Germany’s Dismissal Lawsuits Jump 33% as High Stakes Play Out from Volkswagen to Sick-Leave Rulings
Published on 07/11/2026 at 05:41 | Redaktion boerse-global.de
Workers across Germany are facing a dramatically tougher job market, with new figures showing a 33 percent surge in dismissal-protection lawsuits in 2025 — and the pace quickening into 2026. But behind the numbers lie a series of concrete developments: a landmark court ruling on sick leave, a Volkswagen restructure that dangles buyouts worth up to €40,000, and government plans to ease firings for the highest earners.
The trend is most visible in industrial strongholds. Baden-Württemberg’s labour courts logged more than 42,000 new cases in 2025 alone. In the first half of 2026, the statewide total climbed another 9.8 percent — a sign, say legal experts, that economic uncertainty is translating into more contested dismissals.
The 21-Day Deadline That Can Make or Break a Case
Any worker who receives a notice of termination has exactly three weeks to file a claim with the local labour court. The goal is not automatically a severance payment, but a judicial ruling on whether the employment relationship continues. This rule applies even in cases of immediate (fristlose) dismissal: the employer must, upon request, provide the written reason without delay under §626(2) of the German Civil Code. The three-week filing deadline remains fixed.
Courts are also scrutinising behaviour-based dismissals more closely. In many cases, a prior written warning is mandatory. Judges examine whether a fresh warning was necessary after long periods of unblemished service.
Those time pressures become especially acute when workers are weighing company exit packages.
Volkswagen’s “Gentle” Job Cuts Come With a Trap
On 9 July, Volkswagen’s supervisory board approved a cost-saving plan that postponed concrete plant closures. Workers now face a stark choice: stay on or leave with a severance bonus. Offers range from €30,000 to €40,000 under voluntary programmes.
Yet labour lawyers warn that signing a mutual termination agreement (Aufhebungsvertrag) can trigger up to 12 weeks of blocked unemployment benefits — a risk many employees may not fully appreciate. For mass layoffs or partial plant closures, social plans typically determine who is most vulnerable; protection increases with age, length of service and family obligations.
Sick Leave: Tighter Rules After May 2026 Ruling
The Federal Labour Court (BAG) raised the bar for illness-based dismissals in a decision on 7 May 2026 (case 2 AZR 184/25). Without a properly conducted company reintegration process (Betriebliches Eingliederungsmanagement, or bEM), a termination is invalid, the court ruled. Employers bear the full burden of proving an employee received the invitation to bEM — a mere scan of a registered mail receipt is insufficient.
A separate ruling on 5 May 2026 by the Lower Saxony Regional Labour Court struck down a fixed-term contract without objective grounds, even though the employee had last worked for the same employer 17 years earlier. The judges found a two-year probationary fixed term disproportionate given that statutory probation is six months.
Reform Plan Targets Top Earners – Unions Push Back
The federal government is preparing to loosen dismissal protection in 2027, but only for a narrow group: employees with gross monthly salaries around €15,000. Employers would gain the ability to end such contracts more easily in exchange for a severance payment. Supporters point to tax incentives designed to encourage a quick return to work.
The ver.di union has sharply criticised the plan. Researchers at the Institute for Employment Research (IAB) warn that the salary threshold could create a “glass ceiling”, discouraging career advancement by making top positions legally riskier to hold.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
