{"id":6553,"date":"2023-04-12T08:52:14","date_gmt":"2023-04-12T06:52:14","guid":{"rendered":"https:\/\/smart-arbeitsrecht.de\/?page_id=6553"},"modified":"2025-07-02T11:56:03","modified_gmt":"2025-07-02T09:56:03","slug":"abfindung-bei-kuendigung","status":"publish","type":"page","link":"https:\/\/smart-arbeitsrecht.de\/en\/abfindung-bei-kuendigung\/","title":{"rendered":"Severance pay upon termination \u2013 everything you need to know"},"content":{"rendered":"

The Severance pay upon termination<\/strong> For many employees, severance pay from their employer is a given. However, this is often a misconception, as there is no statutory right under German law to which employers are always obligated. This may be shocking for employees. However, it does not mean that employees cannot receive severance pay after being terminated by their employer. This often depends on a certain degree of negotiating skill and the specific circumstances of the individual case.<\/p>\n\n\n

\n
\"Abfindung
Do you have any questions about severance pay upon termination?<\/strong>
Call me directly at 040 524 717 830<\/a><\/strong> \u2013 I will help you personally. Or send me a message via the Contact form<\/a><\/strong>.<\/figcaption><\/figure><\/div>\n\n\n

This article highlights the most important aspects<\/strong> on the topic of severance pay. It explains when severance pay is considered, how it is legally regulated, and why there is no automatic entitlement to severance pay. The article also shows under which Requirements<\/strong> a severance payment is negotiated and which factors can influence the amount.<\/p>\n\n\n\n

In addition, the article addresses tax and social security regulations<\/strong> and describes the possible effects of severance pay on the receipt of unemployment benefits. As an employee, you will receive a comprehensive overview of how and under what conditions severance payments are negotiated in practice.<\/p>\n\n\n\n

\n

Overview<\/h3>\n
    \n
  1. What is severance pay?<\/a><\/li>\n
  2. When am I entitled to severance pay?<\/a><\/li>\n
  3. Why does it make sense for the employer to pay severance pay?<\/a><\/li>\n
  4. Which terminations result in severance pay?<\/a><\/li>\n
  5. In which cases are employees still entitled to severance pay?<\/a><\/li>\n
  6. How much severance pay do you get after termination?<\/a><\/li>\n
  7. How should employees not behave after being fired?<\/a><\/li>\n
  8. How much are the social security contributions on a severance payment?<\/a><\/li>\n
  9. Is severance pay tax-free?<\/a><\/li>\n
  10. Is a severance payment taken into account when receiving unemployment benefits?<\/a><\/li>\n
  11. Conclusion<\/a><\/li>\n
  12. FAQ<\/a><\/li>\n<\/ol>\n<\/div>\n\n\n\n

    What is severance pay?<\/h2>\n\n\n\n

    A severance payment is a benefit provided by the employer for the Loss of job<\/strong>Severance pay is generally considered if the employer has terminated the employment or if there is a termination agreement that includes severance pay. Remuneration<\/strong> of the employer, but no remuneration.<\/p>\n\n\n

    \n
    \"Was<\/figure><\/div>\n\n\n

    In common usage, severance pay is closely related to Termination<\/strong> Employees receive severance pay when they lose their job due to dismissal. This means the employee loses their social security benefits and is at risk of becoming unemployed.<\/p>\n\n\n\n

    Therefore, court settlements and termination agreements often state the following with regard to severance pay:<\/p>\n\n\n\n

    \n

    \u201cThe employee shall receive compensation for the loss of his job in accordance with Section\u00a7 9<\/a>, Section 10 Consumer Protection Act<\/a> in the amount of\u2026\u201c<\/p>\n<\/blockquote>\n\n\n\n

    The severance payment is therefore a Special service<\/strong> as compensation for job loss.<\/p>\n\n\n\n

    \n
    \n

    Have you been terminated or do you have questions about severance pay?<\/p> Contact us now<\/a>\n <\/div>\n<\/div>\n\n\n\n

    When am I entitled to severance pay?<\/h2>\n\n\n\n

    A common misconception is that employees \u201cautomatically<\/strong>\u201c are entitled to severance pay if the employer terminates the employment. Legally speaking, employees are generally entitled no claim<\/strong> There is simply no legal regulation that requires this. Neither the German Civil Code (BGB) nor the German Dismissal Protection Act (KSchG) contain provisions that make severance pay mandatory \u2013 at least as a general rule. dismissal for operational reasons<\/strong> after \u00a7 1a KSchG<\/a> You can find details below.<\/p>\n\n\n

    \n
    \"Anspruch<\/figure><\/div>\n\n\n

    The Dismissal Protection Act<\/strong> It primarily serves to protect against unjustified dismissals and to preserve the employment relationship. It protects the employee from socially unjustified dismissals<\/strong>, so that in the event of an unjustified dismissal he can sue for continued employment and does not automatically receive severance pay.<\/p>\n\n\n\n

    So in Germany there are no severance pay claim<\/strong> in case of termination. What we do have in Germany, however, is a Protection of existing rights<\/strong>This means that if you are dismissed, the entire process is initially geared toward getting your job back. Because if you, as an employee, are in the right and win the unfair dismissal case, you will get your job back and not receive any severance pay.<\/p>\n\n\n\n

    Dismissal protection proceedings often end with a settlement and severance pay<\/h3>\n\n\n\n

    However, the labor court procedure is designed so that there is no judgment at all, but rather that the employee and employer reach an amicable agreement beforehand<\/strong>Therefore, a dismissal protection process begins with a Conciliation hearing<\/strong>, which is intended solely to promote amicable settlement. Furthermore, if an amicable settlement is reached and the case is terminated by compromise, no court costs are incurred.<\/p>\n\n\n\n

    From experience, it can be said that most dismissal disputes do not end with a judgment in which the employee wins and then (perceives) to lose. In many cases, the end result is an amicable and mutual termination, in which Comparison.<\/strong> And in this comparison, the employment relationship is finally regulated and usually also finished<\/strong>The employer is often willing to pay severance pay, especially if the reasons for dismissal are not clear and cannot be proven in court.<\/p>\n\n\n\n

    \"Anwalt<\/figure>
    \n

    More about Dismissal protection suit<\/a> You can find out more in this article.<\/p>\n<\/div><\/div>\n\n\n\n

    <\/div>\n\n\n\n

    Why does it make sense for the employer to pay severance pay?<\/h2>\n\n\n\n

    But let\u2019s get to the point:<\/strong> Why do employers even pay severance pay to employees upon termination if they aren't legally obligated to do so? Even if they lose the unfair dismissal case, they would never have to expect to pay severance pay (with one exception). Just a reminder: <\/strong>German termination law protects the continued existence of the employment relationship and generally does not offer any protection against severance pay!<\/p>\n\n\n

    \n
    \"Gr\u00fcnde<\/figure><\/div>\n\n\n

    But for employers it is often the lesser evils<\/strong>, to pay severance pay. It is legally and financially simply safer and faster<\/strong> than the path without severance pay. There are two main reasons for this:<\/p>\n\n\n\n

    Risk of default of acceptance after termination<\/h3>\n\n\n\n

    After notice of termination by the employer, employees often file a complaint within three weeks<\/strong> This leads to a often lengthy legal disputes<\/strong>, which is at least several months<\/strong>, but can also drag on for over a year, especially if the case goes to the second instance, the State Labor Court. In the meantime, the notice period expires, and the employee is generally not re-employed.<\/p>\n\n\n\n

    The risk for the employer is that the termination will prove to be ineffective<\/strong> proves to be unfounded, e.g. due to formal errors or insufficient grounds for termination, and the employment relationship has not been terminated. In this case, the employer would Delay in acceptance<\/strong> This means that he would not have accepted the work of the employee despite the existing employment relationship. The employer would then have to pay the wages for the entire period count<\/strong>, even though he didn't work.<\/p>\n\n\n\n

    To avoid this financial risk, employers often choose to voluntary payment<\/strong> a severance payment to safely end the employment relationship and the dismissal protection process.<\/p>\n\n\n\n

    \n

    We know the Employers' strategies<\/span> \u2013 and negotiate on an equal footing.<\/h3>\n

    Severance pay is not a gift. It is the result of prudent negotiation.<\/strong><\/p>\n

    We know why employers pay \u2013 and how to make the most of this opportunity. Our experienced specialist lawyers represent you consistently and with a sense of proportion \u2013 throughout Germany.<\/em><\/p>\n

    <\/i> Call now <\/a> <\/i> Free initial assessment<\/a><\/div>\n<\/div>\n\n\n\n

    Reemployment of workers<\/h3>\n\n\n\n

    Another risk that causes employers to pay severance pay to employees in the event of termination is obvious: in the event of a loss in court, not only financial disadvantages<\/strong>. In this case, it is also legally established that the employment relationship persists<\/strong> \u2013 at least until no other decision is made in the second instance.<\/p>\n\n\n\n

    This means that the employer is generally obligated<\/strong> is to continue to employ the employee. And a good Specialist lawyer for labor law<\/a> will regularly also file a request for continued employment on behalf of his client as an additional application. If it then turns out that the termination is invalid, the employee usually wins even with the request for continued employment. The consequence:<\/strong> The employee can enforce employment, even through enforcement measures.<\/p>\n\n\n\n

    This isn't exactly in the employer's best interests. It even contradicts the employer's interests, since the employer didn't issue a dismissal for operational, conduct, or personal reasons without good reason.<\/p>\n\n\n\n

    The employer\u2019s interests may speak in favor of severance pay<\/h3>\n\n\n\n

    By terminating the employment, the employer has clearly expressed his interests: He wants to terminate the employment relationship finish<\/strong> and the employee no longer take back<\/strong>This situation of interests applies to all three possible reasons for termination \u2013 behavioral<\/strong>, personal<\/strong> and operational reasons<\/strong> \u2013 similar, although for different reasons.<\/p>\n\n\n\n

    However, since a possible favorable judgment in the dismissal protection process can enforce continued employment, the employer will want to pursue a legally secure and swift separation from the employee. This is possible through a settlement to which both parties to the employment contract agree. agree<\/strong> The greater the desire for separation, the more likely the employer will be willing to agree to a high severance payment in a settlement.<\/p>\n\n\n\n

    Which terminations result in severance pay?<\/h2>\n\n\n\n

    At a dismissal for operational reasons<\/strong> Employees often have the best chances of receiving severance pay, as the dismissal has nothing to do with their behavior or their person, but rather with operational reasons<\/strong> However, it is often difficult for employers to defend dismissals for operational reasons in court, as they prove<\/strong> It must be established that the job has been eliminated and that no alternative employment opportunities exist. Furthermore, the employer must conduct a social selection process among the affected employees, which can be prone to errors.<\/p>\n\n\n\n

    \"Betriebsbedingte<\/figure>
    \n

    More on the topic Dismissal for operational reasons<\/a>, read here.<\/p>\n<\/div><\/div>\n\n\n\n

    <\/div>\n\n\n\n

    At a dismissal for misconduct<\/a><\/strong>, where the employee violated his duties<\/strong> The chances of receiving severance pay are often lower, especially in cases of serious violations. However, errors made by the employer during termination, such as insufficient warnings or formal errors, can increase the chances of receiving severance pay.<\/p>\n\n\n\n

    At a dismissal for personal reasons<\/a><\/strong> the reason lies in the person<\/strong> of the employee, for example, in the case of sickness-related absences or inadequate performance. The employer perceives the relationship between work performance and compensation as disrupted and wants to avoid financial burdens or operational disruptions through termination. However, the legal hurdles are particularly high for dismissals due to sickness, and employers are more likely to pay severance pay if the prognosis is positive.<\/p>\n\n\n\n

    In addition to illness-related reasons, dismissal for personal reasons can also occur in the case of \u201cLow performers<\/strong>", or with employees who are unable to perform their work due to incarceration or loss of their driving license. In these clear-cut cases, there is little interest in severance pay. In less clear-cut cases, however, there is often scope for negotiation of a settlement with severance pay. Experience has shown that dismissing low performers is a particularly difficult undertaking for employers.<\/p>\n\n\n\n

    In summary, the probability of a severance payment depends heavily on the Type of termination and circumstances <\/strong>The chances are higher for dismissals for operational reasons, whereas dismissals for conduct-related or personal reasons are more complex from a severance pay perspective, and the prospects of success for a severance payment depend on the legal and formal details of the individual case.<\/p>\n\n\n\n

    In which cases are employees still entitled to severance pay?<\/h2>\n\n\n\n

    While there is no general legal entitlement to severance pay, there are always situations in which such a claim may arise. These are specific, individual cases that do not apply to every termination by an employer.<\/p>\n\n\n

    \n
    \"Ausnahmen<\/figure><\/div>\n\n\n

    For example, there are employment contracts in which it has been agreed that in the event of termination by the employer, a severance payment of the agreed amount is to be paid. If the employee is then terminated by the employer, the employee is entitled to such a Clause in the employment contract<\/strong> a claim to the severance payment. But only then. Such clauses are, for example, in Managing director employment contracts<\/strong> as social security in the event of dismissal is not uncommon.<\/p>\n\n\n\n

    Other cases include:<\/p>\n\n\n\n