English-speaking severance lawyers in Germany. There is no general statutory right to severance under German law — but in practice severance is paid in the overwhelming majority of dismissal cases that go to the labor court. The number that lands in your bank account depends on how well the case is read, how well the social-selection and procedural defects are exploited, and how the negotiation at the Gütetermin is run.
The customary severance formula (Regelabfindung)
The starting point German labor courts apply is the formula from § 1a KSchG:
0.5 × gross monthly salary × completed years of service
This „Regelabfindung” is not a statutory entitlement — it is the anchor labor courts and lawyers use when no other framework (social plan, contractual scheme) applies. The actual settlement number can be anywhere from 0.25 to 2.0 monthly salaries per year of service, depending on the leverage you bring.
What moves your severance up — the leverage points
Realistic severance ranges by tenure and salary
| Tenure | Weak dismissal (high) | Typical Regelabfindung | Strong dismissal (low) |
|---|---|---|---|
| 2 years | ~1.5–2 monthly salaries | ~1 monthly salary | ~0.25–0.5 monthly salaries |
| 5 years | ~4–6 monthly salaries | ~2.5 monthly salaries | ~1 monthly salary |
| 10 years | ~9–14 monthly salaries | ~5 monthly salaries | ~2.5 monthly salaries |
| 20 years | ~20–28 monthly salaries | ~10 monthly salaries | ~5 monthly salaries |
These are realistic ranges from our practice. The exact number depends on a written legal assessment of your specific case — which we provide free of charge in the initial enquiry.
The Sozialauswahl (social-selection test) — how to attack it
Where the dismissal is operational (betriebsbedingt) and only some employees in comparable roles are dismissed, the employer must apply the social-selection test under § 1(3) KSchG. The four — and only four — criteria are:
- Length of service (Betriebszugehörigkeit)
- Age
- Maintenance obligations (children, dependent spouse)
- Severe disability
The employees who score worst on these criteria are most protected. If the employer dismissed you while retaining a less-protected colleague in a comparable role, the dismissal is normally unlawful — even if the underlying business decision was sound. You can demand disclosure of the social-selection points calculation, and we routinely find errors in it.
The employer can exclude individuals from the comparison pool only if their continued employment is in the legitimate interest of the business (Leistungsträger-exception under § 1(3) S. 2 KSchG). Courts watch these exclusions closely and the burden of proof is on the employer.
Works-council (Betriebsrat) consultation — a major defect in many dismissals
Where a works council exists, the employer must consult it in writing before issuing the dismissal (§ 102 BetrVG). The consultation must include the social-selection reasoning. If the consultation is procedurally defective — incomplete information, wrong reasoning, no opportunity for the council to respond — the dismissal is void regardless of the merits.
For employees in a company with a works council, this is one of the most powerful arguments in the case. We obtain the consultation file early and check it line by line.
Severance in a Sozialplan
When a large operational change is planned in a company with a works council, the council can negotiate a Sozialplan (§§ 112, 112a BetrVG) that sets a specific severance scheme for affected employees. Common Sozialplan formulas weight age, tenure, dependants — sometimes well above the standard 0.5 starting point, sometimes with caps. The Sozialplan amount is a contractual entitlement, enforceable as a normal contract claim. Individual negotiation above the Sozialplan amount is usually still possible but constrained.
How severance is taxed — the Fünftelregelung
Severance is taxable income in the year it is paid. Without special treatment, the lump sum could push you into a much higher marginal bracket. The Fünftelregelung under § 34(1) EStG mitigates this:
The relief is largest where your ordinary annual income is well below the top brackets. For very high earners already at the 42% / 45% rate, the benefit is small. Coordinate the structure of the payment with your Steuerberater — we work with one if you need a referral.
Good news on social security: severance is generally not subject to social-security contributions, provided it is a genuine compensation payment and not disguised continuing salary.
Beyond severance — what else to put in the Vergleich
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Reference letter (Zeugnis) wording
A negotiated Grade-2 summary („stets zu unserer vollen Zufriedenheit”) with a full closing formula. Sometimes more valuable to your career than an extra month of severance.
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Garden leave at full pay
Paid release until the end of the notice period, ideally „ohne Anrechnung” — i.e. no offset for income from your new employer.
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Vacation payout (Urlaubsabgeltung)
Unused vacation paid in cash on top of severance, not netted from it.
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Pro-rated bonus
The in-flight bonus year, calculated pro-rata to your last working day, paid at target attainment or last-year level.
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Outplacement budget
For senior roles, often €5,000–€20,000 added to fund career-transition services.
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Mutual confidentiality
Two-way confidentiality, not one-way, with carve-outs that don’t muzzle your future job search.
Sperrzeit and the „turbo” clause
A settlement that ends the employment earlier than the contractual notice period (the so-called „Turboklausel” or Freistellungsklausel) can save the employer payroll and free you to take a new job. But it has Sperrzeit implications under § 159 SGB III — the Agentur für Arbeit may impose a 12-week blocking period on unemployment benefits if you accept early termination. We structure the agreement to preserve benefits where possible: respect the notice period in writing, frame the severance within § 1a KSchG limits, and document that the employer would otherwise have dismissed.
Frequently asked questions about severance in Germany
Is there a statutory right to severance after a dismissal?
No general right exists. Four narrow exceptions: § 1a KSchG (if the employer expressly offers severance for waiver), a Sozialplan in a company with a works council, a contractual or collective severance scheme, and §§ 9, 10 KSchG court-ordered Auflösung in exceptional cases. Otherwise, severance flows from a negotiated settlement.
How is severance calculated?
The customary anchor is 0.5 × gross monthly salary × completed years of service. The real number runs from 0.25 to 2.0 monthly salaries per year of service, depending on case strength and leverage.
Is severance taxed?
Yes — as income in the year of receipt — but the Fünftelregelung under § 34 EStG reduces the marginal-rate burden by treating the payment as spread over five years for rate purposes. Social-security contributions generally do not apply.
Will accepting severance trigger a Sperrzeit on unemployment benefits?
Only if the agreement is structured incorrectly. With proper drafting — notice period respected, severance in the § 1a corridor, dismissal-inevitable language — the Sperrzeit is usually avoided. See our Sperrzeit explainer.
How long does a severance negotiation take?
Most cases settle at the Gütetermin, roughly 4–8 weeks after we file the Kündigungsschutzklage. Out-of-court negotiations without a filing typically resolve in 2–4 weeks but yield lower severance because the employer has no court-deadline pressure.