Key takeaways

• Employment legal insurance covers the legal costs of disputes with your employer. These can involve wrongful termination, not paying wages or overtime, etc.
• Emplyoment legal insurance has a 3-month waiting period. The insurer doesn’t cover the legal costs for disputes arising during the waiting period.
• A good labor law legal insurance policy costs between 20 € and 40 € per month.
• The loser doesn’t pay the legal costs of the winner in labor law disputes. It’s to protect the employee from paying big legal bills of their employer’s lawyers if they lose.

This is how you do it

• Suppose you have a legal dispute with your employer. Contact your workers’ council for support.
• If your company doesn’t have a workers’ council, you can seek legal advice by calling your legal insurance provider’s service hotline.
• You can compare the legal insurance offers on Check24* or Verivox*. If you want a service in English, check Getsafe* legal insurance and Feather*.
• The legal insurance company can terminate your contract if you file 2 claims within 12 months.
• Before hiring a lawyer, get a written confirmation of cost coverage from your insurer. The letter confirms that the insurer will cover the legal costs.

Table of Contents

What can you do if the employer terminates you in Germany?

You received a termination letter from your employer out of the blue. You think you didn’t do anything wrong to deserve it. So, what can you do in this situation?

• First of all, you should stay calm, even though you might be very angry.
• Contact your workers’ council if your company has any. The workers’ council can help you negotiate with the employer.
• Suppose your company doesn’t have a workers’ council or the workers’ council cannot help. You should contact the service hotline of your legal insurance company for free legal advice. Your insurer can provide you with options and explain your rights in this situation. If needed, you can file a suit against your employer.
• If you don’t have legal insurance, contact a lawyer for a consultation. The lawyer may charge between 100 € and 250 € for the consultation. But they’ll explain your rights and the legal costs that may incur in your situation. Then, you can decide whether to pursue the matter further.

What is employment legal insurance in Germany?

Employment legal insurance (Arbeitsrechtsschutzversicherung) covers the legal costs of disputes with your employer. It is also called professional legal insurance (Berufsrechtsschutzversicherung). 

The dispute could be regarding wrongful termination, the employer not paying overtime or wages, or any other issue. Employment legal insurance covers the lawyer’s fees and court costs for the dispute.

Is employment legal protection insurance worth it?

Yes, employment legal insurance is worth it for the following reasons.

• It covers the legal costs of disputes with your employer. To give you an idea, you will spend around 2000 € in lawyer’s fees and court costs for a dispute value of 9000 €. And the legal costs increase with the dispute’s value.
• In employment law, the loser party doesn’t cover the winner’s legal costs. So, even if you win the legal dispute, you won’t get the legal costs back. This is done to protect the employees from paying huge lawyer’s bills to their company if they lose.
• Many times, you want to know your rights in a particular situation. But you shy away from it as a lawyer will charge you a couple of hundred euros for the advice. That’s where legal insurance is handy, as they offer free legal advice. 
• Legal insurance also brings peace of mind and confidence. You can assert your rights at the workplace without worrying about the legal costs. 
• Labor law conflicts that end up in court usually last several years. And it’s very expensive.
• Companies are laying off workers in 2024. If you are affected by these layoffs and your employer refuses to pay a fair severance package, legal insurance can help.
• Your company doesn’t have a workers’ council to protect your rights.

However, a lot depends on your employer and how high you see the risk of a legal dispute. If you are unhappy and see chances of disputes, you should get legal insurance as soon as possible.

This is because employment legal insurance has a 3-month waiting period. And legal insurance doesn’t cover the costs of disputes arising during the waiting period.

You can compare the legal insurance offers on Check24* or Verivox*. If you want a service in English, check Getsafe* legal insurance and Feather*.

Who doesn’t need employment legal insurance in Germany?

• Self-employed and freelancers don’t need employment legal insurance.
• People working in companies that have strong workers’ councils can also get by without legal insurance.

Big employers like Bosch, Deutsch Bahn, Daimler, etc. have strong workers union that protects employees rights. You can even ask for legal advice from the workers’ council members.

Workers Council also helps resolve disputes with employers. However, smaller companies and start-ups don’t have strong workers’ unions.

So, to assert your legal rights, you need support from a lawyer. To cover the lawyer’s fees and court costs, it’s best to have a legal insurance policy.

What is insured under employment legal insurance in Germany?

Legal insurance covers the legal costs for the following legal dispute with your employer.

• Unjustified terminations
• Unfair severance pay
• Employer not paying the salary, bonus, or vacation
• Employer refuses to pay the overtime
• You leave the company and don’t get or get a bad reference letter
• Employer fires you during the maternity leave
• Bullying and discrimination in the workplace
• Company pension
• Unemployment benefits claims

NOTE: This is not an exhaustive list. You should check your legal insurance contract to determine what is insured.

What is NOT insured under employment legal insurance in Germany?

• Criminal offense: Legal insurance doesn’t cover the costs if you commit a criminal offense and get fired. You can get extended criminal protection to cover such costs. But you must pay the legal costs back to the insurance company if you lose.
• No chances of success: If there is no chance of success, the legal insurance company can refuse to cover the costs. However, the insurer must provide valid reasons. Moreover, you have the right to object to the insurer’s decision.
• General legal advice on employment law: Employment legal insurance doesn’t cover the costs of legal consultation for events that haven’t occurred yet. For example, you fear the employer will fire you and want to know what you can do in such a situation. The legal insurance provider won’t cover the costs of such consultation as the event (i.e., firing) hasn’t happened yet.  
• Existing legal disputes: The legal insurance company doesn’t cover the legal costs of existing disputes or disputes that arise during the waiting period. 

NOTE: The point at which the legal dispute arises is important, not when you hire a lawyer or take the matter to court. So, if the cause of the dispute was before you took the legal insurance, the insurer will not cover the costs, even if you hired a lawyer after the waiting period.

To avoid it, you can get a policy with a “Subsequent event theory” clause. Such contracts cover disputes where the “cause of damage” was before taking the legal insurance plan.

What services does a good employment legal insurance offer?

• Sum insured: Many labor legal insurance tariffs offer unlimited coverage. However, it should cover at least 5 million euros. 
• Free legal advice on the phone: Your legal insurance contract must include free legal advice. Some providers even offer free advice on areas not covered by the contract.
• Right to choose your lawyer: Ensure that your legal insurance contract offers you the right to choose your lawyer (Freie Anwaltswahl). It allows you to pick the lawyer you want and not what the insurer recommends.
• No-claims bonus: Some legal insurance providers reduce the deductible amount if you don’t claim for a few years. However, such contracts are double-edged swords, as they can increase the deductible if you make a claim. You should not decide on a legal insurance policy based on this point.
• Waiting period: Employment legal insurance always comes with a waiting period of 3 months. The only scenario in which you have no waiting period is when you change insurers. The only prerequisite is that there is no gap between the switch.
• Cancellation by the insurer: Usually, the legal insurance provider can cancel the contract if you make two insurance claims within 12 months. So, you should check what your insurer considers a claim. Ensure that legal advice given over the phone isn’t considered a claim eligible for terminating the contract. 

How do you find the best employment legal insurance plan in Germany?

You can compare the legal insurance offers on Check24* or Verivox*. If you want a service in English, check Getsafe* legal insurance and Feather*.

How much does employment legal protection insurance cost?

You cannot get employment legal insurance independently. You must get it together with private legal insurance.

Good employment legal insurance with private legal insurance costs between 20 € and 40 € per month as of March 2024.

FAQs

Can you deduct employment legal insurance contributions from tax?

Yes, you can deduct employment legal insurance contributions from your taxes. 

NOTE: Only the part you pay for employment legal insurance is tax deductible.

You can learn more in our guide on deducting legal insurance contributions from tax.

Does employment legal protection insurance have a waiting period?

Yes, employment legal insurance has a 3-month waiting period.

Can you choose your own lawyer?

Yes, you can choose your lawyer if your contract has the “Freie Anwaltswahl” clause.

Can an employment legal insurance provider cancel your contract?

Yes, your legal insurance provider can terminate your contract if you file 2 claims within 12 months. You should ensure that legal advice over the phone is not considered a claim eligible for contract termination.

If your insurer sends a contract termination notice, you should request a contract cancellation reversal. It allows you to cancel the contract instead of your insurer. 

It’s because, getting a new legal insurance policy is tough if your insurer terminates the contract.

References

• https://www.allianz.de/recht-und-eigentum/rechtsschutzversicherung/arbeitsrecht/arbeitsrechtsschutz/
• https://www.verivox.de/rechtsschutzversicherung/arbeitsrechtsschutz/
• https://www.check24.de/rechtsschutzversicherung/arbeitsrechtsschutz/
• https://www.arag.de/rechtsschutzversicherung/arbeitsrechtsschutz/
• https://www.huk.de/haus-haftung-recht/ratgeber/rechtsschutz-arbeitsrecht.html
• https://www.brak.de/presse/zahlen-und-statistiken/