No one in Germany is priced out of challenging a dismissal. Prozesskostenhilfe (PKH) — legal aid — pays the court costs and your own lawyer’s statutory fees if your income is low and your case has reasonable prospects (§§ 114 ff. ZPO, applicable in labor courts via § 11a ArbGG). After a dismissal, when salary is about to stop and every fixed cost suddenly looks threatening, PKH is the mechanism that keeps the Kündigungsschutzklage affordable. This article explains who qualifies, what PKH does and does not cover, how the application works, and how it interacts with legal expenses insurance.
What PKH covers
- Court costs: filing and hearing fees of the labor court (already modest, and waived entirely on settlement).
- Your own lawyer: the statutory RVG fees of the attorney assigned to you (beigeordnet) — normally the lawyer you chose yourself, who applies for PKH with you.
- Court-ordered expenses: witness compensation, interpreters, experts.
Depending on your means, PKH is granted either free of any repayment or against monthly instalments (see below). How statutory fees are calculated in the first place is explained in our article on RVG fees in employment law; a full cost overview is on our costs page.
What PKH does not cover
PKH never covers the opponent’s costs (§ 123 ZPO). In most litigation that would be a serious gap — but in first-instance labor proceedings it is almost irrelevant: under § 12a ArbGG, each side bears its own lawyer’s fees regardless of who wins. So in the typical dismissal case, a PKH-funded claimant genuinely litigates at zero or near-zero personal cost. The exposure only appears on appeal, where the loser-pays principle applies.
The means test
PKH looks at your einzusetzendes Einkommen — deployable income — calculated as your net income minus a cascade of allowances (Freibeträge, adjusted every January):
- An employment allowance (roughly €280/month) if you earn from work.
- A personal allowance for you (roughly €620/month) and comparable allowances for a spouse/partner, plus allowances for each child (reduced by the child’s own income such as Kindergeld attribution rules).
- Full housing costs (rent and heating, as far as not disproportionate).
- Reasonable insurance premiums, work-related expenses, debt service in justified cases, and special burdens.
The result decides the outcome:
- Deployable income under €20/month: PKH without instalments — fully free.
- Above that: PKH with monthly instalments of half the deployable income, for a maximum of 48 months — and never more than the actual costs incurred.
Assets
You must use assets first, but protected amounts (Schonvermögen) are meaningful: roughly €10,000 per person in savings, an adequate owner-occupied home, a reasonable car needed for work, and dedicated retirement products. A severance received during the proceedings counts as an asset and can lead to retroactive instalment orders — factor this into settlement planning.
The merit test
PKH requires „hinreichende Erfolgsaussicht” — reasonable prospects of success — and the litigation must not be frivolous (mutwillig). The bar is deliberately low: the court must not pre-try the case, and success only needs to be genuinely open. In dismissal-protection cases the merit test is passed almost by default, because the employer bears the burden of justifying the dismissal and the outcome is rarely predictable at filing stage. Where a settlement is realistic — as in ~80% of cases — prospects are by definition reasonable.
How to apply
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Complete the declaration form
The „Erklärung über die persönlichen und wirtschaftlichen Verhältnisse” — a nationwide standard form covering income, assets, housing costs, and dependents.
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Attach evidence
Last salary slips or ALG I notice, rental contract, bank statements, insurance premiums, loan schedules. Incomplete evidence is the number-one cause of delay.
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File it with the Kündigungsschutzklage
Your lawyer files the PKH application together with the complaint. PKH is granted retroactively to the date the application was complete — so the 21-day deadline is never a reason to wait.
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Court decides — usually without a hearing
The labor court reviews means and merits on paper. The opponent is not heard on your finances; the declaration remains confidential from the employer.
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After the case: the 4-year window
The court can review your finances for 4 years after the case ends (§ 120a ZPO). You must report income improvements of more than €100/month and address changes. Improvements can convert free PKH into instalment PKH retroactively.
Beratungshilfe: the out-of-court sibling
PKH only covers court proceedings. For out-of-court advice — reviewing a dismissal letter, a termination-agreement draft, a Zeugnis — low-income clients can obtain Beratungshilfe: a voucher (Berechtigungsschein) from the local Amtsgericht that funds lawyer’s advice against a personal contribution of just €15. The means test mirrors the PKH standard. If court proceedings follow, PKH takes over from there.
PKH and legal expenses insurance
PKH is subsidiary: if you hold legal expenses insurance that covers employment disputes, the insurance pays and PKH is unavailable — an existing coverage claim counts as an asset. In practice the order of checking is always: (1) insurance, (2) union legal protection if you are a member, (3) PKH. Tell your lawyer about all three at the first conversation; the funding route changes nothing about the strategy, only about who pays.
Worked example
Warehouse employee in Bonn, €2,300 net/month, single, rent €820 warm, no meaningful savings. Dismissed without notice; a Kündigungsschutzklage is filed with a Streitwert of three gross monthly salaries (3 × €3,100 = €9,300).
Means test:
- Net income: €2,300
- minus employment allowance (~€280) and personal allowance (~€620): €1,400
- minus housing €820, insurance/commuting ~€120: deployable income ~€460
- Instalment: half of that, rounded — ~€230/month.
Case costs: the matter settles at the Gütetermin for €7,750 severance (0.75 monthly per 3.3 years) plus a Grade-2 Zeugnis. Court fees: €0 (settlement). Own lawyer’s RVG fees on €9,300 plus settlement surcharge: ~€2,700 including VAT.
Result: PKH covers the €2,700; the client repays it in ~12 instalments of €230 — interest-free — and stops as soon as the actual costs are reached. Had his income been €1,700 net with the same rent, deployable income would have been below €20 and the entire case would have cost him nothing at all. Either way, the €7,750 severance is untouched by first-instance opponent costs thanks to § 12a ArbGG.
Frequently asked questions
Can I choose my own lawyer under PKH?
Yes. PKH does not assign you a random attorney — you choose a lawyer willing to act under PKH conditions, and the court appoints (beiordnet) that lawyer. The representation itself is identical to privately funded work.
Does receiving ALG I or Bürgergeld automatically qualify me?
Practically, yes for instalment-free PKH in most cases — benefit-level income falls below the allowances. You still must file the declaration form with evidence; the benefit notice serves as the core income proof.
What happens if I lose the case — do I owe the employer’s lawyer?
Not in the first instance: § 12a ArbGG excludes reimbursement of the opponent’s lawyer regardless of outcome, and PKH covers your own side. On appeal, loser-pays applies and PKH does not shield you from the opponent’s costs — a risk assessed carefully before any appeal.
Will the employer learn about my finances from the PKH application?
No. The declaration of personal and economic circumstances is submitted to the court only and is not served on the opponent. The employer merely sees that PKH was applied for or granted.
I received a severance after PKH was granted — do I have to report it?
Yes. A severance is a significant improvement in your financial circumstances within the 4-year review window and must be reported. The court may order instalments or a lump-sum contribution up to the actual case costs — usually a small fraction of the severance.
My PKH application was rejected — is the case over?
No. Rejection only affects funding, not the lawsuit itself, and can be challenged by sofortige Beschwerde within one month. Alternative funding (instalment agreements with your lawyer, union support) can bridge the gap.