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Severance Pay in Germany: 'Those Who Want High Severance Must Not Be Nice'
🇩🇪 Germany /Economy & Trade

Severance Pay in Germany: 'Those Who Want High Severance Must Not Be Nice'

From Die Zeit · () German

Translated from German, summarized and contextualized by DistantNews.

At a glance

Interview Named sources Context piece
  • Companies planning large-scale layoffs may offer severance packages, but employees' chances depend on the presence of a works council.
  • If a works council exists, a company must negotiate a reconciliation and social plan with the employer, usually guaranteeing severance pay.
  • While a social plan dictates severance amounts, individuals find it difficult to renegotiate these terms.

As numerous corporations announce plans to reduce their workforce, employees facing potential dismissals are looking to severance packages for financial security. However, the likelihood of receiving such compensation hinges significantly on whether the company has established a works council.

That depends on whether the company has a works council. Only then is a reconciliation and social plan, meaning an agreement between the works council and the employer, mandatory.

— Michael FuhlrottMichael Fuhlrott, an expert, explains the conditions under which employees can expect severance pay during layoffs.

When a works council is in place, German labor law mandates that employers must engage in a reconciliation and social plan negotiation. This process typically ensures that employees, even those subject to valid termination, will receive a severance payment. These agreements are designed to mitigate the impact of layoffs on the workforce.

Most employees can be sure that they will receive severance pay even in the event of a valid termination.

— Michael FuhlrottFuhlrott reassures employees about the likelihood of receiving severance if a works council is involved.

While the existence of a social plan offers a degree of certainty regarding severance, individuals often find themselves with limited power to negotiate the specific amounts outlined. The terms are generally binding, making it challenging for an employee to secure a more favorable payout independently.

However, the severance pay stipulated in the social plan is difficult for the individual to renegotiate.

— Michael FuhlrottFuhlrott points out the limitations individuals face in negotiating severance terms once a social plan is agreed upon.
DistantNews Editorial

Originally published by Die Zeit in German. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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