Employee Receivables Lawsuit

When an employment relationship ends, or even while it is still ongoing, the unpaid entitlements an employee is owed are rarely limited to a single item. Unpaid wages for the final months, compensation for years of overtime, unused leave days, and termination-related indemnities often come up together. An employee receivables lawsuit is a case filed to claim all or part of these receivables from the employer, together with statutory interest.

Each receivable item has its own eligibility conditions, calculation method, and rules of proof. On this page, we outline the most common items and how the process works. Every case is unique, and your specific situation should be assessed separately on the basis of your payslips, contract, and termination documents.

Which receivables can be claimed?

Severance pay

Severance pay is regulated under Article 14 of the former Labor Law No. 1475, which remains in force. It arises when the contract of an employee with at least one year of service is terminated by the employer without just cause, when the employee terminates the contract for just cause, in cases listed in the law such as military service or retirement, and when a female employee resigns of her own accord within one year of marriage. Thirty days of gross pay, including fringe benefits, is used as the basis for each full year of service. However, a statutory cap applies to the compensation, and this cap is reset every year. For a preliminary estimate, you can use our severance pay calculator.

Notice pay

The party terminating an open-ended employment contract must comply with the notice periods set out in the law. Under Labor Law No. 4857, these periods are two weeks for service of less than six months, four weeks for service between six months and one and a half years, six weeks for service between one and a half and three years, and eight weeks for service of more than three years. If the notice period is not observed, notice pay equal to the wages for that period must be paid.

Overtime pay

Work exceeding forty-five hours per week is overtime, and each hour is paid at the regular hourly rate plus fifty percent. Annual overtime cannot exceed two hundred and seventy hours in total. Proof is usually provided through witnesses, entry and exit records, and correspondence. For details, see our article on how to prove an overtime claim.

Annual leave, weekly rest day, and public holiday pay

Depending on length of service, an employee is entitled to paid annual leave of fourteen days for one to five years of service, twenty days for more than five and fewer than fifteen years, and twenty-six days for fifteen years or more. When the contract ends, pay for any unused leave must be paid out. In addition, an extra day's wages must be paid for each day worked on national holidays and public holidays.

Unpaid wages and other receivables

Wages for the most recent period worked, bonuses and premiums, and contractual payments such as transportation and meal allowances can also be claimed. If these payments have become regular under the contract or workplace practice, this strengthens the basis of the claim. Where the conditions are met, special indemnities such as bad-faith compensation and compensation for breach of the duty of equal treatment may also come into play.

Mandatory mediation and the litigation process

For employee receivables and compensation based on the law or on an individual or collective employment agreement, applying to a mediator before filing a lawsuit is a prerequisite for the case. The process unfolds as follows:

1. Gathering payslips, bank statements, the contract, the termination letter, and the social security (SGK) service record.
2. Preparing a preliminary calculation of the receivable items.
3. Applying to the mediator and holding negotiations; signing the minutes if an agreement is reached.
4. If no agreement is reached, filing a lawsuit at the labor court together with the original or a certified copy of the final minutes.
5. Hearing the witnesses and obtaining the accounting expert's report; objecting to the report.

Where the amount of the receivable cannot be determined precisely when the lawsuit is filed, an indeterminate receivable lawsuit can be filed, and the amount can be increased after the expert report. The competent court is the labor court; the case can be filed at the defendant's place of residence or at the court of the place where the work was performed.

Notice of termination and termination for just cause

Whether a significant portion of the receivables arise depends on who terminated the employment contract and on what grounds. For this reason, the content of the termination notice shapes the course of the case. An employee may terminate the contract without waiting for the notice period in the cases listed in the law, such as non-payment of wages, failure to apply working conditions, or being subjected to conduct contrary to morality and good faith. The right to terminate based on conduct contrary to morality and good faith must be exercised within six working days of learning of the incident and, in any case, within one year of the incident occurring. When termination is made through a notary or in writing, clearly stating the reason prevents a later claim that the employee resigned.

Statute of limitations

The statute of limitations is five years for severance pay, notice pay, unused annual leave pay, bad-faith compensation, and compensation for breach of equal treatment. A five-year limitation period also applies to wage-type receivables such as wages and overtime. Because the period for wage receivables runs separately from the date each month's wages became due, if you delay, receivables for the oldest periods may become time-barred.

Proof and the importance of documents

• Payslips: Signed payslips that include overtime accruals may require proof to the contrary by written document, so the content of documents you sign matters.
• Release agreement: A release agreement covering the employee's receivables from the employer is absolutely void if it does not meet the form and conditions required by law.
• Witnesses: Statements from people who worked during the same period are decisive, particularly in proving overtime and actual wages.

Our firm's support

Our firm handles the process on behalf of the employee or the employer, from identifying the receivable items to mediation negotiations, from labor court proceedings to the enforcement stage. If the invalidity of the termination can also be argued, the receivable claims are planned together with a reinstatement lawsuit.