- A severance payment is usually a matter of negotiation
- The well-known rule of thumb is not an upper limit
- The more serious the dismissal would be, the stronger your position
- Those who take a structured approach often achieve significantly better results
- Our employment lawyers will show you what is realistically achievable in your situation
Specialist solicitor in employment law
With over 15 years’ experience in employment law
Why severance pay is negotiable
In many cases, a severance payment is not a fixed sum. The employer offers it in order to reach an agreement quickly and without risk. That is precisely why there is room for negotiation. A severance payment is not the result of a fixed rule, but of negotiation.
What determines your negotiating position
It is not the formula that matters, but your situation:
- Length of employment
- Salary
- Employer’s interest in a quick resolution
- Risk of dismissal
- Pressure on both sides
The more difficult it is for the employer to dismiss you, the more likely you are to secure a higher severance payment.
“Employers do not pay a large severance package because they are ‘nice’, but to mitigate risks: the risk of litigation, reputational risk, the potential for disruption to business operations, and internal administrative costs. The greater the perceived risk to the employer, the more willing they are to top up the severance package. This creates a situation in which the employer consciously opts for a higher severance payment rather than an unpredictable legal proceeding.”
The 0.5 rule is not a limit
Many people see the well-known formula as a limit. That is wrong. At most, it is a starting point. If your position is strong, much more is possible.
Here’s how to approach the negotiation
- Don’t react immediately. Don’t give a quick commitment. Instead, say: “I’d like to take my time to look at this and have it checked.”
- Clarify your own position
- Can the employer terminate your contract?
- How much pressure is they under?
- What alternatives are there?
- Look at the whole package Not just the severance pay, but also
- leave of absence
- Reference
- Holiday
- Bonus
- Unemployment benefit
- Only then should you discuss pay Be objective, prepared and avoid pressure. You don’t have to prove anything. The key is to know your position and not give in too quickly.
- Don’t sign anything without checking it first A higher figure doesn’t necessarily mean a good outcome.
What to avoid saying during the interview
When negotiating a severance package, it is often the little things that determine how much you can ultimately secure. The biggest mistakes are made early on:
- You show that you want out as quickly as possible
- You mention a figure too early on that would be ‘okay’ for you
- You react under time pressure
- You only talk about money and ignore other points
As soon as you show pressure or commit to a position, the negotiation shifts to your disadvantage. The important thing is: you don’t have to prove anything. You just need to avoid unnecessarily weakening your own position.
"Following his dismissal, an employee received a severance offer of €12,000 and was prepared to sign. At first glance, the sum seemed reasonable. Together with the client, we devised a negotiation strategy and deliberately chose not to settle the matter immediately.
Result: The severance pay was subsequently increased to €22,000 – with the added benefits of paid leave and an improved reference. The difference was not down to luck, but to a structured approach to the negotiations."
Common mistakes in severance pay negotiations
In practice, the same patterns keep repeating themselves:
- The first offer is accepted as ‘normal’
- One’s own position is underestimated
- The discussion focuses solely on the severance pay
- No review takes place, or it happens too late
- The impact on unemployment benefits is ignored
The problem is this: many people lose out not because of the figure in the contract, but because they misjudge the situation. A severance payment is not a fixed amount. It depends on your position – and that is precisely what is often given away in such moments.
When you need support
You shouldn’t simply take a chance on assessing your situation if a specific offer is already on the table or if several risks are coming together at once. It is particularly advisable to have your situation reviewed if:
- a specific severance package has already been offered
- it is unclear whether the amount is reasonable
- the employer is putting pressure on you
- there is a possibility of dismissal or a termination agreement
- there are also unresolved issues regarding leave of absence, a reference or unemployment benefit
It is precisely in these situations that it often becomes clear whether the offer is viable or whether you would currently be giving money away. Our severance pay solicitors in Munich will examine your specific case and show you what is realistically possible in your situation.
The one tip that, in our view, makes the biggest difference to severance pay negotiations: never go into negotiations with just a single figure in mind, but with a clear three-point strategy:
- Minimum target (below which you will not agree)
- Target range (realistic negotiation range)
- Opening demand (deliberately higher, clearly justified)
Anyone who approaches negotiations in this way – ideally backed up by an unfair dismissal claim as leverage – comes across as professional, predictable and, at the same time, assertive. In practice, it is precisely this combination that leads to severance packages significantly higher than what could be achieved ‘on a whim’ without a strategy.
