Legal fees in labour law - What does a lawyer cost and who pays?

Many employees are reluctant to seek legal advice—for fear of the costs. However, employment law has an important feature: in the first instance before the employment tribunal, each party bears their own legal costs, regardless of the outcome of the proceedings. In this guide, you will find out what costs to expect and what support is available.

The special feature of employment law: no reimbursement of costs in the first instance

Unlike most other areas of law, a special cost rule applies in the first instance before the employment tribunal: each party bears their own legal costs — even if they win the case (Section 12a(1) ArbGG).

This rule is intended to encourage employees to exercise their rights without having to fear the risk of high costs if they lose the case.

How much does a lawyer cost in employment law?

Lawyers’ fees are governed by the Lawyers’ Fees Act (RVG) and are calculated on the basis of the value of the claim. In employment law, the value of the claim is often linked to the gross monthly salary.

Typical values in dispute

Sample calculation: Unfair dismissal claim

Assuming your gross monthly salary is €3,500, the value in dispute for an unfair dismissal claim would then be approximately €10,500 (3 × €3,500).

Without a settlement — i.e. in the event of a judgment — the settlement fee does not apply, and the costs are slightly lower. These amounts are indicative and may vary depending on the individual case.

Out-of-court advice

Not every case goes straight to court. An initial consultation with a solicitor is often the first step. The cost of an initial consultation is capped by law at a maximum of €190 net (plus VAT) — provided you are a consumer.

Many law firms also offer flat-rate packages for the initial consultation. Ask about the terms and conditions in advance.

Legal expenses insurance — when does it pay out?

Legal expenses insurance covering employment law generally covers the costs of:

• Legal advice
• Court costs
• Expert fees
• The opposing lawyer’s fees (from the second instance onwards)

Important restrictions:

Always obtain confirmation of cover before instructing a solicitor. Without confirmation of cover, you risk having to bear the costs yourself.

Legal advice assistance — support for those on low incomes

If you cannot afford a solicitor and do not have legal expenses insurance, you can apply for legal advice assistance. This covers the costs of out-of-court legal advice.

Requirements:

• Low income (comparable to legal aid thresholds)
• No other means of assistance (e.g. legal expenses insurance)
• The legal matter must not be frivolous

Your contribution is just €15. You can obtain the legal advice voucher from the relevant local court.

Legal aid — when the case goes to court

Legal aid (PKH) is available for court proceedings. It covers court and legal fees in full or in part.

Requirements:

If approved without instalments, you will incur no costs. If approved with instalments, you will pay monthly instalments based on your income for a maximum of 48 months.

Recipients of legal aid must report any improvement in their financial situation for up to four years after the conclusion of the proceedings — otherwise, the legal aid may be subsequently revoked.

When is it worth hiring a lawyer in employment law?

Whether it is worth hiring a lawyer depends on the individual case. Legal support can be crucial in the following situations:

Receiving a notice of dismissal: In an unfair dismissal claim, a settlement is often at stake that far exceeds the legal fees.

Offered a settlement agreement: A lawyer can negotiate the amount of the severance pay, avoid a waiting period and mitigate unfavourable clauses.

Disputing a reference: Correcting a reference can significantly improve your career prospects.

Unpaid wages or overtime: Enforcing legitimate wage claims is usually financially worthwhile.

Received a warning letter: An unjustified warning letter can form the basis for a subsequent dismissal — early legal review can prevent this.

Frequently Asked Questions (FAQ)

Do I have to pay the other party’s legal fees if I lose the case?

Not in the first instance before the Employment Tribunal. Each party bears its own legal costs here. From the second instance (Regional Employment Tribunal) onwards, the usual cost rules apply: the losing party pays.

How much does an initial legal consultation cost?

For consumers, the initial consultation is capped at a maximum of €190 net (approx. €226 gross). Many law firms also offer more affordable flat rates.

Can I afford a solicitor if I don’t earn much?

Yes. Legal advice assistance is available for out-of-court advice (€15 contribution), and legal aid for court proceedings. Both are available to people on low incomes.

Do I need a solicitor before the employment tribunal?

In the first instance, there is no obligation to have a lawyer — you can represent yourself. In the second and third instances, a lawyer is mandatory. Even in the first instance, legal representation is advisable in most cases.

Is it worth hiring a lawyer in the event of dismissal?

Generally speaking, yes. In unfair dismissal claims, a settlement is often negotiated that far exceeds the cost of legal representation. Without a lawyer, many employees miss out on money.

Does my legal expenses insurance cover employment law?

Only if your policy includes the employment law cover module. Check your contract and obtain a confirmation of cover before instructing a lawyer.

This article is for general information purposes only and does not replace individual legal advice. The costs mentioned are indicative figures — the actual costs depend on the individual case.