Severance Pay old
What is the old severance pay system?
Severance pay is a payment provided for by law for employees (white-collar and blue-collar workers), to which they are generally entitled upon termination of their employment. For employment relationships based on a contract under private law and entered into before 1 January 2003, the old legal provisions (the old severance pay scheme) continue to apply.
How does the old severance pay system differ from the new one?
The entitlement to severance pay only arises upon the (legal) termination of the employment relationship, provided that this has lasted for at least three years, and depends on the nature of the termination of the employment relationship. In the event of ordinary notice of termination by the employer, dismissal through no fault of the employee, justified early resignation, or termination by mutual agreement, the employee is entitled to severance pay. Depending on the duration of the employment relationship, the entitlement to severance pay can range from twice to twelve times the final monthly salary. In all other types of termination, such as voluntary resignation (with important exceptions), early resignation without good cause and dismissal for cause, the entitlement is forfeited in full. The parties to the employment contract may agree to switch to the new system by mutual consent.
Learn more about our employment law practice area. Please feel free to contact us for further information.