How much severance pay is typical?

The well-known rule of thumb 'half a month's salary per year' is only a practical guideline — not a law. What actually determines your severance pay.

As soon as severance pay is on the table, almost the same figure always comes up: half a month’s salary per year of employment. This rule of thumb is widely used in practice — but that is exactly what it is: a rule of thumb, not a statutory entitlement and not a fixed formula binding on courts or employers. What you actually end up receiving depends on quite different factors.

How I can help you

• I assess what the rule of thumb is actually worth in your specific case.
• I evaluate your real litigation risk — the most important lever for the amount.
• I negotiate the severance figure on your behalf, rather than you accepting the employer’s first offer.
• I factor in additional elements such as the notice period, accrued holiday pay and bonuses.
• I clarify whether a claim is even worthwhile or whether a quick settlement makes more sense.

Where does the rule of thumb come from — and why is it only a guideline?

The rule of “0.5 gross monthly salaries per year of employment” developed out of labour court practice and is used by many lawyers and judges as a rough benchmark. The legislator itself only recognises a comparable calculation in one single, narrowly defined special case — the severance offer under section 1a of the Dismissal Protection Act for dismissals for operational reasons, where the severance pay is indeed statutorily defined as 0.5 monthly earnings per year of employment. Outside this special case there is no statutory link to this figure — the actual severance pay agreed in a settlement can be higher or lower.

What actually determines the amount in practice

• Litigation risk: the more uncertain the outcome of unfair dismissal proceedings is for the employer, the more willing they usually are to negotiate on severance pay.
• Length of service and age: longer service and higher age tend, in practice, to increase the severance figure.
• Negotiating skill: severance pay is a matter for negotiation — those who go into discussions well prepared and with legal advice regularly achieve better outcomes.
• Other claims: outstanding holiday entitlement, bonuses, the wording of the reference letter, or non-compete clauses can often be folded into the same negotiation.

More on the whole subject on the Employment Law page.

How I proceed for you

I give a realistic assessment of what severance pay is achievable in your specific case — based on your actual prospects in unfair dismissal proceedings, not on a blanket formula. I then negotiate on your behalf, whether out of court or in unfair dismissal proceedings before the labour court. Please note: in the first instance before the labour court, each side bears its own legal costs (section 12a of the Labour Courts Act) — legal expenses insurance frequently covers the costs, and I handle the request for cover on your behalf.

Talk to me before you sign a figure the employer sells to you as “standard”.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-07-02.

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