Termination protection high earners 2027 faces a major shift as the planned reform seeks to link the personal scope of the Dismissal Protection Act to an annual gross income of €177,500.
Employees earning above this threshold lose the general protection against socially unjustified dismissals. The full text of the current law can be viewed here: Dismissal Protection Act (full text). Nevertheless, even without the classic dismissal protection, courses of action remain – if you know them and act promptly.
Termination protection high earners 2027: What really changes?
The draft bill states that the Dismissal Protection Act will no longer apply to employees whose regular annual earnings exceed the contribution assessment ceiling of the statutory pension insurance (West) – for 2027 this is set at €177,500. This concerns not only the fixed base salary but also regularly paid variable components: guaranteed bonuses, commissions, profit‑sharing, benefits in kind such as company cars or stock options upon vesting, and employer contributions to retirement plans that have a salary character. One‑off payments like jubilee awards are not taken into account. The threshold is adjusted dynamically each year. A legal-socio-political analysis of the reform shows that the legislator intentionally defined a group that allegedly “can look after its own protection” – in practice this often falls short because individual bargaining power may be lacking.
How the annual salary for the €177,500 threshold is calculated
The decisive factor is the “regular annual remuneration” in the sense of social security. Included are: fixed base salary, contractually guaranteed bonuses, commissions at a predictable level, non‑cash benefits (company car, stock options upon vesting) and employer contributions to pension schemes, to the extent they have a salary character. Genuine one‑off payments without repetition are not counted. If you are close to the limit, you should review your compensation structure precisely – sometimes a contractual shift from variable to fixed components or waiving certain fringe benefits is enough to fall below the threshold and retain dismissal protection. The details on calculating the €177,500 threshold are essential for this assessment.
Option 1: Consistently exploiting formal errors in the dismissal
Even if the general dismissal protection no longer applies, a dismissal is not automatically lawful. Formal flaws make it vulnerable: missing or defective hearing of the works council (§ 102 BetrVG), failure to observe the notice period, lack of written form (§ 623 BGB) or an impermissible employer‑initiated resignation. Moreover, the special dismissal protection continues to apply in full – for pregnant employees, parents on parental leave, severely disabled persons (degree of disability ≥ 50), works council members or data‑protection officers. Also dismissals that violate morality (e.g., out of spite, discrimination under the AGG) remain prohibited. Filing a claim can therefore be worthwhile to assert formal defects or to force a settlement.
Option 2: Reviewing and asserting special dismissal protection
Certain employee groups enjoy extended dismissal protection despite the income threshold. These include pregnant workers, parents on parental leave, severely disabled individuals with a degree of disability of 50 or more, works council members, and persons specially protected under data‑protection law. If any of these grounds applies, the dismissal remains ineffective regardless of income. It is therefore worthwhile to clarify early on whether such protection exists – this can considerably strengthen your bargaining position and prompt the employer to agree to a voluntary settlement.
Option 3: Negotiating a severance payment – realistically assessing bargaining power
Without the protection of the Dismissal Protection Act, the statutory lever that often prompts employers to offer severance payments disappears (§ 1a DPA applies only if expressly offered in the dismissal letter). Nevertheless, many companies pay voluntarily – to avoid litigation, limit reputational damage, or because the works council (if present) negotiates under § 112 BetrVG in mass layoffs. The amount is purely a matter of negotiation; there is no legal entitlement. As a reference for negotiations, the formula “0.5 to 1.0 monthly salaries per year of service” is often cited – but it is not automatic and offers no guarantee. Going into the discussion well prepared (documenting your performance, proving particular need for protection, showing alternative positions within the group) markedly improves your stance. Understanding termination protection high earners 2027 helps you gauge your leverage.
Option 4: Seeking reinstatement – using it tactically and sparingly
A request for reinstatement in the dismissal protection proceedings (§ 611a BGB in conjunction with § 286 ZPO) can create pressure – but only if the employer can and will actually take the employee back. If the position no longer exists, the relationship of trust is broken, or the conflict escalates, the outcome may be a judgment acknowledging the claim with a duty to reinstate, rather than a settlement. This entails risks: the employer must pay wages in default, but does not have to make additional payments. For high‑earning top earners, the employer’s liability for back‑pay is substantial – which can increase willingness to settle, provided the employee genuinely considers returning. If you are solely after a severance payment, use this lever tactically and sparingly, not as a bluff.
Option 5: Bundling all claims increases the settlement pool
A strategy that has proven effective in practice: do not look at dismissal protection or severance pay in isolation, but bundle all outstanding claims into a single settlement. These include: accrued vacation (paid out), overtime (compensated either financially or as time off), variable remuneration (bonus, commission, long‑term incentive plans), company car provision, reference wording and grading, paid leave during notice period, outplacement expenses, and supplemental pension commitments. Each of these items carries a monetary value and enlarges the subject matter – which influences not only the severance amount but also the lawyer’s settlement fee (RVG). A holistic view prevents the employer from overlooking individual items or later disputing them.
Mind the deadlines: the three‑week period remains crucial
Regardless of income: a dismissal becomes legally effective if no lawsuit is filed at the labor court within three weeks of receipt (§ 4 DPA, § 7 DPA). This is an exclusion period – missing it renders the dismissal effective even in the case of serious errors. For top earners the same rule applies: have counsel review immediately whether a claim makes sense. Even if the general protection has fallen away, the suit can uncover formal defects, build negotiating pressure, or buy time for an orderly handover. Hesitation forfeits options.
Conclusion: Act early and secure your options
The reform concerning dismissal protection for high earners in 2027 hits well‑paid employees hard, but does not leave them defenseless. Those who know their compensation structure, verify special dismissal protection, exploit formal flaws in the dismissal, and bundle all claims negotiate from a position of strength – not fear. The route often leads to a settlement that comprises more than just a severance payment. The key is: do not wait until the dismissal letter lands on your desk; instead, seek legal advice at the first signs (strategy talks, position cuts, new managers). This way you secure the best options – even without the classic dismissal protection. Ultimately, staying informed about termination protection high earners 2027 ensures you act wisely.
Note: This article provides general information and does not substitute for legal advice in individual cases. For a free initial assessment of whether litigation funding might be suitable for your case, you can contact RechtStark.
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.