Severance after withdrawing a claim — many employees assume they are automatically entitled to severance pay after a redundancy dismissal. But that is a misconception, as a recent ruling by the Thuringia Higher Labor Court shows. The case of a long-serving order picker at tegut Logistics makes clear: anyone who withdraws their unfair dismissal claim generally loses all negotiating leverage for severance pay — even when personal hardships such as caring for elderly parents are involved.
The Case at a Glance: Severance Claim After Dismissal at tegut Logistics
The claimant had worked as an order picker at a tegut Group logistics company since December 1991. The tegut Group belongs to the Swiss retail giant Migros and operates supermarkets. At the S.-Stadt site in Thuringia, 64 permanent employees worked, including the claimant. As part of a strategic realignment, management decided to consolidate logistics sites and build a new central facility in H.-M.-Stadt. The existing S.-Stadt site was to be closed.
The claimant received a redundancy dismissal in March 2023 effective September 30, 2023. At the same time, he was offered a modified contract — which he declined. Instead, he filed an unfair dismissal claim but later withdrew it. He then sued for severance pay — without success. The Erfurt Labor Court dismissed the claim, and the Thuringia Higher Labor Court upheld that decision.
Who Was Affected? Long-Serving Order Picker at the S.-Stadt Site
The claimant was 61 years old at the time of dismissal and had been with the company for nearly 32 years. His average gross monthly salary was 2,628 euros for a 40-hour week. He lived in his own house and cared alone for his parents in need of care: his 86-year-old father with care level 2 and his 81-year-old mother with care level 3. This personal situation played a central role in the proceedings — but not in the claimant’s favor.
Although caring for parents undoubtedly constitutes a significant personal hardship, the claimant could not derive any severance entitlement from it. The court clarified that personal circumstances play no role in the question of severance pay once a dismissal has been accepted. What matters is solely whether the employer offers severance or a settlement is reached.
Why the Employer Wanted to Close the Site
The tegut Group, part of the Migros Group, pursued a growth strategy after the acquisition. Markets were to be expanded into new regions, requiring a substantial increase in logistics capacity. According to the company, there was no way to create the necessary space at the existing sites. A new build elsewhere or a complete relocation were the options. Ultimately, the company decided to concentrate on a single central site in H.-M.-Stadt and close the S.-Stadt location.
For the affected employees, this meant their jobs at that site ceased to exist. Continued employment at another location was not possible, as the modified contract provided for a transfer that the claimant refused. The dismissal was therefore socially justified — provided the social selection had been properly conducted. But that examination never took place, because the claimant withdrew his unfair dismissal claim.
Severance After Withdrawing a Claim: Is There an Automatic Entitlement?
Many employees believe they are automatically entitled to severance pay after a redundancy dismissal. That is a widespread misconception. Severance pay is not a statutory entitlement but a contractual or settlement agreement. There is a statutory provision in Section 1a of the Protection Against Dismissal Act (KSchG) that provides for severance pay if the employer expressly cites operational reasons in the dismissal letter and the employee does not file an unfair dismissal claim within the filing deadline. However, this rule only applies if the employer offers the severance pay in the dismissal letter. In many cases — including this one — that does not happen.
Without such an offer, the only route is via an unfair dismissal claim. Within those proceedings, a settlement can be reached that includes severance pay. Anyone who withdraws the claim, as the claimant did here, gives up that possibility. There is then generally no entitlement to severance pay — unless the employer pays voluntarily. Severance after withdrawing a claim is therefore not a given; it depends entirely on the employer’s willingness to negotiate.
Further information on the amount and requirements of severance pay can be found in our guide Severance After Dismissal. The amount of severance pay is not set by law either. As a rule of thumb, half a gross monthly salary per year of service is often used as a reference point, as also explained in our article on the BMW job cuts. The claimant thus gave up the chance of severance pay by withdrawing his claim. This shows how important it is not to accept a dismissal hastily and to inform yourself about your legal options early on.
What Do Personal Hardships Like Caring for Parents Mean for the Proceedings?
Caring for relatives is a socially recognized and often burdensome task. In employment law, however, it only plays a role when it comes to the social selection in a redundancy dismissal. Under Section 1(3) KSchG, the employer must consider social criteria such as length of service, age, maintenance obligations, and disability when selecting employees for dismissal. The assumption of care duties can also factor into this balancing — for instance, where particular hardships would result.
But this protection only applies if the employee has the dismissal reviewed by a court. Anyone who — like the claimant — withdraws their unfair dismissal claim accepts the dismissal and can no longer challenge the social selection. The question of personal hardship thus loses its relevance for the proceedings. Even in the context of severance after withdrawing a claim, personal hardships play no role. The court made clear in this case that personal circumstances such as caring for parents cannot establish an independent severance claim. Severance pay and personal hardship are not automatically linked.
For employees, this means: anyone who wants to obtain severance pay should not simply accept a dismissal but actively consider filing an unfair dismissal claim. Only then can the social selection be reviewed and, at best, severance pay be negotiated. Our guide to the unfair dismissal claim explains how to proceed. The tax treatment of severance pay is another important point — we have a dedicated article on the one-fifth rule for severance tax.
Appeal Not Admitted: What Does This Mean for the Claimant?
The Higher Labor Court did not admit a further appeal. The judgment is therefore final, unless the claimant files a complaint against the denial of leave to appeal within one month — which is only possible on grounds of fundamental legal questions or deviations from supreme court rulings. In this case, there appear to be no such grounds, so the proceedings are concluded for the claimant.
For other employees, this point is important: not every judgment can be taken to the next instance. Admission of a further appeal is the exception. Anyone who loses a claim should therefore seek early advice on the prospects of an appeal or further appeal. Often it is more sensible to present all arguments in the first instance and push for a settlement.
Unfair Dismissal Claim and Litigation Funding: How You Can Proceed
The case shows how quickly a dismissal can turn into protracted legal proceedings — and how important a well-considered strategy is. Anyone who receives a redundancy dismissal should first examine whether the dismissal is socially justified. This includes not only the question of the grounds for dismissal but also the proper social selection. An unfair dismissal claim must be filed with the Labor Court within three weeks of receiving the dismissal. Anyone who misses this deadline loses their protection against dismissal.
Within the claim proceedings, a settlement may be reached in which the employer pays severance. The amount depends on the circumstances of the individual case — the rule of thumb of half a gross monthly salary per year of service is often used as a reference point, but this is not a fixed entitlement. What matters are the negotiating position and the prospects of success of the claim. Anyone who pursues severance pay after withdrawing their claim should understand the consequences: without a pending claim, there is generally no pressure on the employer to pay voluntarily.
Because labor court proceedings involve costs, litigation funding can help. RechtStark examines whether the funding of an unfair dismissal claim can be assumed. The litigation funder covers the costs of the proceedings and receives a share of the awarded severance pay in the event of a successful outcome. This enables employees with low incomes to enforce their rights without taking a financial risk. Further information on litigation funding is available on our website.
If you are affected by a dismissal, you should contact a specialist employment lawyer immediately. Only they can assess the prospects of success and initiate the right steps. Severance pay after withdrawing a claim is not an automatic benefit — but with the right strategy, a fair solution can often be reached.
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.