Law

You are employed

At work, the most common disputes are about dismissals, severance pay and unpaid salary.

When am I protected against dismissal?

You're protected if you've been with the company for more than six months and more than ten people work there. Your employer then needs a socially justified reason. But you only have three weeks to challenge the dismissal. After that, it's valid.

Am I entitled to severance pay?

As a rule, you have no automatic right to it. Severance pay is negotiated, usually as part of an unfair dismissal claim.

Should I sign a termination agreement?

Don't sign it in the first meeting. Once you've signed, you can't withdraw, and the Federal Employment Agency can suspend your unemployment benefit for up to twelve weeks (Sperrzeit).

Can I find out what my colleagues earn?

In companies with more than 200 employees, you can find out what a comparable group earns on average. You send the request to the works council or, if there isn't one, to your employer.

What you can do now

1. If you've been given notice, write down the date, because you have three weeks to file a claim. Call a specialist employment lawyer that same week.
2. If you're offered a termination agreement, take it home with you and only sign once you've had advice.
3. If you want to know whether you're paid fairly, send your pay request in writing to the works council or your employer.

You are self-employed

For the self-employed, disputes are mostly about contracts and invoices that go unpaid.

Do I need a written contract for every job?

A contract is valid by email or a handshake too. In a dispute, though, only what you can prove will help. So put the work, price, payment terms and liability in writing. A confirming email is often enough.

Can I use terms and conditions from the internet?

We advise against it. Templates rarely fit your business, and invalid clauses simply don't apply. If you sell to private customers, a faulty clause can even lead to a cease-and-desist letter (Abmahnung).

Can I exclude my liability?

You can limit it, but you can't exclude it completely. You're always liable for intent and for harm to life or health, and as a rule for gross negligence too. Professional liability insurance covers the rest.

Am I falsely self-employed?

That can happen if you work mainly for one client, follow their instructions and are part of their team. A status determination procedure with the German Pension Insurance (Deutsche Rentenversicherung) gives you clarity.

What do I do if a client doesn't pay?

Send a reminder once the payment term has passed and charge default interest. If they still don't pay, you can apply for a court payment order (Mahnbescheid) online yourself.

What you can do now

1. Have a lawyer write your terms and conditions and a model contract, tailored to your services and with a limit on liability.
2. Take out professional liability insurance that fits your risk.
3. If you work mainly for one client, have your status checked by the German Pension Insurance.
4. Put a payment term on every invoice and send a reminder as soon as it has passed.

You are having a child

Many of your rights around pregnancy and parental leave only apply if you claim them in time and in writing.

Can I be dismissed while I'm pregnant?

As a rule, your employer can't dismiss you from the start of the pregnancy until four months after the birth. If they didn't yet know about the pregnancy, you can tell them up to two weeks after receiving notice.

When do I have to register my parental leave?

You must notify your employer in writing at least seven weeks before it starts. During parental leave, you can work up to 32 hours a week. In companies with more than 15 employees, you even have a right to this part-time work under certain conditions.

Will I get my old job back afterwards?

You're entitled to an equivalent position, though not necessarily your exact old one. If you're treated unfairly, write everything down, because you have to assert claims under the General Equal Treatment Act within two months.

And if I'm self-employed?

So far, there's no statutory maternity protection for you like there is for employees. It's only been announced. With statutory health insurance, you only get maternity benefit (Mutterschaftsgeld) if your cover includes sickness benefit (Krankengeld). With private insurance, daily sickness allowance only pays if the policy started at least eight months before the birth, so you need to sort this out before you get pregnant.

What you can do now

1. Notify your employer in writing of your parental leave at least seven weeks in advance, and of your part-time work too if you want to work part-time.
2. If you're treated unfairly, note the date, the conversation and who was there, and assert your claims in writing within two months.
3. If you're self-employed, check your health insurance before you get pregnant: statutory with sickness benefit, or private with daily sickness allowance.

You are starting a business

Your legal form decides how much you're personally liable for and how much tax you pay, including when you sell later. Discuss it with a lawyer and a tax adviser.

Which legal form suits me?

If you're testing an idea on the side or starting alone, a sole proprietorship or working as a freelancer (Freiberuflerin) is often enough. It's simple and cheap, but you're liable with your private assets. If two of you start without a contract, you automatically form a GbR (civil law partnership) and are both personally liable, including for each other's mistakes. If you want to limit liability, the GmbH (limited liability company) is the standard. It needs €25,000 in share capital, and you pay in at least half when you set it up.

Isn't a UG enough?

You can set up a UG (a mini GmbH) with very little capital, but it has drawbacks. It has to set aside a quarter of its profit every year until it reaches €25,000, and the suffix “haftungsbeschränkt” (limited liability) shows banks, clients and investors straight away that there's little capital. If you can raise the money, the GmbH is usually the better choice.

Do I need a holding company?

If you want to grow, bring in investors or sell one day, a holding GmbH above your GmbH can make sense. Set it up from the start, because doing it later gets complicated. More on this under “You have run a business for years”.

Do I have to protect my company name?

It's not required. But if the name is already registered as a trademark, the owner can send you a cease-and-desist letter, and you'll have to rename, often including your website and printed materials. So check that it's free before you start.

What you can do now

1. Choose your legal form with your tax adviser and your lawyer, and ask them directly what it means for a later sale.
2. If you're starting with others, sign a partnership agreement that covers who brings what, who decides and what happens if someone leaves.
3. Check with the German Patent and Trade Mark Office whether your name is free, and register it as a trademark. Online this costs €290 for up to three classes.

You have run a business for years

Whether your business is legally well set up usually only becomes clear when you sell, in a crisis or in a divorce.

How much will I keep if I sell?

That depends mainly on the structure. If you sell a sole proprietorship, you pay your personal tax rate on the profit, and relief is only available once in your life and only from the age of 55. If your holding GmbH sells its shares in your GmbH, 95% of the profit is tax-free, leaving an effective tax of around 1.5%. If you later take the money out privately, it's taxed again.

Can I set up the holding company shortly before the sale?

Then a seven-year holding period applies. If you sell within that time, part of the benefit is taxed retrospectively. So the holding company should be in place well before the sale.

What should I watch out for with an earn-out?

With an earn-out, you receive part of the purchase price later, depending on how the business performs after the sale. It's taxed when the money comes in. Before you sign, have someone calculate what this means for your tax.

What happens to my business in a divorce?

Without a prenuptial agreement, the increase in your business's value goes into the equalisation of accrued gains (Zugewinnausgleich), and that can mean paying out a very large sum. A prenuptial agreement can exclude business assets.

And if I'm out of action or money gets tight?

If you're out of action, someone needs a power of attorney to keep things running, and a private lasting power of attorney is often not enough for this. If the GmbH becomes insolvent, you as managing director must file for insolvency within three weeks at the latest, or you're personally liable.

What you can do now

1. If you're thinking about selling, even in a few years' time, have your tax adviser and lawyer review your structure now, so a holding company is in place in time.
2. If you're married, check whether your prenuptial agreement covers business assets.
3. Draw up a business power of attorney so someone can act if you're out of action.

You rent or buy a home

When it comes to housing, the most common disputes are about rent increases, service charges and notices to quit.

How much can my rent go up?

It can rise at most to the local reference rent (ortsübliche Vergleichsmiete), and by no more than 20% within three years. In many cities, the limit is 15%.

Do I have to accept every service charge statement?

No. The statement must reach you no later than twelve months after the end of the billing period. If it arrives later, you usually don't have to pay anything extra. You can raise objections up to twelve months after receiving it.

What can I do if I'm given notice because the landlord wants to use the home themselves?

Your landlord has to give specific reasons for their own need (Eigenbedarf). Depending on how long you've rented, you have three to nine months, and in cases of hardship you can object. Have the notice checked quickly. A tenants' association can help at low cost.

What should I look out for when buying?

The land register (Grundbuch) shows who owns the flat. If the two of you are buying, set out your shares in the purchase contract. And have the draft contract checked before the notary appointment, because the notary is neutral and doesn't represent your interests.

What you can do now

1. Check every rent increase and every service charge statement before you pay. A tenants' association can help at low cost.
2. If the two of you are buying, set out your shares in the purchase contract and have the draft checked before the notary appointment.

Are you thinking of buying property as an investment? What you should know about financing, returns and risks is covered under Building wealth.

You are separating

If you worked part-time for a long time during your marriage, you often have much less money and a smaller pension after a divorce. The law balances out some of this.

How long does it take to get divorced?

As a rule, you have to live apart for one year. During this time, you may be entitled to separation maintenance.

Will I get maintenance after the divorce?

Maintenance for yourself is usually only paid for a limited time, because since 2008 the principle of personal responsibility applies. Child maintenance is separate from this.

What happens to assets and pensions?

Any assets added during the marriage are shared out, and so are the pension rights built up during the marriage. For the years before and after, only what you paid in yourself counts.

Is our prenuptial agreement valid?

If it puts you at a one-sided disadvantage, it often won't hold up. Courts look especially closely if you gave up income for the family.

What you can do now

1. Get an overview of accounts, investment accounts, property, insurance policies and debts, and keep copies of the documents.
2. Request your insurance record from the German Pension Insurance so you know what rights you have.
3. Don't sign any agreement until your own specialist family lawyer has checked it, even if you both agree.

What changes for your taxes after a separation is covered under Taxes.

You live together without being married

If you're not married, the law gives you very little protection, no matter how long you've been together.

Do I inherit if my partner dies?

Without a will, you don't inherit. And even with a will, you pay much more inheritance tax than married couples.

Who owns our shared home?

It belongs to the person named in the land register. Who paid how much doesn't matter here, at least at first.

Who has custody of our child?

At first, only the mother does. You declare joint custody at the youth welfare office (Jugendamt).

What you can do now

1. Write wills so you inherit from each other, and get advice on inheritance tax.
2. If you buy together, have both of you entered in the land register and record in a cohabitation agreement who paid what.
3. If you have a child, make the joint custody declaration at the youth welfare office.

You want to get married

Without a prenuptial agreement, you live in the community of accrued gains (Zugewinngemeinschaft). What each of you had before the marriage stays yours, and what is added afterwards is shared out if you divorce. For many couples this works well.

When is a prenuptial agreement worth it?

A prenuptial agreement is worth it above all if one of you has or wants to start a business, if your assets are very unequal or if one of you will cut back at work for the family. The agreement can then, for example, set out compensation for pension provision.

How does it work?

A prenuptial agreement must be notarised, and the notary advises you both neutrally. If you want to know what the agreement means for you, ask your own lawyer a few weeks before the appointment.

What you can do now

1. Talk before the wedding about whether one of you has a business or will cut back at work.
2. If so, get advice from your own lawyer a few weeks before the notary appointment.

You are ill for a long time

If you're ill for a long time, deadlines start running with your employer and your health insurer. If you know them, you won't lose money or your job.

When do I have to call in sick?

Tell your employer straight away, ideally before work starts. If it lasts longer than three calendar days, you need a sick note by the following working day at the latest, and your employer may ask for it sooner. The practice sends it electronically, and your employer retrieves it from your health insurer.

How long will I keep getting paid?

Your employer keeps paying you for six weeks, as long as you've worked there for at least four weeks. After that, your health insurer pays sickness benefit: 70% of your gross salary, at most 90% of your net salary. For the same illness, you can receive it for up to 78 weeks within three years.

Can I be dismissed while I'm ill?

Yes, being ill doesn't protect you from dismissal. But if your employer dismisses you because of the illness, they have to show that you are likely to be absent often or for long periods in future and that the business suffers significantly as a result. Here too, you only have three weeks to challenge it.

What's a BEM meeting?

If you've been ill for more than six weeks within twelve months, in one go or added up, your employer has to offer you workplace reintegration management, known as BEM. Together you work out how you can return well. Taking part is voluntary. If your employer hasn't offered it, they'll find it much harder to defend a later dismissal on grounds of illness in court.

How do I return after a long illness?

With a gradual return to work, known as the Hamburg model: you start with a few hours and build up over several weeks. During this time, you keep receiving sickness benefit. Your doctor draws up the plan, and your employer and health insurer have to agree to it.

What happens when sickness benefit ends?

If your health insurer asks you to apply for rehabilitation, you have ten weeks to do so, otherwise your sickness benefit can stop. If sickness benefit ends and you still can't work, you'll often receive unemployment benefit, even if your employment contract continues. Register with the employment agency in good time.

What you can do now

1. Call in sick on the first day and get your sick note issued in time.
2. If your health insurer sends you a letter with a deadline, for example about rehabilitation, meet the deadline and, if in doubt, get advice from a lawyer specialising in social law or a social advice service.
3. Accept the BEM meeting if you're offered one, and bring suggestions for what would make your return easier.
4. If you're dismissed, call a specialist employment lawyer within the three weeks.

What sickness benefit means for your taxes and your financial protection is covered under Taxes and Building wealth.