Severance payment

According to Section 1 a (1) KSchG, there is a statutory entitlement to severance pay if the employer promises the employee to be dismissed a severance payment of half a gross monthly salary per year of employment in the event that the employee does not file an action for unfair dismissal.

Furthermore, there is a statutory entitlement to severance pay in the event that the employment relationship is terminated by the labor court upon application in accordance with Sections 9 and 10 KSchG, although this rarely occurs in practice.

Outside of these two special cases, there is no statutory entitlement to severance pay. Nevertheless, a large number of dismissal protection proceedings end with an agreement on the termination of the employment relationship and the payment of a severance payment for the loss of employment. The amount of the severance payment depends on the chances of success in each case; however, a rule of thumb of half a month's gross salary per year of employment has proven itself. If the chances of success are better for the employee than for the employer, the severance payment can also be significantly higher or - conversely - significantly lower in individual cases.

More information? Email us: arbeitsrecht@voelker-gruppe.com