The rules on severance pay in detail

There is no severance for a socially justified dismissal.

If an employee files an action for dismissal protection, the employer must prove in court that there was a reason for the dismissal. If the court decides the dismissal was invalid, the employment relationship continues and the employer must reinstate the employee. The risk of this often leads to settlements in which the employer and employee agree on the termination of the employment relationship in return for a payment. The amount of the payment is usually calculated based on length of service and gross monthly salary (i.e. yearly pay divided by 12). However, there is no binding formula and the circumstances of the individual case are taken into account by the court, making the amount hard to predict. Generally, we estimate half a month’s salary per year of service if the chances of success in court are fifty-fifty. If the chances of the employee are good, s/he will expect more.

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Author: Kliemt.HR Lawyers

Date: December 2018