What is severance pay, and when is it provided in Germany?

Severance pay, also known as "Abfindung" in Germany, is financial compensation given to employees who are terminated from their jobs. It is typically provided when employees are let go for legitimate reasons, such as layoffs, corporate restructuring, or business closure.

Is severance pay mandatory in Germany?

No, severance pay is not mandatory in Germany, but it is a common practice. Employers often offer severance pay as a form of support to employees during the transition period following termination.

How is the amount of severance pay determined in Germany?

The amount of severance pay in Germany varies depending on several factors, including the employee's age, length of service, and the reason for termination. There is no fixed formula in labor legislation, so it is often determined through collective bargaining agreements or negotiations between the employer and employee.

What are the circumstances that make an employee eligible for severance pay in Germany?

Eligibility for severance pay in Germany typically arises when an employee is dismissed for legitimate reasons, which may include layoffs, corporate restructuring, or business closure. Severance pay may also be considered in cases of serious misconduct or health-related terminations.