- A severance payment in a termination agreement is not automatically guaranteed
- The amount depends on your negotiating position, not on fixed rules
- Those who sign too hastily often accept an offer that is too low
- Our employment lawyers will assess what severance pay is realistically achievable in your situation
Specialist solicitor in employment law
With over 15 years’ experience in employment law
Are you entitled to severance pay?
A termination agreement does not automatically mean that you will receive a severance payment. A severance payment is only payable if you and your employer expressly agree to it. Without a clear provision, you will not receive any payment. The severance payment is not standard practice, but the result of your negotiations. If you sign the contract without checking it, you automatically accept the employer’s offer – regardless of whether it is fair.
How much is the severance payment under a termination agreement?
A commonly cited guideline is around 0.5 months’ salary per year of service. However, this figure is not a hard and fast rule, but merely a rough starting point. In practice, it is your specific situation that matters most:
- Length of service
- Your salary
- Your position within the company
- The risk of dismissal for the employer
- Your actual bargaining power
If the employer wishes to avoid a risk, your severance pay will increase. If you sign quickly, it will decrease. Our employment lawyers will assess what severance pay is realistically achievable in your case and where there is room for negotiation.
Should you accept the first severance offer?
In most cases: no. An offer may be reasonable if:
- the amount is reasonable and in line with market rates
- the employer could enforce a valid termination
- no further disadvantages arise, for example regarding unemployment benefit
You should not agree too hastily if:
- the offer seems surprisingly low
- the employer is putting pressure on you
- it is unclear whether a dismissal would even be valid
- you are unsure of your negotiating position
The first offer almost always reflects the employer’s interests, not yours.
Why do employers offer severance pay in the first place?
An employer does not pay a severance payment voluntarily, but out of self-interest. The aim is to terminate the employment relationship quickly and without risk. A dismissal may be open to challenge. Where there is uncertainty, the employer is more willing to pay a severance payment. This is precisely where your leverage comes in: the higher the risk for the employer, the stronger your negotiating position.
“The severance pay specified in the termination agreement is entirely a matter of negotiation – there is no statutory standard. Employers often calculate this amount at a level significantly lower than what would be realistic in an unfair dismissal case, because they hope you will gratefully accept this ‘opportunity’.”
How to increase your severance pay
The severance pay is negotiable. How you approach the matter will determine the outcome. These points will strengthen your position:
- Do not sign immediately
- Have the contract checked in detail
- Know your options
- You are prepared to accept a termination if it is open to challenge
- You actively negotiate
The key point is: you do not simply accept the contract, but shape it. Our solicitors, who specialise in termination agreements, will support you in negotiating the specific points that will increase your severance pay.
Common mistakes regarding severance pay
In practice, the same mistakes crop up time and again:
- Employees sign under time pressure
- Employees focus solely on the severance pay and ignore other risks
- Employees do not have the contract reviewed by a lawyer
- Employees underestimate their own negotiating position
Particularly critical: a large severance payment is of little use to you if you then receive no unemployment benefit for several weeks.
"Always assess the severance payment in the termination agreement in comparison to
- what could be achieved through dismissal and legal action, and
- what unemployment benefit risks (waiting period/suspension) the agreement triggers.
Many severance payments that appear ‘attractive on a net basis’ shrink drastically when you factor in the lost unemployment benefit."
When you should have your severance pay reviewed
You should have the severance payment reviewed if:
- you are offered a termination agreement
- the amount seems unclear or low
- your employer is putting pressure on you
- you do not know how much is possible
- you are facing redundancy
Our lawyers, who specialise in severance pay, will analyse your situation and show you exactly what severance pay you can secure.
"Always assess the severance payment in the termination agreement in comparison to
- what could be achieved through dismissal and legal action, and
- what unemployment benefit risks (waiting period/suspension) the agreement triggers
Many severance payments that appear ‘attractive on a net basis’ shrink drastically when you factor in the lost unemployment benefit."
Do you have any questions about your situation?
The severance pay can often amount to several thousand euros. If you sign too hastily, you’ll miss out on this opportunity. Our specialist employment lawyers will assess your situation on a case-by-case basis and show you how to achieve the best possible outcome.
