Severance from a German insolvency plan: too late after 12 years?

Germany’s Federal Labour Court ruled on 1 June 2026 that a worker who waited nearly ten years to claim information about his severance entitlement under an insolvency social plan lost that right. The case (Az. 1 AZR 166/25) shows how strict German deadlines can be – even when the insolvency administrator never told workers their money had become available.

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Worker loses right to severance information after decade of inaction

Germany’s Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on 1 June 2026 that a former employee has no right to information about the amount of his severance pay under an insolvency social plan (case no. 1 AZR 166/25). The court overturned the earlier decision of the Regional Labour Court (Landesarbeitsgericht) Hamm of 21 August 2025 (case no. 15 SLa 649/24), which had sided with the worker. If you have claims under a German insolvency social plan, you need to actively pursue them – or risk losing them entirely.

What is a social plan? In Germany, when a company shuts down or makes large-scale redundancies, the employer and the works council (Betriebsrat – the elected employee representatives in the workplace) are legally required to negotiate a Sozialplan: a collective agreement setting out financial compensation for affected workers. Think of it as a legally structured severance framework, not a voluntary payout.

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A 2013 social plan – claimed only in 2023

The Federal Labor Court has not yet issued its reasoning. The lower court had established the following facts:

A company went insolvent and shut down in 2013. The insolvency administrator and the works council agreed on a social plan promising severance payments to the remaining 25 employees – but only if enough money was left over after paying the insolvency estate’s other debts. In German insolvency law this threshold is called Masseunzulänglichkeit (mass insufficiency): a situation where the estate cannot even cover the ongoing costs of the insolvency proceedings. In 2014 the administrator informed the insolvency court that this obstacle had been removed. The workers were never told. It was only in 2023 – nearly ten years later – that the claimant found out and demanded information about the exact amount owed to him. The BAG held that this was too late.