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When the boss gives a resignation, many employees are very angry about the job loss.

The hope of a severance payment comforts some for a short time.

A few thousand euros should be in it - after all, they have remained loyal to the company for years.

However: employees do not have a general right to severance pay.

"Many expect that the former employer will have to compensate for the loss of the job," says Jörg Kraft, career advisor at Liebich & Partner management consultancy in Baden-Baden.

"Employees are only really entitled to this in rare cases."


The cases for employees for whom payment is expressly agreed in the employment or collective agreement are clear.

Accordingly, you are entitled to a severance payment.

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Another exception: the operational dismissal of an employee who works in a company in which the works council and employer have negotiated a social plan with severance pay rules.

If such an employee is terminated, for example because the orders have collapsed or a plant has to be closed, employees can expect a compensation claim.

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employees can try to get severance pay by filing an action for protection against dismissal.

Prerequisite according to the Employment Protection Act: Employees have to work for more than six months in a company that regularly employs more than ten full-time employees.

In this case, however, the goal of a severance payment is sought via a detour.

Because the lawsuit is actually aimed at determining whether the termination is ineffective and whether the person concerned remains employed by the company.

If it turns out that the employee has a good chance of asserting himself, the company may be willing to voluntarily pay a severance payment in order to get rid of the employee anyway.

Termination agreement: separation by mutual agreement

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"If it is unclear whether the termination is effective or not, the court will generally try to reach an agreement between the parties in the first court hearing," says Fenimore von Bredow, specialist lawyer for labor law in Cologne.

That can mean: The employment relationship is terminated against payment of a severance payment.

Employers then weigh up: Is a severance payment cheaper than the costs that could arise from a potentially month-long legal process?

There are also cases in which employers and employees find out out of court that they want to go their separate ways from now on.

Instead of unilateral termination, they can then jointly decide on a termination agreement.

In this, the employer can guarantee his employee a severance payment in return for leaving the company.

The amount of the severance payment varies greatly.

An often used rule of thumb: half a gross monthly earnings times the number of years of employment.

In the case of the termination agreement, employees sometimes have the prospect of higher sums.

"In negotiations like this, one can quickly speak of five- or six-digit severance payments," says career advisor Kraft.

But you shouldn't be blinded by that.

Because after deduction of taxes, severance payments can only be half as high.

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Employees have to pay tax on severance payments.

The so-called fifth rule can save taxes.

The tax burden of a severance payment is thus spread over five years.

Those affected still have the right to unemployment benefit despite a severance payment - but only if the regular notice period is observed.

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An example: If a boss pays an employee his wages for two months as severance payment so that he leaves the company two months before the end of the notice period, the employee is not yet entitled to unemployment benefits during this period.

"If unemployment benefits are applied for, the employment agency will almost certainly file a criminal complaint," explains von Bredow.

"After all, an employee received unemployment benefits in the case, although in reality he was not entitled to it."

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Read more articles from our series of advice on termination here:

Everything about termination

This article was first published in July 2019.