Employment Law2026-11-05

My plant is on the closure list — what redundancy payment am I entitled to, and when is an unfair-dismissal claim worth it?

Q: What will the proceedings cost me?

That is governed by the Lawyers' Remuneration Act (*Rechtsanwaltsvergütungsgesetz*), whose fees are tied to the amount in dispute in your case. Existing legal-expenses insurance and trade-union legal protection regularly apply here; what arises in your case and who bears it is something I discuss openly with you in the initial consultation, before I take any action.

When a site closes, there is usually no statutory right to a redundancy payment — your money sits in the social plan. How the amount is worked out, where a claim has real leverage, and the one deadline that decides everything.

The news usually reaches you not as an official announcement but through the grapevine: your plant is up for review, and a list is doing the rounds. While the workforces of large industrial employers are currently striking for a dependable future, boardrooms have cost-cutting programmes and site decisions on the agenda. In this situation, two questions come up again and again: what payments you might be legally entitled to — and on what grounds a claim before the labour court makes sense.

In short

When a site closes, in most cases there is no statutory right to a redundancy payment. What you receive is set out in the social plan (Sozialplan) that the works council negotiates with the employer; if no agreement is reached there, a conciliation board decides on the drawing-up of a social plan (§ 112 Abs. 4 BetrVG). An unfair-dismissal claim is worth it above all where the plant is not closing entirely, where the social selection is open to challenge, where the involvement of the works council or the mass-redundancy notification went wrong — or where the employer never even attempted to reach a reconciliation of interests (Interessenausgleich). You have three weeks from receipt of the written dismissal to bring that claim (§ 4 Satz 1 KSchG); after that, the dismissal is treated as valid from the outset (§ 7 KSchG).

How I can help

Reviewing the dismissal, the reconciliation of interests and the social plan for points of attack before the three weeks run out
Recalculating your redundancy payment under the social plan formula — cut-off dates, uplifts and caps are often applied to your disadvantage
Bringing the unfair-dismissal claim and negotiating the settlement, with the aim of getting beyond the social plan figure
Reviewing any termination agreement, transfer offer or voluntary-leaver scheme before you sign, including the consequences for your unemployment benefit
Negotiating outstanding leave, bonuses, release from work and a usable reference alongside the rest, rather than leaving them on the table

Where your redundancy payment comes from — and where it doesn’t

There are essentially four sources, and they rarely all flow at once.

The social plan. Shutting down or scaling back the whole establishment or essential parts of it is an operational change (Betriebsänderung, § 111 Satz 3 Nr. 1 BetrVG). In businesses that normally employ more than 20 employees entitled to vote, the employer must inform the works council fully and in good time and discuss the measure with it. The social plan compensates for the economic disadvantages and has the effect of a works agreement (§ 112 Abs. 1 BetrVG) — you can claim payment directly from it. Without a works council there is no social plan; then all that remains is individual negotiation. Where the operational change consists solely of a reduction in staff, the social plan is moreover only enforceable once certain thresholds are reached (§ 112a Abs. 1 BetrVG) — in a plant closure those figures are usually met.

The offer under § 1a KSchG. Here the employer pays for your waiver of a claim. The condition is that, in the dismissal notice itself, the employer points out both of the following: that the dismissal is based on urgent operational requirements, and that by letting the claim deadline pass you become entitled to a redundancy payment. If this notice is missing — and it often is — the entitlement does not arise.

The compensation for disadvantage (Nachteilsausgleich). If the employer carries out the operational change without having attempted a reconciliation of interests with the works council, or departs from an agreed reconciliation of interests without compelling reason, the employees dismissed as a result can bring a claim before the labour court for a redundancy payment; § 10 KSchG applies accordingly (§ 113 Abs. 1 und 3 BetrVG). This is a separate claim for payment, not unfair-dismissal protection — and it can be combined with the unfair-dismissal claim.

The settlement. In practice the most important source. One point is essential to grasp: if you win the unfair-dismissal claim, the court does not award you a redundancy payment — it finds that the employment relationship continues. A redundancy payment by judgment arises only where the court dissolves the employment relationship on application because continuing it is unreasonable (§ 9 KSchG). The leverage of the claim therefore lies not in the judgment, but in the risk the employer carries because of it.

How the amount can be worked out

Social plans almost always work with a formula: factor × years of service × gross monthly earnings, often extended by uplifts for children, age or severe disability, capped by a maximum sum and topped up with a bonus for leaving early. The factor is the result of the negotiation, not of the law — it tends to sit well below 1.0 where profitability is poor, and above it where the works council was able to apply pressure. In setting it, the conciliation board must weigh the social interests of those affected against what is economically justifiable for the business, and must not endanger the continued existence of the business (§ 112 Abs. 5 BetrVG).

Two statutory benchmarks give a sense of the upper and lower end. § 1a Abs. 2 KSchG sets 0.5 months’ earnings per year of employment, with any period of more than six months rounded up to a full year: so at 11 years and 8 months you reckon with 12 years and arrive at 6 months’ earnings. § 10 KSchG caps the court-awarded redundancy payment at up to 12 months’ earnings, at up to 15 from the age of 50 where the employment relationship has lasted at least 15 years, and at up to 18 from the age of 55 where it has lasted at least 20 years. What counts is the money and benefits in kind due to you for your regular working hours in the month employment ends (§ 10 Abs. 3 KSchG) — so benefits in kind such as a company car belong in the figure, and are often forgotten.

When a claim is worth it — and when it isn’t

What matters is whether the closure is as legally clean as it sounds. These are the points I check:

Is it actually a complete shutdown? If the whole establishment closes, a social selection largely falls away — there is no one left to compare you with. But if only a part is being wound down, or if your “plant” is in law merely a part of a larger establishment, the social selection extends to all comparable employees in that establishment. This is where most successful challenges lie.

Is the social selection sound? The factors to be taken into account are length of service, age, maintenance obligations and severe disability (§ 1 Abs. 3 Satz 1 KSchG). On your request, the employer must tell you the reasons for its selection — and you should make that request. Employees may be left out of the selection where they are key performers, or where their continued employment is in the legitimate operational interest of maintaining a balanced staffing structure (§ 1 Abs. 3 Satz 2 KSchG).

Is your name on a name list? Where the employees to be dismissed are named in a reconciliation of interests, it is presumed that the dismissal is prompted by urgent operational requirements, and the social selection can only be reviewed for gross error (§ 1 Abs. 5 KSchG). That significantly worsens your position — with one exception: the presumption does not apply in so far as the situation has materially changed since the reconciliation of interests came about.

Is there another job? The law expressly names continued employment at another workplace in the same or another establishment of the undertaking as a ground that makes the dismissal socially unjustified — though, in the situation governed there, only where the works council has objected in writing on that ground within the time limit (§ 1 Abs. 2 Satz 2 Nr. 1 KSchG).

Have the formalities been observed? The works council must be heard before every dismissal; a dismissal issued without such a hearing is invalid (§ 102 Abs. 1 BetrVG). In larger waves of redundancies the employer must notify the employment agency and, beforehand, inform the works council in writing of the reasons, numbers, selection criteria and the calculation of any redundancy payments (§ 17 KSchG); redundancies subject to notification take effect before one month has passed since receipt of the notification only with the agency’s consent (§ 18 Abs. 1 KSchG). The dismissal must be declared in writing and validly signed; an email is not enough.

Is the plant being sold rather than closed? If the plant and equipment and the workforce pass to a buyer, there is a transfer of business. A dismissal on account of the transfer is invalid (§ 613a Abs. 4 Satz 1 BGB); a dismissal on other grounds remains possible (Satz 2).

A claim makes no sense where the establishment is plainly closing completely and for good, your name is on a valid name list, the social plan reflects your position correctly, and the formalities are in order. In that case we negotiate over the figure, not over the validity.

A typical case

A skilled worker, 14 years with the employer, is dismissed as part of an announced “site consolidation”. The social plan provides for a formula based on a factor and length of service, and his name is on the list in the reconciliation of interests. The review shows: the plant is not closing entirely — two production lines and maintenance are staying, and several colleagues with shorter service work there in comparable positions yet do not appear in the selection. On top of that, the monthly earnings in the redundancy calculation were set without shift premiums. Together, the two are enough to mount a challenge. The proceedings end at the conciliation hearing with a settlement above the social plan figure, together with release from work until the termination date and an agreed reference.

Common mistakes

Waiting for the list. Many let the three weeks slip because negotiations are still running or “the works council is handling it”. The works council represents the workforce, not your individual case — and it cannot stop your deadline.
Signing the termination agreement because a bonus beckons. Ending employment without observing the ordinary notice period can lead to your unemployment benefit being suspended (§ 158 SGB III); terminating the employment relationship yourself can trigger a blocking period (§ 159 SGB III). Both can usually be avoided if the agreement is drafted correctly — but not once you have signed.
Rejecting a transfer offer out of hand. Anyone who turns down a reasonable continued-employment offer is liable to be excluded from social plan benefits; the fact that the other workplace is in a different location is not in itself enough to make it unreasonable (§ 112 Abs. 5 Satz 2 Nr. 2 BetrVG).
Treating the social plan figure as the end of the negotiation. The social plan is the floor from which negotiation starts, not the ceiling.
Not requesting the information on the social selection. Without it you are arguing in the dark, even though the law gives you the right to it.

Frequently asked questions

Am I automatically entitled to a redundancy payment when a plant closes?

No. There is no general statutory right to a redundancy payment for the loss of your job. Entitlements usually follow from a social plan, from an offer under § 1a KSchG, from the compensation for disadvantage under § 113 BetrVG, or from a settlement in unfair-dismissal proceedings.

Usually not: the social plan has the effect of a works agreement, and the entitlement under it does not, in principle, depend on whether you bring a claim. Social plans do, however, often contain clauses on waivers, cut-off dates or additional bonuses for not bringing a claim — these provisions have to be read in the particular plan before you file.

What does it mean if my name is in the reconciliation of interests?

It is then presumed that urgent operational requirements prompt your dismissal, and the social selection can only be reviewed for gross error (§ 1 Abs. 5 KSchG). That makes a claim harder, but not hopeless — particularly where the situation has materially changed since the reconciliation of interests was concluded, or where the list came about with a formal defect.

How long do I have, and what happens if I miss the deadline?

Three weeks from receipt of the written dismissal (§ 4 Satz 1 KSchG). If you miss it, the dismissal is treated as valid from the outset (§ 7 KSchG). A late claim is only admitted where, despite all reasonable care, you were prevented from bringing it in time; the application must be made within two weeks of the obstacle being removed, and is barred at the latest six months after the end of the deadline (§ 5 KSchG).

What will the proceedings cost me?

That is governed by the Lawyers’ Remuneration Act (Rechtsanwaltsvergütungsgesetz), whose fees are tied to the amount in dispute in your case. Existing legal-expenses insurance and trade-union legal protection regularly apply here; what arises in your case and who bears it is something I discuss openly with you in the initial consultation, before I take any action.

Your next step

If the dismissal is on your desk, the three-week deadline is already running — and it runs regardless of whether the social plan is still being negotiated. Have the dismissal, the reconciliation of interests and the social plan reviewed now, while both routes are still open: the claim and the negotiation. You can read how unfair-dismissal proceedings run, from the conciliation hearing to the settlement, on my page on the unfair-dismissal claim before the labour court; an overview of my work in employment law is available there. I act nationwide, and the consultation can be held by video or telephone if you prefer.

This article provides general information and is no substitute for legal advice in an individual case.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-11-05.

Christian Czirnich, Rechtsanwalt (attorney at law), Kirchseeon near Munich

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