Severance Agreement German

kenty9x | March 30, 2022 | 0

There is no legal right to severance pay in Germany. Under the Protection against Dismissal Act, an employee with an employment contract of indefinite duration is entitled to severance pay if the employer indicates in the dismissal that the dismissal is based on operational reasons and offers compensation, or if the employee does not file a complaint against the dismissal within three weeks. A legal right to the severance pay of an employee in the event of collective redundancies exists if there is a works council. According to the statutes of the works council, the employer and the works council negotiate a social plan which includes a redundancy payment in the event of collective redundancies for operational reasons. In this case, the employee is “automatically” entitled to severance pay of half a month`s salary per year of employment, rounding off the hours of work from more than 6 months to a full year. For example, when a person has worked for a period of four years and seven months – this period is rounded up to five years. Although there is no legal right to severance pay, some employees are entitled to severance pay through many reasons why parties to an employment contract want to separate in individual cases or why a party unilaterally terminates the employment relationship. One possible reason is to avoid termination procedures, which carry risks for both parties. Alternatively, the parties may want to resolve their disputes quickly and smoothly by terminating the employment relationship. Another possible reason from the employee`s point of view is that he wants to take a new job before the end of his contractual notice period. As in Dutch law, a termination agreement is one solution.

The payment and amount of severance pay depends on the negotiations. Ultimately, under Article 1a of the Law on Protection against Dismissal, a claim for severance pay can arise under the following conditions: What distinguishes a termination agreement The termination contract differs from a liquidation agreement in which the employer has already terminated the relationship and the parties agree in the liquidation agreement to terminate the employment relationship that already has ended. It is not a question of termination, but of its consequences. If the employer does not respect his services, the employee cannot directly assert his rights under a termination or liquidation contract, that is to say that he cannot directly appoint a judicial officer to enforce the claim. To do this, the employee should first conduct legal proceedings in order to obtain an instrument of enforcement. It is different from a court settlement. The termination of an employment relationship after termination by the employer and the bringing of an action by the employee may also be regulated by means of a court settlement. A court settlement is directly enforceable, that is, if the employer does not fulfill the indemnity, the employee can directly ask the bailiff to recover/execute his claim (for example. B to pay the payment of the settlement). Although the empirical formula “half to a full gross monthly salary per year of employment” is widely used to calculate possible severance pay, in practice it often turns out that the actual amount of severance pay paid can differ significantly from this result. If you know your employer`s arguments and know exactly what`s important in the negotiations, you usually decide whether you will receive severance pay and the amount of compensation. Therefore, it is often advisable to consult experts in labor law.

In this case, severance pay of half a month`s salary may be claimed for each year of employment. The maximum payment required by law is 12 months` salary. This represents 15 monthly salaries for employees aged 50 and over with at least 15 years of uninterrupted service and 18 months` salary for employees aged 55 and over with at least 20 years of uninterrupted service. Entrust our partner lawyers with the processing of your case and negotiate a good severance package for you. CONNY will bear all costs – if necessary also before the courts. In practice, however, many employers and employees will agree on provisions for severance pay in order to avoid lengthy legal proceedings over the effectiveness of dismissal. This severance pay often represents 50% of the monthly salary per year of service. However, this can vary greatly depending on the strength of the dismissal case and the employer`s previous practice.

Regulation In principle, German labour law does not provide for the employee`s right to payment of a settlement. Therefore, there are no fixed regulations on the amount of a settlement payment under a termination agreement. The rule of thumb often used is: 0.5 months` salary per year of employment; for large international companies, however, this can be, for example, 1.0 monthly salary per year of employment or for small or financially low employers only 0.25 monthly salary per year of employment. However, the circumstances of the individual case must always be taken into account (age, illness, performance of the employee, strength of the protection against dismissal granted to the employee, speed with which the employee finds a new job, compensation for other disputed financial claims by means of settlement, etc.). The whole is the key factor. In the event that the employer does not respect the social plan, the employee may apply to the Labour Court for severance pay. The dismissal letter: In the event of dismissal for operational reasons, your employer may expressly refer to your right to severance pay in the dismissal letter. Why should you be cautious about layoffs and deals for operational reasons? In most cases, severance pay is paid by the employer in the event of unlawful dismissal. If employees file (or threaten to file) a formal complaint with the Labour Court within 3 weeks of receiving the dismissal, there is a risk that the dismissal will be described as ineffective, which means that they should continue to employ the employee and pay his salary….