What Does an Unfair Dismissal Claim Really Cost?

Been dismissed and worried about the legal and court costs of bringing a claim? I explain how the amount in dispute is calculated, who bears which costs, and what help is available.

You’re holding the dismissal letter and wondering whether it’s worth bringing a claim — but the worry about the costs is holding you back. That’s a fair question, because the costs system before the labour court has one particular feature that catches many people off guard. Let me explain what you actually need to budget for.

In brief

The cost of an unfair dismissal claim is based on the so-called amount in dispute (Streitwert), which in a dismissal case is capped by law at no more than one quarter’s salary. The single most important feature: before the labour court, at first instance each side bears its own legal costs — regardless of who wins. Court fees only arise if the case actually goes to judgment; if you end the dispute by settlement, they fall away substantially. And if you can’t afford it, there are genuine options through legal expenses insurance, advice aid, or legal aid.

How I can help you

• Assess your cost risk concretely before a claim is filed, tailored to your salary and your situation
• Submit a cover request to your legal expenses insurer and obtain confirmation of cover
• Check whether advice aid (Beratungshilfe) or legal aid (Prozesskostenhilfe) is available to you
• File your unfair dismissal claim within the deadline and guide you through the entire proceedings
• Conduct settlement negotiations where an agreement makes more economic sense than a judgment

The amount in dispute – the basis for all the costs

Solicitor or court, both calculate their fees from the amount in dispute in the proceedings. In an unfair dismissal claim this figure is capped by law under § 42 Abs. 2 GKG at no more than what you would earn in a quarter of a year — that is, three months’ gross salary. Any severance payment negotiated during the proceedings is expressly not added to it.

The calculation is simple: amount in dispute = 3 × gross monthly salary. On a gross salary of, say, €3,600, the amount in dispute would therefore be €10,800. From this figure both the solicitor’s fees under the RVG and the court fees under the GKG are then derived, using a statutory fee schedule. The precise final sum depends on the schedule currently in force and on how your particular case unfolds; I’ll work it out for you concretely at our first meeting, based on your actual salary.

The cost trap most people don’t know about

Unlike in most other civil proceedings, before the labour court at first instance the rule is: each party bears its own legal costs — even the party who wins outright. This is expressly set out in § 12a Abs. 1 ArbGG and rules out both reimbursement of your own legal costs and any compensation for time spent. So even if you win your unfair dismissal claim, you will, as a rule, not have your own legal costs reimbursed by the employer. There is only one exception: where another court initially accepted the case wrongly and only later referred it to the labour court.

Your own solicitor’s fees are calculated under the RVG from the amount in dispute. For out-of-court work — such as correspondence with the employer before a claim is filed — a business fee (Geschäftsgebühr) regularly arises (rate 0.5 to 2.5, ordinarily 1.3, under No. 2300 VV RVG); if court proceedings then follow, it is partly credited against the procedural fee there. For the court work itself a procedural fee (Verfahrensgebühr) arises (rate 1.3 under No. 3100 VV RVG), and for attending the court hearing an additional hearing fee (Terminsgebühr) (rate 1.2 under No. 3104 VV RVG). If an amicable agreement is reached, a settlement fee (Einigungsgebühr) arises on top — ordinarily at rate 1.5 (No. 1000 VV RVG), or at rate 1.0 where court proceedings are already pending (No. 1003 VV RVG).

Court fees: only payable in full on a contested judgment

In an unfair dismissal claim, court fees only arise if the proceedings actually end in a contested judgment. If the dispute is resolved beforehand by a court settlement — which, in unfair dismissal claims, is the rule rather than the exception — the court fees come out considerably lower than after a full judgment. This is one of the reasons a settlement is, in many cases, more economically attractive than a fight to judgment, even when the prospects of success are good. I’ll discuss openly with you when a settlement makes sense and when it’s worth pressing on toward a judgment.

When money for the proceedings is tight

You don’t necessarily have to bear the costs on your own:

• Legal expenses insurance: If you have employment-law legal expenses cover, I’ll obtain confirmation of cover for you before any costs are incurred.
• Advice aid (Beratungshilfe): On a low income, the cost of out-of-court advice and representation can be greatly reduced.
• Legal aid (Prozesskostenhilfe, PKH): For the court proceedings themselves, legal aid under §§ 114 ff. ZPO may be available if you cannot, or can only partly, meet the costs. The requirement under § 114 ZPO is that the claim offers sufficient prospects of success and does not appear frivolous — which, for an unfair dismissal claim filed within the deadline, is almost always the case.

Which of these options is available to you is something I’ll clarify at our first meeting, which is free of charge at my firm.

A typical case from practice

An employee on a gross salary of around €3,600 receives an ordinary dismissal. The amount in dispute for the unfair dismissal claim is therefore €10,800 — three months’ gross salary, capped under § 42 Abs. 2 GKG. She has no legal expenses insurance but earns too much for legal aid. After we assess the prospects of success at the first meeting, she decides to bring the claim. At the conciliation hearing the parties agree on a severance payment and continued employment until an agreed date — the settlement ends the proceedings before a contested judgment is given, which means the court fees come out considerably lower than in a full case through all instances.

Common mistakes

• Not bringing a claim at all out of fear of the costs. Many let the three-week deadline for the unfair dismissal claim lapse because they overestimate the costs — when it’s precisely the amount in dispute that is capped by law.
• Not bringing in your legal expenses insurer in time. Without prior confirmation of cover, you risk the insurer refusing the costs later.
• Rejecting settlement offers out of hand because you’re determined to “win no matter what” — without bearing in mind that even a winning judgment won’t get your own legal costs reimbursed, because of § 12a ArbGG.
• Not having advice aid or legal aid checked, even though your income might qualify.

Frequently asked questions

Will my legal costs be reimbursed if I win?

No, as a rule not. Under § 12a Abs. 1 ArbGG, at first instance before the labour court each party bears its own legal costs, regardless of the outcome of the proceedings. That applies even if you win your unfair dismissal claim outright.

What is the amount in dispute in my unfair dismissal claim?

The amount in dispute is at most one quarter’s earnings, that is three months’ gross salary (§ 42 Abs. 2 GKG). A severance payment agreed later is not counted in the calculation.

What happens on costs if we settle?

On a settlement, a settlement fee additionally arises for your solicitor, but the court fees come out considerably lower than on a contested judgment. In many cases, a settlement is therefore also the more economical solution on the costs side.

I’m not on a high income – should I still be able to bring a claim?

Yes. Check with me whether advice aid (Beratungshilfe) for out-of-court advice or legal aid (Prozesskostenhilfe) under §§ 114 ff. ZPO for the court proceedings may be available. One of the requirements is that your claim has sufficient prospects of success.

Does the first meeting with you cost anything?

No, the initial consultation at my firm is free of charge. There we discuss your specific situation, estimate the amount in dispute and the cost risk, and clarify what support — such as legal expenses insurance or legal aid — may be available to you.

Your next step

The three-week deadline for an unfair dismissal claim runs regardless of whether you have a clear picture of the costs — so don’t wait until every question is answered. Come to the free first meeting with your dismissal letter; I’ll work out your specific amount in dispute, check your insurance and funding options, and tell you honestly whether and how a claim is worth it for you. You can find out more about my work in employment law at /en/topics/employment-law.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-08-23.

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