Severance payment

Severance pay is a single payment made by the employer to an employee when the employment relationship ends. Typically, severance pay is paid as financial compensation for the loss of employment or to settle any claims the employee may have. It is possible to determine the amount of severance pay by law, collective agreement or individual agreement.

Severance pay in Germany

Severance pay is not prescribed by law in Germany unless it has been agreed in a collective agreement or employment contract. If an employment relationship ends as part of an amicable solution or through termination for operational reasons, severance pay is often paid. The amount of severance pay is usually based on the length of time an employee has worked for the company and their monthly salary. It is important to note that severance payments are treated for tax purposes in Germany. Tax may be payable depending on the amount of severance pay, which is withheld directly by the employer.

Severance pay in the EU

The rules on severance pay can vary from country to country in the European Union. Certain countries have laws and regulations governing the payment of severance pay. It is recommended to find out about the local regulations in order to know the rights and obligations of employers and employees. For employment relationships within the EU, special rules may apply to ensure that severance pay is calculated and paid correctly.

Severance pay in Switzerland

There is no statutory regulation for severance pay in Switzerland. As a rule, the employer pays severance pay voluntarily. Severance pay is often paid as compensation for the loss of employment or as compensation for the employee on termination of the employment relationship. Employees in Switzerland should check their employment contracts carefully to find out whether they contain severance pay provisions and under what conditions severance pay is paid. It is a good idea to seek legal advice to secure your own entitlements in the event of dismissal or termination of employment.

Severance pay and social security

Severance pay can have an impact on social security, particularly with regard to unemployment benefits or pension entitlements. It is important to know the impact of a severance payment on social security contributions and entitlements. In some countries, considering severance pay as income may affect eligibility for certain social security benefits. Before accepting a severance payment, employees should inform themselves about the potential consequences and, if necessary, seek professional advice.