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Severance: what is customary?

The Munich labour courts orient themselves towards half a gross monthly salary per year of service. That is a benchmark, not a rule: in practice the range runs from nothing to a full monthly salary per year. There is an entitlement only in special cases, for instance under a social plan. Under § 1a KSchG it arises only if the employer expressly offers severance in the notice of dismissal and you do not bring a claim. Otherwise it is negotiated, and the less certain the employer is that the dismissal would hold up, the more they are willing to pay.

Christian Czirnich, Rechtsanwalt (attorney) since 1994, KirchseeonPrefer to call? +49 8091 617 7777

Write to me in English and I will answer in English. Proceedings before a German labour court are conducted in German; I take care of that.

What severance is usual?

Please note: if you resign yourself, there is as a rule no severance at all.

What the figure does not tell you

This figure is where the negotiation starts, not your result. Whether you get it depends on the reason for the dismissal. Whether it helps you depends on the benefit suspension, the notice period and when it is paid. That can only be said on the facts of your case.

Tell me how long you have worked there and whether you have a dismissal or an offer – I will look into it.

I read every message myself and usually reply on the next working day. What you write to me is covered by legal professional privilege from the first word, even if no engagement comes about. The initial assessment is free of charge.

Prefer to call? +49 8091 617 7777

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Frequently asked questions

How much severance is customary?
The Munich labour courts orient themselves towards half a gross monthly salary per year of service. That is a benchmark, not a rule: in practice the range runs from nothing to a full monthly salary per year. Where a case falls within that range depends above all on how vulnerable the dismissal is — the less certain the employer is that it would hold up in court, the more they are willing to pay.
Am I entitled to severance pay?
As a rule, no. A statutory entitlement exists only in special cases — for instance under § 1a KSchG, where the employer expressly offers it in the notice of dismissal, or on the basis of a social plan, collective agreement or individual contract. In all other cases severance is the outcome of a negotiation, usually at the conciliation hearing of the unfair-dismissal proceedings.
Will accepting severance cost me unemployment benefit?
That depends on how the employment ends. If you sign a settlement agreement, you terminate the employment relationship yourself — the employment agency will then, as a rule, impose a blocking period of twelve weeks (§ 159 SGB III). If instead the employment ends before the ordinary notice period expires and severance is paid for that, the benefit is suspended until that period has run (§ 158 SGB III). Both can be taken into account when the agreement is drafted; that is among the points I check before you sign.
Is severance taxable?
Yes, severance is taxable employment income. Social security contributions, however, are not levied on it. Under certain conditions the so-called one-fifth rule (§ 34 EStG) reduces the progression. The guide article on taxation sets out how that works in detail.
How much time do I have?
If a dismissal has already been issued, three weeks from the moment it reached you (§ 4 KSchG). Once that period has passed the dismissal is deemed effective — and with it goes the leverage from which severance arises in the first place. If there is no dismissal yet but an offer, no statutory period runs; what matters then is the deadline stated in the offer.

Office: Hubertusstr. 8a, 85614 Kirchseeon (OT Eglharting), a few minutes from Eglharting S-Bahn station. Directions and map