"I didn't know our employment contracts were problematic – until the first unfair dismissal case came up." Such experiences are unfortunately not uncommon in HR departments. In the complex German employment law landscape, inadequate structures can have costly consequences – costs that can be avoided with the right approach. As an HR professional, you face the challenge of operating legally while not investing too much time. This guide compares three proven models for employment law protection and shows which one best suits your situation.
Four Essential Factors of an Effective HR & Legal Setup
Proactivity: Identifying and Avoiding Risks
A good legal setup enables you to identify employment law risks early. In concrete terms, this means: regular reviews of your HR documents and sensitizing your team to typical employment law pitfalls.
Continuous learning within the team is crucial. Offer regular training on current legal topics – from new case law on remote work regulations to changes in fixed-term employment law.
Learn from your own experience: After each employment law incident, conduct a brief reflection. What worked well? What have we learned? These insights can flow directly into your processes.
The currency of all employment law templates is equally important. Outdated documents increase the risk of legal vulnerabilities. Therefore, establish a structured process for continuous updates.
Reactive Competence: Sound Actions in Critical Situations
Despite the best prevention, conflicts become unavoidable over time. In Germany, approximately 1% of employees sue their employer – every year! An effective setup provides clear procedures and direct access to relevant documents and expertise, for instance when a warning or termination needs to be legally sound.
Well-structured documentation minimizes vulnerabilities in legal disputes. Quick responsiveness prevents minor disagreements from becoming costly legal battles.
Scalability: Growing with the Company
Your company is constantly evolving – your legal setup should support this, not hinder it. A future-proof solution grows organically and adapts flexibly to new requirements, whether it's the introduction of new working time models or the implementation of working time tracking.
The ideal setup allows for easy integration of new areas during expansions and remains stable even with personnel changes – an often underestimated factor.
Economic Efficiency: Optimal Cost-Benefit
Every legal setup must offer a clear return on investment and optimally use your resources. A well-thought-out setup leads to better resource allocation in the HR area and relieves the burden of routine tasks.
The greatest savings usually occur indirectly: through avoided escalations, faster solutions, and thus time savings in the team as well as lower external costs.
Three Models in Direct Comparison
Model 1: The External Lawyer
In this traditional approach, your HR department works with a specialized employment law firm. The collaboration can be reactive (lawyer is mainly consulted for specific problems) or proactive (regular jour fixes, support with routine cases).
In practice, reactive collaboration usually predominates, with the lawyer being used as a "firefighter" and for strategic projects.
Advantages
You receive impeccable legal protection in critical situations and for strategic projects. In the proactive variant, maximum preventive effect is added – your lawyer can identify risks before they become problems.
This collaboration minimizes risks in disputes and relieves your HR team of complex legal questions.
Disadvantages
A significant disadvantage is the high cost: hourly rates of 250 to 350 € are not uncommon for employment law experts. With the typically reactive collaboration, preventive aspects only come into play occasionally. The causes of escalations are thus often not addressed in depth.
The proactive variant may impair the competence development of your own team. A habituation effect can set in, where no in-depth engagement with employment law seems necessary. Not every lawyer explains the background in a way that creates a learning effect for the team.
Finally, depending on the lawyer's workload, delays can occur if you have to wait a long time for responses. This is particularly annoying for smaller but urgent issues.
Rating (based on typical reactive use):
Proactive Risk Management: ⭐⭐
Reactive Risk Handling: ⭐⭐⭐⭐⭐
Scalability and Flexibility: ⭐⭐⭐
Economic Efficiency: ⭐⭐⭐
Model 2: Research and solve by yourself
In this model, your HR team works largely independently on employment law issues. You systematically build internal competence, use online resources, and contact external consultants only in critical cases.
Over time, you develop your own routines and templates that exactly match your company's reality.
Advantages
Flexibility and quick decisions are the biggest strengths – you can act without external coordination. Financially, this model is advantageous as consultant fees only occur occasionally.
Particularly valuable is the continuous development of your own competence, which benefits the entire company in the long term. Pragmatic, company-specific solutions emerge that fit your corporate culture.
Disadvantages
This approach carries higher risks due to possible knowledge deficits. Employment law research can often be complex and fraught with uncertainties, especially for non-lawyers. In special cases, you often need to know the relevance of the situation to search correctly. With the right support, however, competence can be built and developed. In any case, it creates a considerable time expenditure of at least 8 hours per month per person, which is then unavailable for other HR tasks.
This becomes particularly problematic during capacity bottlenecks: Do I accept imprecision in employment law, or can I justify a delay in urgent tasks?
Dependence on individuals as knowledge and experience carriers represents another risk. If, for example, an experienced HR manager leaves the company, a competence gap emerges that is difficult to compensate for. Additionally, there is no continuous external validation of knowledge.
Rating:
Proactive Risk Management: ⭐⭐
Reactive Risk Handling: ⭐⭐
Scalability and Flexibility: ⭐⭐⭐⭐
Economic Efficiency: ⭐⭐⭐⭐
Model 3: Legal Tech in Employment Law
This hybrid model combines digital efficiency with expert support as needed. Your HR department uses a legal tech platform as a basis for employment law questions.
For individual case consultation and legal projects, there is direct access to specialized lawyers at discounted rates.
Advantages
The combination of digital efficiency and legal security makes this approach particularly attractive. You benefit from consistently up-to-date, legally verified templates and receive quick answers to specific questions – usually within one working day. This helps both to efficiently manage day-to-day employment law matters and to continuously expand and update your own knowledge.
The digital structure makes it easy to keep track of the issues that have arisen. Employment law knowledge is decentrally available, which promotes independent development.
Additional, needs-based support from affiliated lawyers ensures legal certainty with simultaneous cost efficiency, even in complex cases where your own expertise needs to be underpinned by legal assessment.
Disadvantages
This model stands or falls with the quality of the chosen platform. Moreover, not every provider offers all the functions mentioned above. For very specific questions, standardized solutions sometimes lack the necessary depth of detail.
Furthermore, effective use requires certain basic digital skills in the team. Implementation requires a certain familiarization period so that all team members can use the functions efficiently and internalize best practices.
Rating:
Proactive Risk Management: ⭐⭐⭐⭐
Reactive Risk Handling: ⭐⭐⭐⭐
Scalability and Flexibility: ⭐⭐⭐⭐⭐
Economic Efficiency: ⭐⭐⭐⭐
Which Model Suits Your HR Department?
The Lawyer for Security-Conscious Companies
The proactive lawyer model is particularly suitable for companies in highly regulated industries such as pharmaceuticals or financial services, where flawless employment law compliance is required. This model would also be the first choice if your company has already had employment law conflicts or operates in an industry with strong union influence. The reactive variant is the lived standard in German SMEs. It can be quite effective as a "firefighter." Unfortunately, it often does not address the causes of escalations or only partially. However, it can be well complemented by aspects of the other approaches.
Do-It-Yourself in Small and Stable Settings
The independent approach is well-suited for very small companies with limited budgets. If your workforce is stable with little fluctuation, standard situations that you can handle well yourself usually predominate in everyday life.
This model works particularly well with experienced HR employees who already bring solid employment law knowledge. Companies in industries with few employment law peculiarities also fare well with this lean approach.
360° Coverage through Legal Tech
The digital legal tech solution unfolds its strengths particularly in medium-sized companies with controlled growth. Start-ups and scale-ups appreciate the continuous support in building competencies. Companies from the consulting and agency environment benefit from the speed and cost efficiency.
This model is recommended if you seek a good balance between legal certainty and economic efficiency. It is the solution of choice if you want to systematically professionalize your HR department without incurring high legal fees permanently.
The 5-Step Plan for Implementation
1. Assessment
Begin with an honest analysis of your current situation. What legal risk areas exist in your company? Critically examine whether inadmissible questions are potentially asked in your job interviews.
How high is the employment law competence in your team? Which processes are already working well, which need improvement? This inventory forms the basis for all further steps.
2. Set Priorities
You cannot optimize everything simultaneously. First, concentrate on high-risk areas such as termination processes or working time regulations.
Establish clear responsibilities and identify "quick wins" – measures that bring rapid improvements with little effort.
3. Standardize Processes
Establish clear procedures for recurring operations such as hiring, warnings, or reference writing. Introduce uniform checklists and documentation standards.
Build a reliable, preferably digital filing system for quick access. This helps you avoid duplication of work and ensures nothing is overlooked.
4. Structure Knowledge Management
Knowledge must be shared, updated, and easily accessible. Plan regular training on employment law topics for your HR team and managers.
Build an internal knowledge database with best practices and templates. Exchange ideas with other HR professionals in networks to benefit from their experiences.
5. Establish Quality Assurance
Establish the four-eyes principle for critical decisions such as terminations. Regularly review your processes and documents, ideally with external support. Ensure that questioning and updating your own knowledge is structurally anchored. Implement feedback loops through which practical experiences can systematically flow into your processes.
The Right Approach for Your Success
The choice of the optimal legal setup is determined by numerous company-specific factors. Your company size, industry, and growth dynamics play just as much a role as your budget and existing competencies.
The classic lawyer model offers high security in crisis situations. The independence approach scores with economic efficiency and flexibility but carries increased legal risks. The legal tech variant positions itself as a balanced middle ground with low costs, great learning effect, and easy scalability.
But it is not perfect yet...
What matters is not the theoretical perfection of the setup, but its practical suitability for your specific needs. Begin with an honest assessment of your current situation.
Identify the biggest risk areas in your company and consider which model best fits. Ask yourself where deficits still exist and gradually develop your legal setup further. This way, your HR department remains the strategic partner that all departments need – legally secure, efficient, and future-proof.
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