What to do When You Lose Your Job in Germany

Loosing your job can be hard for everyone, but it gets even harder if you don’t prepare before you become “unemployed” can be even harder than the loss of the job.

Register at Arbeitsamt

An employee is required to register at the Arbeitsamt at least 3 days after receiving their dismissal letter or after handing in their resignation letter. This ist o ensure the Arbeitsamt finds you a new job before you are actually jobless. It saves them from having to pay you any benefits.

Failure to register or doing it too late means the employee may lose their entitlement to benefits for a given period of time after becoming jobless.

The employer is required to mention the time period within an employee should register at the Arbeitsamt when they issue the dismissal letter, failure to which, the employer will be forced to pay for the employee’s upkeep if they don’t meet the Arbeitsamt deadline thus lose their entitlement to benefits. This doesn’t apply though if the employee decides to negotiate a settlement before registering at the Arbeitsamt. (From a court ruling from: LAG Düsseldorf, Az. 12 Sa 1323/04)

 

Talk to the Betriebsrat

If you think the dismissal was unfair, as an employee you have a right to appeal the decision. This has to be done immediately or shortly after receiving the dismissal letter. This doesn’t work though when the employee is fired due to downsizing activities in the company.

In §3 of the Kündigungsschutzgesetze: „Hält der Arbeitnehmer eine Kündigung für sozial ungerechtfertigt, so kann er binnen einer Woche nach der Kündigung Einspruch beim Betriebsrat einlegen. Erachtet der Betriebsrat den Einspruch für begründet, so hat er zu versuchen, eine Verständigung mit dem Arbeitgeber herbeizuführen. Er hat seine Stellungnahme zu dem Einspruch dem Arbeitnehmer und dem Arbeitgeber auf Verlangen schriftlich mitzuteilen.“

 

Appeal the decision on your own

The law allows all employees to appeal the dismal within 21days at the Arbeitsgericht, failure to which the dismissal comes into effect. The employee doesn’t require a lawyer to represent them at the Arbeitsgericht.

In §4 Absatz 1 of the Kündigungsschutzgesetze: „Will ein Arbeitnehmer geltend machen, dass eine Kündigung sozial ungerechtfertigt oder aus anderen Gründen rechtsunwirksam ist, so muss er innerhalb von drei Wochen nach Zugang der schriftlichen Kündigung Klage beim Arbeitsgericht (…) erheben.“

Check for possibilities of a settlement(pay-off)

Although getting fired isn’t reason enough for the employer to give you a huge settlement, depending on the situation you might be able to get some money out of it. You can either go to court for it, or in some cases e.g. during mass lay-offs, the Betriebsrat usually negotiates a good deal for employees who will be fired.

In cases where the employer stipulates in the dismissal letter that the only reason you were fired was due to restructuring of the company, then an employee who refrains from going to court is entitled to half a month’s salary for every year they worked for their employer. That is according to the §1 a of the Kündigungsschutzgesetze.

Watch out for Finanzamt

If you get a pay out from your former employer, Finanzamt will be there waiting for their share of the cake. If you add the pay-out directly to your current income, your taxes may increase by upto 10% meaning you lose most of your pay-out to Finanzamt. Some experts advice, especially for those with low incomes to use the Fünftelregelung. This works by:

Step 1: The employer calculates your Einkommenssteuer for your regular income.
Step 2: Divide the total pay-out by 5 and add this to the income. This new total will be the one to be taxed.
The difference in tax between the income in step 1 and than in step 2 becomes the tax payable for a fifth of your pay-out. Multiply the difference by 5 and that is the tax for the total sum of the pay-out.