Severance pay in the event of
dismissal: A guide for
employees

Severance pay in the event of dismissal for operational reasons: A guide for employees

Welcome to our website, which deals with the topic of "Severance pay in the event of dismissal for operational reasons". In this comprehensive guide, we would like to provide you with all the important information on the subject of severance pay in the event of dismissal and assist you with any questions or uncertainties you may have. It is advisable to seek legal advice in good time after your dismissal in order to obtain the best possible severance payment. Our experts have extensive knowledge and experience in employment law in the event of dismissal for operational reasons and will be happy to help you.

Severance pay in the event of dismissal for operational reasons - what is it actually?

Dismissal for operational reasons is a serious step for employees. It means that the employer is forced to cut jobs for economic reasons. In such cases, it is often possible to receive a severance payment as part of the dismissal. Severance pay is financial compensation that the employer pays to the employee as compensation for the loss of the job.

The amount of severance pay due in the event of termination for operational reasons can depend on various factors, such as length of service, salary, age and individual agreements in the employment contract or an applicable collective agreement. It is important to note that there is no legal obligation for the employer to pay severance pay at the end of an employment relationship. Nevertheless, it is often possible to negotiate a severance payment with the employer after termination.

Severance pay in the event of dismissal: Legal basis

The legal basis for severance pay in the event of dismissal for operational reasons is set out in the Dismissal Protection Act (KSchG). According to Section 1a KSchG, the employer can offer severance pay in the event of dismissal for operational reasons in order to facilitate the termination of the employment relationship and avoid possible legal disputes. However, the exact conditions and modalities for severance pay following dismissal can be set out in collective agreements, works agreements or individual agreements in the employment contract.

How high is the severance payment in the event of dismissal for operational reasons?

The amount of severance pay in the event of dismissal for operational reasons depends on various factors. As a rule, the amount of severance pay is based on the length of service, the age of the employee and the salary. The longer an employee has worked for the company, the higher the severance payment will generally be. The age of the employee also plays a role, as older employees often find it more difficult to find a new job. Salary is also an important factor, as severance pay is usually intended to provide the employee with financial support.

In many cases, employers base the amount of severance pay on a specific formula. This formula can vary depending on the company, but many employers use the so-called "half-month formula". This involves multiplying the severance payment by half a month's salary for each year of service.

Example: An employee has worked for the company for 5 years and earns EUR 3,000 per month. In this case, the severance payment in the event of dismissal for operational reasons would be calculated as 5 (years of service) x 0.5 (half-monthly salary) x 3,000 (monthly salary) = 7,500 euros.

However, it is important to note that there is no statutory regulation on the amount of severance pay in the event of dismissal for operational reasons. The amount of severance pay is usually a matter for negotiation between the employer and employee.

When can severance pay be refused in the event of dismissal for operational reasons?

Although severance pay is usually paid as compensation in the event of dismissal, it can also be refused in some cases.

It is possible for an employer to refuse to pay severance pay on dismissal if he believes that he has a good chance of defending himself in court against paying severance pay.

For example, an employee can refuse severance pay if they believe that the dismissal is not for operational reasons, i.e. there are no operational reasons for the dismissal. However, if an employee rejects a severance payment, they are generally not entitled to any other or higher compensation.

Negotiations on severance payments in the event of dismissal for operational reasons

It is often possible to influence the amount of severance pay after dismissal by negotiating with the employer. It is advisable to consult a lawyer or the trade union in good time after the dismissal for operational reasons in order to best represent your own interests with regard to severance pay. Sound preparation and knowledge of the legal framework can help to negotiate a fair severance payment.

Further aspects in connection with severance payments after termination

In addition to the amount of severance pay, there are other aspects that are relevant in connection with dismissal for operational reasons. These include, for example, social selection, the reference letter, remaining vacation days and possible claims to unemployment benefits. It is important to pay attention to these aspects and, if necessary, to act in good time in order to protect your rights in the event of dismissal for operational reasons.

Tax aspects of severance pay following dismissal

STax aspects must be taken into account when paying a severance payment on termination of employment. In principle, severance pay is subject to income tax. This means that severance pay is subject to taxation in Germany, but there are allowances and special regulations that can provide tax relief and can be claimed depending on the individual situation. It is advisable to consult a tax advisor after termination in order to understand the tax implications of the severance payment and, if necessary, to take tax-optimizing measures.

Severance pay in the event of dismissal - social security consequences & unemployment benefit

Social security aspects also play a role in connection with severance pay following dismissal. The amount of severance pay following a dismissal can affect your entitlement to unemployment benefit. It is important to know how your individual severance payment affects your social security contributions and entitlement to benefits in order to avoid financial losses. However, there are also certain allowances and offsetting rules. It is advisable to consult a lawyer immediately after giving notice.

Severance pay after dismissal and termination agreement

In some cases, severance pay is paid out after termination as part of a termination agreement. A termination agreement enables the employer and employee to end the employment relationship by mutual agreement. It is important to check the terms of a termination agreement carefully and seek legal advice if necessary in order to protect your own interests. Once the termination agreement has been signed, it is no longer possible to bring an action for unfair dismissal.

Severance pay after dismissal and social plan in the context of dismissal for operational reasons

In the event that several employees are made redundant by larger employers due to operational requirements, it is common for an agreement to be reached with the works council in the form of a social plan. The purpose of such a social plan is to reduce the potentially negative financial impact that the affected employees could experience in the event of redundancy or even to compensate them completely with a fair severance payment. In this context, we would like to provide you with detailed guidance on how you should respond appropriately and effectively to a dismissal and the resulting severance pay that comes with a social plan.

First of all, it is important to understand that a social compensation plan and the severance payment it provides for in the event of dismissal serve as an instrument of social security. It is there to help employees financially through the transition phase after the end of the employment relationship and to cushion any disadvantages. This plan should therefore be carefully reviewed and it should be ensured that it protects the interests of employees in the best possible way in the event of a redundancy with severance pay.

A redundancy with severance pay can of course still be a stressful and unsettling experience, but with a carefully negotiated redundancy plan, you should find it easier to deal with the financial challenges resulting from redundancy with a fair severance payment that such a redundancy can bring. It is important that you know and exercise your rights in the context of severance pay in the event of redundancy. If you have any uncertainties or questions about severance pay, do not hesitate to seek professional legal advice to ensure that you can benefit fully (fair severance pay) from the advantages of the social plan.

Social plan and severance pay in the event of dismissal for operational reasons - what is regulated

Companies are constantly required to change and adapt to current economic conditions. This can often lead to changes in strategy, outsourcing or downsizing, which for some employees can result in dismissal with severance pay. In such reorganization phases, the employer first negotiates with the works council about the reconciliation of interests and the changes in the company, which may end in redundancy with severance pay for many employees.

As soon as the changes have been determined, the social plan with the corresponding severance payment comes into force. This deals with the adverse effects (dismissal for operational reasons) on the employees affected and defines the severance payment to be made. The content of the social compensation plan can be freely negotiated by the works council and the employer. The works council represents the interests of the employees in this process. As a rule, the social compensation plan includes

- Severance pay in the event of dismissal for operational reasons

- Severance payment as part of a transfer company

- Compensation for further training

- Compensation in the form of relocation and travel expense reimbursements

Dismissal and social plan - the amount of severance pay

Severance pay is usually determined for employees who are dismissed for operational reasons. The amount of this severance payment can be freely determined by the employer and works council and is usually based on a calculation formula set out in the social plan, which takes into account various factors such as

- the age of the employee

- the length of time the employee has been with the company

- the gross salary of the employee

Occasionally, employees who are made redundant due to operational redundancies are offered the opportunity to move to a so-called "transfer company" and forego severance pay. Instead of a dismissal with severance pay, they receive further training and ideally a placement in a new job. The employment office pays transfer short-time allowance and the former employer can make additional payments as severance pay. Sometimes the works council and the employer agree on free further training for the dismissed employees as part of a severance payment following redundancy. If the company is only relocating, the redundancy plan often offers reimbursement of relocation or travel expenses as part of the severance payment.

Is a social plan with severance pay always provided in the event of redundancy?

A social compensation plan with severance pay is generally only drawn up in the event of the redundancy of employees for operational reasons and is mandatory if the company employs more than 20 employees entitled to vote and the changes entail considerable disadvantages for a significant proportion of the workforce. These significant disadvantages always include dismissal for operational reasons. Whether a significant proportion of the workforce is affected by the dismissal depends on the ratio of the dismissed employees to the total workforce. In principle, at least 5% of the workforce must be affected. Some guideline values for this are set out in Section 17 (1) of the Dismissal Protection Act (KSchG).

It is important to note that if the operational change consists exclusively of redundancies, the threshold in Section 112a of the Works Constitution Act (BetrVG) must also be exceeded. Otherwise, the works council cannot enforce a social plan as a result of the dismissal with severance pay. In addition, a works council must have existed prior to the operational changes.

If the employer and works council are unable to reach an agreement in the context of a dismissal with severance pay, the social plan can be enforced by the decision of a conciliation committee. This body then independently draws up a plan for the severance payment, which is then made available to the employees.

How can I as an employee benefit from a social plan with severance pay?

Once negotiated, a social plan is binding for the employer. This means that you, as the employee concerned, are entitled to the severance pay provided for in the event of dismissal. This is usually provided in the form of severance pay. It is not permissible for your employer to exclude employees affected by the dismissal from the social compensation plan and the associated severance pay without objective reason.

Imagine, for example, that an employer is planning to downsize department X and therefore wants to give notice to 10 employees from sales and 10 from administration. It would not be permissible to include only the sales employees in the redundancy plan and provide them with severance pay without an understandable reason. However, senior executives are an exception. They can be excluded from the social compensation plan and the resulting severance pay in the event of a dismissal, but this is not mandatory.

It is important that you observe deadlines when giving notice. You can often only assert your claims under the social plan within a certain period of time. If you miss this deadline, you will lose your entitlement to the stipulated severance pay. It is therefore crucial to always pay attention to preclusive periods in the context of severance pay in the event of dismissal for operational reasons.

Severance pay in the event of dismissal for operational reasons - do I have to accept the social plan?

There are a number of important facts to consider when considering a social compensation plan as severance pay in the event of a redundancy. For example, you do not necessarily have to accept the social plan and consequently the severance payment offered by your employer if you are made redundant. In fact, it is crucial not to make any hasty decisions, as you may be entitled to a significantly higher severance payment in the event of redundancy. The severance payment negotiated by the works council should initially be regarded as a minimum amount, and you are completely free to negotiate a higher severance payment. You will not suffer any disadvantages in terms of severance pay as a result.

You should also be aware that the existence of a social plan does not automatically make your dismissal legally binding. You are perfectly entitled to take legal action against the dismissal itself or to demand a better severance payment. It is also important to know that employees may not be excluded from the social plan on the basis of an action for unfair dismissal. However, "turbo bonuses" could be provided for those employees outside the social plan who decide not to file a lawsuit and accept the dismissal.

Legal advice and support in the event of dismissal for operational reasons

The area of severance pay in the event of dismissal for operational reasons is complex and often requires legal advice. A specialist lawyer can help to analyze the individual situation, assert claims for severance pay and achieve a fair settlement. It is advisable to contact an expert at an early stage in order to receive the best possible support following dismissal.

Severance pay on dismissal: Negotiation options and tips

If you are faced with a dismissal for operational reasons and are considering a severance payment, it is advisable to seek professional advice from a specialist employment lawyer.

Here are some tips to help you negotiate a severance payment:

Find out about your rights: familiarize yourself with the applicable laws and regulations to strengthen your negotiating position; alternatively, have a specialist in employment law represent you. At Rotwang Law, we will help you achieve success and a well-deserved severance payment.

Collect evidence: Save all relevant documents, such as termination letters, employment contract, payslips, etc., to support your post-termination claims.

Prepare for the interview: Think in advance about what arguments you can put forward for a severance payment as a result of the dismissal and formulate your demands clearly and specifically.

Negotiate professionally: Remain calm and objective during the negotiations. Try to strive for a win-win situation in which both sides are satisfied.

Do not allow yourself to be put under pressure: Take enough time to check the offer after giving notice.

Conclusion

A dismissal for operational reasons can be a difficult and upsetting situation for employees. However, in many cases, employees are entitled to severance pay, which offers them financial support. The amount of severance pay depends on various factors, such as the employee's length of service, age and salary. However, it is important to note that there is no statutory regulation on the amount of severance pay and the amount is usually negotiated between the employer and employee. Tax aspects should also be taken into account, as severance payments may be subject to income tax. It is advisable to seek advice from a specialist in employment law, e.g. a lawyer from our law firm, on all matters relating to severance pay in the event of redundancy.

Severance pay in the event of dismissal: A guide for employees