Severance pay

The most important thing first: There is no general legal entitlement to severance pay in the event of TerminationThe law only provides for claims to severance pay in the case of Section 1 a KSchG (see Rn 2 ff), in the case of a dissolution judgment according to Sections 9, 10 KSchG (see Rn 10 f), in the case of a social plan (see Rn 22 f) or as Compensation for disadvantagesentitlement to severance pay according to Section 113 of the Works Constitution Act (see Rn 24 f). In addition, severance pay claims may arise from other legal bases, in particular from collective agreements (e.g. collective social plan, rationalization protection collective agreement), company or service agreements or the employment contract itself. Even if your employer usually pays severance pay in the event of Terminationen, a claim may arise from customary law or company practice. Only in exceptional cases do claims arise from general labor law institutions, such as company practice or the principle of equal treatment. Recently, Discriminationaspects play a role. Outside of the legal bases mentioned, the agreement on compensation is usually the result of previous negotiations between the parties (on negotiation techniques, see Pilartz/Spreer in Hümmerich/Boecken/Spirolke § 1 Rn 154 ff).

(Grobys/Panzer-Heemeier, Keyword Commentary on Labor Law, Severance Pay Rn. Marginal Number 1, beck-online)

It is also important that the severance payment is generally fully taxable. However, it is exempt from social security contributions. If the severance payment is paid out in full in one calendar year, a tax reduction, the so-called FIFTH RULE can be applied for.