There are many myths about severance pay
Various rumors and myths circulate about severance payments. For example, some believe that termination entitles to severance pay. Others expect that the severance pay will be paid in addition to the unemployment benefit and will also be tax-free – after all, the upcoming unemployment has to be bridged. Unfortunately, these assumptions do not automatically come true in reality. However, one myth is definitely true: A severance payment always has something to do with the termination of an employment relationship.
A termination entitles to severance pay
It’s noisy t-online the rumor that a dismissal is equivalent to an entitlement to severance pay. However, this is not the truth. Because as long as a termination is lawful, the former employer does not have to pay any additional money such as severance pay. It is irrelevant whether the notice of termination was given without notice or within the notice period; The main thing is that the termination is legal under the law.
The situation is somewhat different in the case of a termination for operational reasons. As a rule, employees are entitled to severance pay, but the legislature does not provide for a uniform amount.
In a termination agreement, where the employer and employee mutually terminate the employment relationship, severance pay is the norm. Depending on the urgency and other factors, the amount of the severance payment is negotiated individually between both parties.
This is how the amount of the severance payment is calculated
As already mentioned, there is no uniform specification for the amount of the severance payment, so this is determined by the respective company itself. However, it has become common practice to calculate the amount of the severance payment using the following formula:
Factor x gross monthly salary x length of service (in years).
The factor indicates what percentage of the gross monthly salary is multiplied by the number of years. According to Arbeitsvertrag.org, the factor 0.5 is commonly suggested – i.e. half of a gross monthly salary. If an employee has earned 2,000 euros gross per month and worked for the company for five years, he will receive a severance payment of 5,000 euros with a factor of 0.5.
Depending on the company and the individual case, this factor can also be 1 or 1.5 or higher. According to t-online, it can be roughly said: the higher the factor, the more likely it is that the termination is unlawful.
Severance payments are tax-free and are added to unemployment benefits
In addition, some employees have the assumption that a severance payment is tax-free – after all, it should at best bridge the time until the next job start. However, this is not the case. The severance pay must be taxed – and depending on the amount of the severance pay, up to half of the severance pay can go to the state. Employees must be aware of this.
It is also the case that unemployment benefits are not always paid immediately after a severance payment, since the severance payment is like a salary for the next few weeks and months.
The termination agreement and the severance payment
In any case, t-online and monster.de advise employees to seek legal advice in the event of termination, albeit in the background at first. If necessary, an action for protection against unfair dismissal should also be filed within three weeks.
However, employees should not appear directly with the lawyer, but try to reach an amicable agreement and, as already mentioned, only seek advice and help from legal counsel in the background.
Editorial office finanzen.net
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