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Saturday, May 16, 2026

Dismissals in Germany: How Employers Can Help Minimize Financial Risks - SHRM

Terminations—whether consensual or unilateral—are part of working life. But not all grounds for termination will hold up in a German labor court. If the court rules that a dismissal is invalid, the employer is obliged to reimburse the employee for any remuneration no longer paid after the end of the notice period based on a so-called default of acceptance. Given that it can sometimes take years for a legally binding court decision to be reached, this risk of compensation for default of acceptance often adds up to large amounts. The employee’s side often uses these economic risks as a bargaining chip to obtain a higher severance payment. This article discusses how these economic risks can be significantly minimized.

Employees Who Do Nothing Until the Verdict Are Taking a Big Risk

According to Section 615 Sentence 2 of the German Civil Code (“BGB”) and Section 11 of the German Employment Protection Act (“KSchG”), during the existing employment relationship, employees not only have to accept that other earnings actually received are offset against the remuneration owed, but also the value of what they could have earned had they not willfully failed to accept reasonable work. Employees who do not look for a new job until the outcome of the dismissal protection dispute therefore risk losing their entitlement to compensation for default of acceptance. However, the prerequisite for this is that the dismissed employee deliberately refrains from taking up a job that they are aware...



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