypothetical earnings that you never actually received, underscoring the critical necessity of documented job search efforts.
Calculations occur on a monthly basis. For example, if you start a new job in January earning €2,000 while your previous gross monthly salary was €3,000, the former employer owes only the €1,000 difference for January. For any preceding months without employment—provided your job search efforts were adequate—you remain entitled to the full previous salary.
Notably, a negotiated severance payment is not deducted from default of acceptance pay, as it represents compensation for the loss of the job rather than ongoing remuneration. However, potential default claims frequently influence the final severance amount negotiated during proceedings.
Documenting Your Job Search: What Records to Keep
To prove in court that you complied with your duty to seek work, you should meticulously document every step of your application process. This documentation serves as your primary defense if the employer alleges you remained idle.
Thorough documentation includes:
- Copies of all sent application letters and resumes
- Responses from employers, including rejections and invitations to interviews
- Confirmation receipts from job portals and recruitment platforms
- A chronological overview of all positions applied for, including dates and job titles
Retain all records at least until the termination dispute is fully concluded. In the event of a dispute over default of acceptance wages, these records provide the evidence needed to verify your diligence.
Common Pitfalls and How to Avoid Them
When managing an employment dispute alongside looking for alternative employment, keep the following essential pitfalls in mind:
1. Missing the three-week deadline. In Germany, an action against wrongful dismissal must be filed with the labor court within three weeks of receiving the written notice. Missing this strict window generally renders the termination legally valid. Review the rules regarding the three-week deadline immediately upon receiving notice.
2. Failing to document job applications. Neglecting to record your job search can lead to reductions in your wage claims due to alleged breach of your duty to mitigate damages.
3. Refusing reasonable job offers. While you are not required to accept positions that are grossly below your qualifications or offer unreasonable conditions, turning down suitable roles without valid justification can result in hypothetical income deductions.
4. Violating non-compete obligations. Starting work for a direct competitor before the formal conclusion of your prior employment relationship can trigger damage claims or justify an immediate extraordinary dismissal.
5. Ineffective communication. Keep interactions with your former employer factual, professional, and properly documented to avoid providing tactical advantages in court.
Conclusion: Protecting Your Rights with Legal Counsel and Litigation Funding
Managing a lawsuit and new job in tandem is legally viable and often advantageous for employees. However, you must adhere to core duties: actively seeking employment, accurately offsetting new earnings, and keeping comprehensive documentation. Observing these guidelines protects your wage claims while stabilizing your personal financial situation.
Because German employment litigation involves intricate procedural rules and strategic decisions, seeking representation from an independent specialist employment lawyer (Fachanwalt für Arbeitsrecht) is strongly recommended. A qualified attorney can evaluate your prospects and negotiate optimal settlement terms, such as a fair severance package.
To alleviate the financial barrier of legal costs, litigation funding offers a practical solution. As a litigation funder, RechtStark reviews your case to determine whether we can cover the financial risk of your dismissal lawsuit. This allows you to assert your legal rights confidently without worrying about attorney or court fees.
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.