If the employment relationship is terminated, the employee is generally still entitled to what they have earned up to that point. In particular, the employer must still pay any unpaid wages even after termination. The situation is different if the employer has issued a termination without notice and no legal action is taken against it in a timely manner (3-week deadline for all terminations).
The employer isn’t paying after termination—what now? Employees should definitely consult a lawyer .
What must the employer still pay after termination?
Termination merely ends the contractual relationship going forward. This means that, in principle, you retain all entitlements accrued up to the date of termination. These include, above all:
a. Unpaid wages
The employer must first pay you any unpaid wages. You are entitled to wages for every day of work performed. Termination does not change this. It therefore does not matter that wages are generally paid only at the end of the month or at the beginning of the following month.
If the employer fails to pay on time, you can immediately file a lawsuit to recover your wages or salary.
b. Overtime Pay
Overtime you have worked must still be paid out in cash or compensated with time off after termination. However, overtime does not have to be paid in every case. Especially in high-paying jobs, overtime is often already covered by the standard compensation. Occasionally, the employment contract even expressly excludes overtime pay. However, such contract clauses are often invalid if they are not limited to a fraction of the monthly working hours.
The next step depends on whether, according to the employment contract or collective bargaining agreement, overtime is paid out or taken as time off. If overtime is taken as time off, this generally applies even in the event of termination. You may—or must—take time off during the notice period. If on the last day of the notice period, you are entitled to be paid for it in cash.
If, on the other hand, the contracts stipulate payment in cash from the outset, you are certainly entitled to payment at the end of the employment relationship.
Even in the case of termination without notice, you can have your overtime paid out in cash. In this case, taking time off in lieu of overtime is no longer possible anyway due to the immediate termination of the contract.
c. Unused Vacation Time
The situation is similar with regard to unused vacation time. Typically, unused vacation time is taken as time off. The employer generally determines when the vacation is taken during the notice period.
However, not every period of leave during the notice period means that your remaining vacation days are being used up. The employer must
- expressly stipulate in the leave of absence that it will be offset against your remaining vacation time,
- irrevocably grant you time off, and
- unconditionally guarantee payment for the leave.
If these conditions are not met, you retain your remaining vacation days despite the leave of absence.
Any remaining vacation will be paid out to you in cash once the employment relationship ends. This is expressly regulated by law for remaining vacation in Section 7(4) of the German Vacation Act (BUrlG). Only contractual vacation that exceeds the statutory minimum may automatically expire following termination. However, this must be stipulated in the contract.
The amount of your vacation pay depends on your average earnings over the last 13 weeks prior to the start of your vacation. Overtime is not included. The average earnings are calculated on a per- workday basis. For a 5-day workweek, the average earnings for the last 13 weeks are therefore divided by 65 workdays.
Example: Employee A has earned an average of €3,250 over the past 13 weeks. His daily earnings are therefore €150. He is thus entitled to €150 per vacation day; with ten days of remaining vacation, this amounts to €1,500.
d. Wages for the duration of the unfair dismissal lawsuit
For employees, the so-called “wages for default of acceptance” are also of particular interest. This refers to the situation in which you offer your services to the employer, but the employer, in breach of their duty, refuses to accept them.
Background: In principle, you are not entitled to wages for work not performed. However, a different rule applies if the employer is responsible for the failure to perform the work. This plays a major role following a termination, as employers typically do not wish to continue employing terminated employees during the court proceedings. If you win the case, however, the employer must generally pay you retroactively for the entire duration. However, any social benefits received in the meantime will be taken into account.
For you to actually be entitled to wages for delay in acceptance, a number of conditions must be met:
- The employment relationship must still exist (e.g., because a court has declared the termination invalid).
- You have not performed your work.
- You are capable of and willing to perform your work. Incapacity to work due to illness, for example, precludes your entitlement to wages for default of acceptance.
- The employer has unjustifiably refused your work.
As a general rule, it is not necessary for you to expressly offer your labor.
Default of acceptance is a complex area. The highest courts have frequently had to address this issue. You should therefore rely on our legal advice regarding this matter. You can reach us at 030 / 890644- 0 or [email protected] .
In some cases, you may even be entitled to continued employment for the duration of the lawsuit. You must—and are permitted to—continue working and will continue to be paid from the outset. Even if you lose the lawsuit, you generally do not have to repay the compensation.
e. Possible Severance Pay
Finally, you may also be entitled to an amount of severance pay. However, this is generally a matter of negotiation. Employers rarely have an interest in a legal dispute. As an employee, you therefore have a good chance of negotiating an amount of severance pay. The amount of the severance pay depends on the circumstances surrounding the termination of your contract.
As a rough guide, however, the following rule of thumb has become established when the risks of an unfair dismissal lawsuit are evenly distributed:
Number of years of employment with the company × ½ of the gross monthly salary
Often, however, the amount is higher than this. Once an employer has agreed to an amount of severance pay, they must pay it.
What to do if the employer doesn’t pay?
Although you are entitled to numerous payment claims, employers regularly refuse to pay. As an employee, you must then ensure that you assert your claim for payment in a timely manner.
How you proceed also depends on why and how the employment relationship ended. If you resigned or parted ways by mutual agreement, it’s often just an accounting error that can be corrected with a simple notice.
In cases of disputed terminations, however, a discussion is usually ineffective. In that case, you should first send the employer a written demand for payment.
Important: You must request payment in a timely manner. Collective bargaining agreements and employment contracts usually stipulate limitation periods (see below for duration). If you do not assert your claim for payment in a timely manner, the employer is no longer obligated to pay. Such clauses also typically require that you assert your claims in writing (i.e., via a letter bearing your personal signature). In some cases, legal action may even be necessary. In this case, however, it is generally sufficient to assert the claim as part of your claim challenging a dismissal.
If the employer still does not pay even after your demand for payment, you should consider filing a lawsuit. If you are already filing a lawsuit challenging your termination, you can also claim these payments in that context. If, on the other hand, you wish to accept the termination and only want to enforce the payments, a separate action for performance is necessary.
If the lawsuit is successful and the employer still refuses to pay, enforcement proceedings will ultimately be necessary.
Especially in court, you’ll need experienced and knowledgeable support. We’ve been practicing employment law for many years and are happy to assist you. You can reach us at 030 / 890644-0 or [email protected] .
How long do I have to claim payment?
Your claims arising from the employment relationship generally become time-barred after three years. The statute of limitations begins (simply put) at the end of the year in which the claim arose.
However, the time limits set forth in the exclusion clause of the employment contract or collective bargaining agreement are generally more important. These are usually significantly shorter.
Contractual limitation periods, however, may not be shorter than three months. Shorter periods are generally invalid (unless agreed upon individually) and are not replaced by a reasonable period.
If you have missed the deadline, you should still have your legal options reviewed. For example, even after the deadline has passed, you are at least entitled to the statutory minimum wage (Section 3 MiLoG). This way, you will receive at least a portion of your actual compensation.
Conclusion
- Unpaid wages must still be paid even in the event of termination.
- This also applies to overtime, unless, in exceptional cases, it has already been compensated as part of the regular salary. If necessary, you may still need to take time off in lieu of the overtime during the notice period.
- If the termination was ruled invalid by a court, compensation for the duration of the unfair dismissal proceedings must generally be paid retroactively.
- An amount of severance pay can often be negotiated.
- Outstanding payments should be demanded in writing or, if a due date is specified in the contract, immediately pursued through legal action.
- Statutes of limitations under collective bargaining agreements or individual employment contracts may apply. If these periods expire and were valid, the employer is generally no longer required to pay. However, there are exceptions (e.g., minimum wage).
