Going through insolvency proceedings does not automatically mean losing one’s job. Even insolvency proceedings do not suspend fundamental provisions of protection against dismissal.

We have collected the most frequently asked questions to us here.

Is my employment contract still valid after the opening of insolvency proceedings?

The employment contract concluded between you and your employer remains valid even after the opening of insolvency proceedings. The conditions set remain valid as far as possible. An important exception to this, however, are any agreed notice periods.

What notice periods apply in the event of insolvency?

In the event of insolvency, the contractual, collective or statutory notice periods shall also apply. After the insolvency proceedings have been opened, the insolvency administrator may, however, terminate the contract with a maximum notice period of 3 months to the end of the month (section 113 InsO) if a longer period of notice should exist by contract, collective agreement or law.

Do I have to report to the Employment Agency when I receive my notice of termination?

Yes, there is an obligation to register with the Employment Agency immediately after receiving notice of termination. If you do not meet this obligation, this can lead to a reduction in benefits or to a block on benefits. Even if you have already registered with the employment agency responsible for you with a leave of absence, you are obliged to notify the employment agency of your dismissal.

Who do I get my certificate of employment from to receive unemployment benefit?

If there is still a payroll office in your company, the employees there will help you. If the office is no longer occupied, contact the insolvency administrator. In addition to the employment agency’s form, provide them with copies of the last twelve time tickets, your employment contract and your notice of termination. This would provide all the documents necessary to draw up the employment certificate.

Do the rules on protection against dismissal also apply in the event of insolvency?

The insolvency proceedings themselves are no reason to dismiss you. In this respect, the rules of protection against dismissal apply if the Protection Against Dismissal Act has already applied to your company prior to insolvency. However, a significant exception in the event of insolvency is that it is possible for the insolvency administrator to reduce the notice periods applicable under the employment contract, collective agreement or statutory notice to three months. If a shorter period of notice is stipulated in the contract, this shall continue to apply.

Do I have a claim to damages if my notice period is shortened due to the insolvency administrator giving notice of termination?

Yes, shortening the notice period triggers a claim for damages (premature damage), which the employee concerned can file with the insolvency administrator as an insolvency claim pursuant to § 38 InsO to the insolvency table in € gross figures. However, if you have income for this period, you must have it taken into account. Services provided by the Federal Employment Agency, the Job Centre or the health insurance fund for the period of the claim must also be taken into account.

Is there a right to an action for dismissal protection?

The fact of insolvency does not forfeit the right to bring an action for unfair dismissal. The statutory deadlines must be observed. A claim must be filed within three weeks of receipt of the notice of termination, if applicable.

With the opening of insolvency proceedings, all processes (including ongoing dismissal protection processes) are suspended. Both employees and the insolvency administrator can resume interrupted processes. However, claims can also be recognised out of court or declared settled together with you. If the insolvent company has an insufficiency of assets, you may have to bear the full costs. Check (if necessary with your legal adviser) the changed possibilities for action; also in financial terms.

Is there no protection against dismissal for severely handicapped and equal people, as well as for expectant mothers or employees on parental leave?

No, even in the event of insolvency, the approval of the responsible authorities is required before employees who enjoy special protection against dismissal can be dismissed.

There is a restriction for recognised severe disabilities below 50 % GdB (equivalent). Equality must be recognised by the Federal Employment Agency. There is no special protection against dismissal if only that of the GdB (less than 50%) has been confirmed by the Integration Office. In the case of severe disabilities of 50% GdB or more, no special recognition by the Federal Employment Agency is required.

Do I have to comply with my obligations arising from my employment relationship even after the proceedings have been opened and, if applicable, after a notice of termination has already been given?

Yes, within the framework of your existing employment relationship you are obliged to perform your contractually agreed or assigned work. The employment contract shall remain in force until its termination.

May I refuse work due to insolvency?

No, the fact alone that insolvency proceedings are pending or already opened is not a reason for you to stop working. Therefore, even in the event of the insolvency of your employer, you are generally obliged to fulfil your contractual duties.

What will happen to my remaining leave?

Remaining leave entitlements shall be settled upon termination of the employment relationship, unless they can be taken in kind. In the event of insolvency, it should be noted that such claims can already be used up by exemption. If claims nevertheless exist after termination, these shall be settled. If the employment relationship ends before the opening of insolvency proceedings, then the holiday pay claims are table claims pursuant to section 38 InsO, which the employee concerned can register as such in gross € with the responsible insolvency administrator/professional administrator pursuant to section 174 InsO in conjunction with section 38 InsO. If the employment relationship ends after insolvency proceedings have been opened, the claim to compensation is a debt in the form of a debt in the event of insolvency pursuant to section 55 InsO and, as a rule, is better off. However, whether the claim can be paid immediately or only in the course of the proceedings and also in full or only quoted depends decisively on the course of the insolvency proceedings. It is important to know that mass claims according to § 55 InsO are subject to the statute of limitations.

What happens to my overtime?

There is also the possibility that overtime may be used up as part of an exemption from work. For the remaining hours, the principle of origin is usually applied. If the work was performed prior to the opening of insolvency proceedings, then the claims shall be table claims pursuant to section 38 InsO; if the claims arose thereafter, then the hours shall be treated as debt in bankruptcy pursuant to section 55 InsO.

Am I entitled to a job reference?

Even if you leave a company due to insolvency, you are entitled to a simple or qualified job reference. If your employment relationship still exists at the time of the opening of the insolvency proceedings, the insolvency administrator can also issue a certificate for you. Please keep in mind, however, that he does not know you and may not be able to judge you. We recommend that you create a list here in which you note your length of service, work content, etc. The insolvency administrator can take over this information if necessary. Since this is also a normal job reference, the usual rules for creating and appraising job references apply. The fact that the employment relationship is based on insolvency can be noted. As company paper is usually not subject to the storage obligation, your certificate may only be issued on neutral letterhead. If necessary, contact your employer in good time about a certificate. The limitation periods also apply to the claim to certificates.

Can I start a new job even if my employment has not yet ended?

As long as your employment relationship is not yet terminated, you must reach an agreement with your employer or the insolvency administrator that you can pursue a new activity before the expiry of the notice period. So that you do not suffer any disadvantages, you must contact the insolvency administrator. The possibility of a termination agreement without observance of a period of notice is always given.

Am I entitled to a settlement if I am dismissed by the insolvency administrator?

There is no general statutory entitlement. If a claim is awarded as part of a dismissal protection suit, it must also be taken into account in the insolvency proceedings in accordance with the judgement or settlement. However, insolvency law provisions shall apply. In the event of insolvency, the conclusion of a social plan pursuant to section 123 InsO requires a works council with which a corresponding agreement can be concluded. If a company must be closed in which there is no works council, there is usually no social plan.