Severance pay on dismissal
Germany has no general statutory right to severance pay. The Dismissal Protection Act (KSchG) provides only two conditional claims – the offer route under § 1a and the court route under §§ 9–10 – each with its own conditions and caps, never an automatic payment.
No general statutory severance
Unlike what many assume, Germany has no provision that gives every dismissed employee, simply by being dismissed, a right to severance pay. The Dismissal Protection Act (Kündigungsschutzgesetz, KSchG) instead knows exactly two situations where severance can arise: the offer route under § 1a, which requires the employer to offer it expressly in the dismissal, and the court route under §§ 9–10, where a court dissolves the employment relationship inside an unfair-dismissal case and awards a reasonable severance. Both are explained in detail below – neither is an automatic payment.
Who can reach either route at all
Both routes first require that the KSchG's dismissal protection applies to you at all. Two gates must clear together:
- Length of service. The employment relationship must have lasted, without interruption, more than 6 months – strictly more than that threshold, not from it.
- Employer size. Small employers with 5 or fewer employees as a rule are outside the KSchG entirely. At 10 or fewer the exemption only covers employment relationships that began after 31 December 2003 – anyone hired earlier stays protected.
The statute itself states how part-time staff count toward the headcount:
Bei der Feststellung der Zahl der beschäftigten Arbeitnehmer nach den Sätzen 2 und 3 sind teilzeitbeschäftigte Arbeitnehmer mit einer regelmäßigen wöchentlichen Arbeitszeit von nicht mehr als 20 Stunden mit 0,5 und nicht mehr als 30 Stunden mit 0,75 zu berücksichtigen.
In gloss: employees working up to a lower weekly-hours threshold count as a fraction of a full post, and those working up to a higher threshold count as a larger fraction – only above that do they count as a full post.
Route 1: the § 1a severance offer
§ 1a KSchG lets an employer offer severance on an operational-reasons dismissal if, in return, no unfair-dismissal claim is filed. The claim arises only under that condition, verbatim from the statute:
Der Anspruch setzt den Hinweis des Arbeitgebers in der Kündigungserklärung voraus, dass die Kündigung auf dringende betriebliche Erfordernisse gestützt ist und der Arbeitnehmer bei Verstreichenlassen der Klagefrist die Abfindung beanspruchen kann.
In gloss: the claim requires the employer's notice of dismissal itself to state that the dismissal rests on urgent operational grounds and that the employee can claim the severance by letting the claim period lapse.
If the dismissal does not carry that notice, no § 1a claim arises – regardless of how long you were employed. Only once the condition is met does the statutory factor apply: 0,5 months' pay per year the employment relationship existed. A part year is rounded up only when the remainder is more than 6 months.
Route 2: court-awarded severance under §§ 9–10
In an unfair-dismissal case, the court can dissolve the employment relationship on request and award severance if continuing the employment is not reasonable for the employee. The statute does not fix the amount – "reasonable" is judicial discretion:
Stellt das Gericht fest, daß das Arbeitsverhältnis durch die Kündigung nicht aufgelöst ist, ist jedoch dem Arbeitnehmer die Fortsetzung des Arbeitsverhältnisses nicht zuzumuten, so hat das Gericht auf Antrag des Arbeitnehmers das Arbeitsverhältnis aufzulösen und den Arbeitgeber zur Zahlung einer angemessenen Abfindung zu verurteilen.
In gloss: if the court finds the dismissal did not end the employment relationship, but continuing it is unreasonable for the employee, it must, on the employee's request, dissolve the relationship and order the employer to pay a reasonable severance.
Only the ceilings that discretion may not exceed are fixed:
| Condition | Ceiling |
|---|---|
| General rule, no further condition | up to 12 months' pay |
| Turned 50 and at least 15 years of service | up to 15 months' pay |
| Turned 55 and at least 20 years of service | up to 18 months' pay |
Both conditions on each of the two higher rows must be met together – age and length of service, not either alone.
There is one exception near retirement, verbatim from the statute:
Dies gilt nicht, wenn der Arbeitnehmer in dem Zeitpunkt, den das Gericht nach § 9 Abs. 2 für die Auflösung des Arbeitsverhältnisses festsetzt, das in der Vorschrift des Sechsten Buches Sozialgesetzbuch über die Regelaltersrente bezeichnete Lebensalter erreicht hat.
In gloss: if, at the date the court sets for the dissolution, you have already reached the statutory pension age under book six of the Social Code (SGB VI), the two higher tiers drop away – only the base ceiling of 12 months' pay remains. How high the award actually is within the relevant ceiling is for the court to decide on the facts of the case – it cannot be worked out in advance, and this page gives no figure for it.
What counts as "months' pay" (Monatsverdienst)
Both routes count in Monatsverdienste – § 1a imports the same reference value that § 10(3) defines for the court route:
Als Monatsverdienst gilt, was dem Arbeitnehmer bei der für ihn maßgebenden regelmäßigen Arbeitszeit in dem Monat, in dem das Arbeitsverhältnis endet (§ 9 Abs. 2), an Geld und Sachbezügen zusteht.
In gloss: it means money and benefits in kind owed to you, at your normal working hours, for the month in which the employment relationship ends – not just the base wage.
Additive to the notice period, not a buy-out
The § 1a claim falls due once the notice period has expired, verbatim:
hat der Arbeitnehmer mit dem Ablauf der Kündigungsfrist Anspruch auf eine Abfindung
In gloss: once the notice period has expired, the employee has a claim to severance. So severance sits alongside the regular notice period, not in its place – it is not a buy-out that shortens the notice period. The court route, in turn, anchors on the date employment would have ended under a justified dismissal – again presupposing a notice period.
What this page does not cover: the Sozialplan
Alongside the two KSchG routes described here, German labour law has a third, separate legal basis: the "Interessenausgleich über die Betriebsänderung, Sozialplan" under § 112 BetrVG. It rests on a change to the business and is negotiated between the employer and the works council – for many dismissed employees it is, in practice, the more significant payment. This page deliberately does not cover it: it is named here only as a pointer, without its mechanics, its calculation, or its conditions.
Severance pay: frequently asked questions
Sources:
- §1a KSchG (Abfindungsanspruch bei betriebsbedingter Kündigung)
- §9 KSchG (Auflösung durch Urteil; Abfindung)
- §1 Abs.1 KSchG (Sozial ungerechtfertigte Kündigungen — the >6-month tenure gate)
- §23 Abs.1 KSchG (Geltungsbereich — the employer-headcount gate)
- §10 KSchG (Höhe der Abfindung — the Monatsverdienst caps)
- BetrVG §112 (Interessenausgleich über die Betriebsänderung, Sozialplan) — NAMED, not sourced
The information above comes from the sources cited. If the statute changed recently it may not be reflected here yet, and none of it has been through our final sign-off — what governs is the cited version of the Act.