Can I receive severance pay through a settlement?

Even if there is no legal claim, employees can receive a severance payment through a settlement. The severance payment is the result of a compromise. Often, the employer has no suitable grounds for termination and still wants to terminate the employment relationship. In order for the termination to remain or become effective, the employer can offer the employee a severance payment.

In proceedings for protection against dismissal, the employer must prove that the dismissal is justified. Many factors play a role in the protection against dismissal. In companies with more than 10 employees, particular care must be taken in selecting which employee is to receive notice of termination. This so-called social selection must be proven and justified in court. If the social selection was not carried out correctly or if a decision cannot be properly substantiated, the termination is invalid and the employment relationship is not terminated.

Providing evidence of correct social selection is usually very time-consuming and cost-intensive. It is often not possible to provide this proof. Therefore, the employer must find a way to motivate the employee to accept the termination, since the employee is often proven right in a hearing before the labor court and thus the case is often lost for the employer. In order to convince the employee to accept termination, he or she is often offered financial compensation in the form of a severance package.