FAQ

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Is there a right to severance pay?

No, there is no general statutory entitlement to severance pay. Severance pay is only provided for in a social plan or, if applicable, in the event of termination for operational reasons within the meaning of Section 1 a KSchG. In most cases, severance pay is the result of a negotiation between the employer and the employee. In a lawsuit, the continuation of the employment relationship is usually disputed and the employer must prove the reasons for termination. In order to end the process for the employee and the employer, a settlement is usually reached with a severance payment. The amount of the severance payment depends on many factors, such as the industry, the length of service, the age and whether the employee has any maintenance obligations.

Published: July 5, 2023
Updated: May 26, 2025

Further FAQs on the topic:

Age can play a role in severance pay in combination with length of service. The older the employee is, the higher the severance payment can be. Age also depends on other aspects, such as the industry and other social factors.

Length of service includes the period during which you worked continuously for your employer from the beginning of the employment relationship until the end of the employment relationship. Interruptions such as parental leave or illness also count towards length of service, provided the employment relationship was not terminated during these periods.

Not included in length of service: Unpaid internships, temporary employment and employment as a freelancer.

The gross monthly salary that must be entered in the severance calculator includes not only the gross monthly salary, but also all salary components such as bonus payments and special payments. These payments include, in particular, bonus payments, premiums, vacation and Christmas bonuses, non-cash benefits, the company pension plan and non-cash benefits such as a company car.

For the severance calculator, all these salary components that have been paid or will be paid in the calendar year must be added up and then divided by the number of months already worked up to the end of employment in this calendar year. The resulting gross monthly salary is then entered into the severance calculator. It should be noted that the gross salary is the amount before deduction of taxes, soli and social security contributions for the severance payment calculation. It is not the amount paid out on the payroll.

The employer and the employee are free to negotiate the amount of the severance payment. The so-called "standard severance payment" is 0.5 gross monthly salary per year of service. The exact amount depends on many factors that must be negotiated between the employer and the employee. In addition to length of service, these include factors such as age, industry and, in particular, the expected effectiveness of the notice given.

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