The rules on severance pay in detail

Statutory termination pay (Trattamento di Fine Rapporto, ‘TFR’) is accrued each month throughout the employment relationship and is equal to the salary paid divided by 13.5 (roughly 7% of gross salary). This indemnity is paid out at termination (or in advance in special cases) with a cost-of-leaving adjustment.

Normally TFR is accrued at the company but it can also be accrued in outside funds at the employees' request.

Entitlement to TFR begins when the employment starts. There is no qualifying period.
Other compulsory termination payments include: a notice indemnity (if the notice is not worked and unless the termination is for gross misconduct), unused leave and other holiday and salary entitlements (i.e. because salary is paid in 13 or 14 monthly installments, the additional month(s) are pro-rated and paid out proportionally at termination).

All the above relate to termination and any remedies for unfair dismissal (such as payment in exchange for waivers) must be paid in addition.

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Author: Toffoletto De Luca Tamajo e Soci

Date: December 2018


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