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HomeGerman FinanceSeverance payment in Germany: Where do you get the most money?

Severance payment in Germany: Where do you get the most money?

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Where is there the highest severance payment? Who is at a disadvantage? The big check – and the best tips for employees to get a lot out of it

Employees who are supposed to leave their company often receive severance payment. But since there is no legal regulation, the bonus is different and mostly depends on your salary and the years of work in the company. But your negotiating skills are also required.

It is good to know what others have received and how much is paid where. Because there are also regional differences – and they can be huge. The Berlin law firm Chevalier Rechtsanwälte recently published a Compensation Atlas 2021 highlighting where in Germany employees get the most severance pay.

Severance payment

East Germans receive around 33 percent less severance pay

Front runner first: Rhineland-Palatinate is the federal state with the most generous compensation for the loss of a job. An average of 13,900
euros is paid here . Bavaria follows with severance payments averaging EUR 12,400.

Others can only dream of it: Internal data from the employment law specialists at Chevalier Rechtsanwälte show that the geographic location of employers plays an important role in the level of severance pay.

This is particularly noticeable in the East: On average, German employees receive a severance payment of around 9,900 euros. In the new federal states (including Berlin) this is 8,600 euros, whereas in the west an average of 11,100 euros is paid.

Employers in eastern Germany pay their employees around 33 percent less severance pay than employers in western Germany.

At the bottom: In Saxony, employees receive the lowest severance payments with an average of EUR 6,700 in comparison to all other federal states.


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Average severance payment in Germany

German StateAverage severance payment
Schleswig-Holstein€ 8,100
Hamburg€ 9,000
Bremen€ 10,500
Niedersachsen€ 9,000
Thüringen€ 200
Sachsen-Anhalt€ 6,900
Nordrhein-Westfalen€ 9,600
Rheinland-Pfalz€ 13,900
Saarland€ 9,200
Hessen€ 10,600
Baden-Württemberg€ 9,800
Bayern€ 12,400
Sachsen € 6,700
Mecklenburg-Vorpommern€ 8,000
Brandenburg€ 8,100
Berlin€ 10,300
*Men receive more severance payment than women in Germany (Avg. men= € 13,200, Avg women= € 7,800) Source: Kanzlei Chevalier
Severance payment

Women receive around 41 percent less severance pay

Even if you compare the severance payments that men and women receive, there are huge differences. Even and even more so in the federal states, where on average the highest sums are paid.

Take Bavaria as an example: men receive an average of 15,000 euros through severance payments. Women, on the other hand, are around 5,000 euros less on average. In Rhineland-Palatinate, too, female employees get around a third less.

Overall, the amount of the severance payment for women is significantly lower: They receive an average of around 7,800 euros, which is around 41 percent less than men who receive an average of 13,200 euros. This difference can be justified on the one hand with the gender pay gap that still exists in Germany. According to this, women receive less wages than their male colleagues for the same work.

The Federal Statistical Office currently states the difference in earnings between men and women at around 18 percent – and that also influences the severance payment. In addition, women are still more likely to work in professions that are generally less paid and more often part-time.

Length of service plays a role

Another component that shows the gender imbalance is the length of service. In the first five years, according to data from the Chevalier law firm, the levels of severance pay for men and women are still similar.

After this time, however, the difference between the sexes in terms of severance payments increases. After up to 25 years in the company, men with an average severance payment of around 34,800 euros will receive almost twice as much as women who receive an average of around 19,100 euros.

Is there always a severance payment for redundancies for operational reasons?

No. Your boss is not legally obliged to pay any severance pay. Not even if he made such a payment on another termination.

Exceptions:

► If a social plan has been drawn up and employees are entitled to severance pay from it.

► If your company has collective agreements or works agreements that include severance pay.

Attention: Severance payments have to be taxed!

Severance payment

When do I get a blocking period for unemployment benefit?

If you receive a severance payment and the employment relationship ends before the regular notice period, the unemployment benefit is blocked.

Since many bosses want to shorten the notice period with a termination agreement, employees should pay attention to when the employment relationship ends.

Unemployment benefit can also be blocked if no valid reason for the end of employment is given. However, operational reasons or long-term illness-related incapacity for work on the part of the employee are accepted.

TIP: clarify the social law consequences with the Arbeitsagentur beforehand.

When is there an entitlement to severance payment?

Most of the time, severance payment is a voluntary agreement between the employee and the employer. The result of often lengthy negotiations. Because there is only a right to severance payment in a few exceptional cases, such as:

Company-related severance payment Severance payment as a social compensation for the loss of the job (§ 1a KSchG):

Half a month’s salary for each year in which the employment relationship existed. This corresponds to the amount of the standard severance payment. The employee can only claim the operational severance payment if three conditions are met: The termination was expressly based on urgent operational reasons. The employee may not have brought an action for protection against dismissal within three weeks of receiving the notice of termination. And the employer must have indicated in the letter of termination that severance pay can be claimed if the deadline for filing a complaint has expired.

2. Severance payment as compensation for disadvantages

For example, if the employer deviates from a balance of interests agreed with the works council without compelling reason (Section 113 BetrVG).

3. Resolution compensation

Resolution of contract and fixing the compensation by the working dish (§ 10 KSchG). Prerequisite for this: The employee can no longer be expected to continue the employment relationship or the employer can no longer expect any cooperation that is conducive to operational purposes.

In addition, the granting of a severance payment can be stipulated in the employment contract. This is often the case with employees in management positions, for example. But it can also be part of a collective agreement.

What is the standard severance payment?

The standard severance payment, which is also known as the rule of thumb or thumb formula, is a kind of guideline for calculating severance payments. It is mainly based on

  • the amount of the last monthly salary paid,
  • the length of employment of the employee in the company.

The standard severance pay is not required by law. Rather, it serves as a benchmark for settlement negotiations. The severance payment actually agreed can be significantly higher or lower. Also important to know: Various formulas are used nationwide, some of which are based on the age of the employee.

According to the most frequently used formula, the standard severance pay is half gross earnings per year of employment.

Practical example
A newspaper editor worked for a media company for 8 years. His work was most recently remunerated with 3,500 euros per month. As a result, the standard severance payment would be 14,000 euros.

What does the severance payment amount depend on?

Basically: The amount of the severance payment is a matter of negotiation. In addition to the negotiating skills of both parties or their legal representatives, it depends on certain factors such as:Legal and factual situationLength of service with the companyCourse of the legal proceedings (in the case of a dismissal protection suit): The longer the process, the higher the cost risk for the former bossInterest of the employer in a quick replacement of the job

The higher the chances of the employee that any dismissal protection lawsuit will be decided in his favor, the higher the severance pay that can be achieved.

If, on the other hand, there are rather minor doubts about the effectiveness of the termination, the amount offered is likely to be lower. This is the case, for example, if the ordinary termination or extraordinary termination does not contain any errors in terms of content or form.

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