The weakening economic situation in Germany is leading to an increase in legal disputes related to employment, according to the insurance industry. The Association of German Insurance Companies (GDV) reported to the Funke Media Group newspapers that in the second quarter of 2026, 15.3 percent of all claims made to legal protection insurance were related to employment disagreements. This is an increase from 14.6 percent a year earlier and 14.2 percent in 2024.
The trend in claim payments is even more pronounced. From January to June 2026, 38.6 percent of all payments made by legal protection insurers were directed toward labor law protection. This figure is up from 36.8 percent during the same period in 2025, and 33.9 percent in 2024.
Jörg Asmussen, Managing Director of the GDV, told the newspapers that as companies downsize or undergo restructuring, conflicts surrounding the workplace naturally increase. He noted that for employees, these disputes can quickly concern their fundamental financial stability. Consequently, labor law protection is gaining increasing importance during periods of weak economic activity.
The German economy has suffered from low dynamism and high uncertainty for years, while the number of company insolvencies remains elevated. In the first half of 2026, the Federal Statistical Office registered 12,812 business insolvencies, which is 6.7 percent more than the same period last year. Furthermore, in August, the number of unemployed people reached just over three million, an increase of 36,000 compared to the previous year.
For employees, legal protection insurance can cover the costs of a lawyer and a court proceeding, up to the agreed-upon limit, particularly when facing termination. In a lawsuit seeking protection against dismissal, there is generally a three-week deadline. Without such insurance, employees are typically required to cover their own lawyer’s fees in the first instance at the Labor Court, even if they ultimately win the case.
Overall, the demand for legal protection insurance is rising. For 2026, the GDV forecasts a 4.5 percent growth in contributions. In 2025, there were approximately 26.2 million legal protection contracts and around 5.1 million claims, resulting in a claim expenditure of roughly 4.1 billion euros-a significant increase from approximately 2.7 billion euros ten years prior. Currently, around 60 percent of households in Germany have legal protection insurance.
