The rules on severance pay in detail

The employee is entitled to severance pay if the employment is terminated for organisational reasons or for the long-term loss of the employee’s ability to perform his or her current work, according to a medical assessment. In general, the method of calculation of severance pay depends on the form of termination and the duration of the employment relationship.

If the employer terminates the employment by notice (for the above reasons), the employee is entitled to the following compensation:

Length of service Severance pay
From two to five years of employment one month’s pay
From five to ten years of employment two months’ pay
From ten to 20 years of employment three months’ pay
Over 20 years of employment four months’ pay

 

If the employer and employee end the employment by agreement (for the above reasons), the employee is entitled to the following compensation:

Length of service Severance pay
Less than two years of employment one month’s pay
From two to five years of employment two months’ pay
From five to ten years of employment three months’ pay
From ten to 20 years of employment four months’ pay
Over 20 years of employment five months’ pay

 

If the employer terminates the employment by notice or by agreement for the reason that the employee is no longer able to perform his or her work owing to an accident at work, occupational disease or the threat of such a disease, or if s/he has reached the maximum permissible exposure at the workplace determined by a decision of the public health authority, the employee is entitled to severance amounting to at least ten months’ pay (unless the occupational injury was the employee´s fault).

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Author: Nitschneider & Partners

Date: December 2018

 

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