In order to contest the validity of the dismissal, the employee has to file legal action within three weeks after receipt of the dismissal. Otherwise, the dismissal is deemed to be valid.

If the court holds that the dismissal was valid, the employment relationship was terminated by the dismissal without severance payment.

The employee can claim a severance payment only by way of exception, i.e. in case of a dismissal for operational reasons offering a severance payment if the employee abandons legal action against the dismissal (Section 1a Dismissal Protection Act) or in case a severance payment is stipulated in a works agreement, bargaining agreement with the trade union or in a social plan in context with alterations in the establishment.

If the court holds that the dismissal was invalid, the employment relationship was not terminated. The employee has to return to his workplace. The employer has to pay the salary and other depts in arrears. This might cover a long time. In general, the Labour Court needs 6 months for a judgement, the Higher Labour Court another 6 months and the Federal Labour Court further 12 months.

In practice, the parties often conclude a settlement agreement in court to close the case promptly and to avoid a judgement which can only decide whether the dismissal was valid or invalid. Since the employer bears the burden of proof for the facts which show he fulfilled all requirements of the dismissal, he is more or less prepared to pay a severance payment depending on the risk to lose the law suit. The employee might be interested in a quick solution, because he might have heard enough accusations and bears the burden of proof for facts which exculpate him.