In short
The rule of thumb in Germany is half a gross monthly salary per year of service. Severance after 10 years is therefore around 5 monthly salaries, after 20 years around 10. The factor 0.5 is also mentioned in Sec. 1a KSchG, but there is only a statutory right to severance in exceptional cases: the actual amount is a matter of negotiation and depends above all on how vulnerable your dismissal is.
Key points
- Rule of thumb: 0.5 x gross monthly salary x years of service. More than 6 started months count as a full year under Sec. 1a (2) KSchG.
- The rule of thumb is a starting value, neither a minimum nor a maximum. Depending on the situation, severance can be well below or above it.
- If the labour court dissolves the employment, severance is capped at 12 monthly earnings; from age 50 with 15 years of service at 15, from age 55 with 20 years of service at 18 (Sec. 10 KSchG).
- Without protection against dismissal (small business, waiting period) and after missing the 3-week deadline, there is usually no severance, no matter how long you have worked there.
- Whether an offer is fair is checked at Recht 24/7 by an employment lawyer within 24 hours at a fixed price.
Contents
- The rule of thumb: half a monthly salary per year
- Severance table by years and salary
- Severance after 2, 3 and 4 years
- Severance after 5 years
- Severance after 10 years
- Severance after 15 years
- Severance after 20 years
- Severance after 25, 30 and more years
- Cap on dissolution by the court
- Why the rule of thumb is only a starting value
- When is there no severance even after many years?
- How to get severance
- What is left after tax?
- FAQ
The rule of thumb: half a monthly salary per year
The formula is: gross monthly salary x years of service x 0.5. It comes from Sec. 1a KSchG: in the case of a dismissal for operational reasons, you are entitled to 0.5 monthly earnings per year of service if your employer offers this in the dismissal letter and you do not file a claim. In negotiations, the same factor has become the usual starting point, even without a legal entitlement.
What counts as the monthly salary? What matters is what you are entitled to for your regular working hours in the month in which the employment ends, in money and benefits in kind (Sec. 1a (2) sentence 2 in conjunction with Sec. 10 (3) KSchG). This includes, for example, a company car that may be used privately. Whether a pro-rata Christmas bonus, a 13th salary or bonuses are included must be checked in the individual case.
How are started years counted? A period of more than six months is rounded up to a full year (Sec. 1a (2) sentence 3 KSchG). 9 years and 7 months therefore count as 10 years, 9 years and exactly 6 months as 9 years.
Example calculation: €4,000 gross, 12 years and 8 months of service. The calculation uses 13 years: €4,000 x 13 x 0.5 = €26,000 gross.
Severance table by years and salary
Standard severance with a factor of 0.5, all amounts gross and calculated by us (0.5 x salary x years). For values in between, use the severance calculator [REDAKTION: Link auf abfindungsrechner, sobald veröffentlicht].
| Years of service | Monthly salaries | €2,500 | €3,500 | €4,500 | €6,000 | €8,000 |
|---|---|---|---|---|---|---|
| 1 | 0.5 | €1,250 | €1,750 | €2,250 | €3,000 | €4,000 |
| 2 | 1 | €2,500 | €3,500 | €4,500 | €6,000 | €8,000 |
| 3 | 1.5 | €3,750 | €5,250 | €6,750 | €9,000 | €12,000 |
| 4 | 2 | €5,000 | €7,000 | €9,000 | €12,000 | €16,000 |
| 5 | 2.5 | €6,250 | €8,750 | €11,250 | €15,000 | €20,000 |
| 6 | 3 | €7,500 | €10,500 | €13,500 | €18,000 | €24,000 |
| 7 | 3.5 | €8,750 | €12,250 | €15,750 | €21,000 | €28,000 |
| 8 | 4 | €10,000 | €14,000 | €18,000 | €24,000 | €32,000 |
| 10 | 5 | €12,500 | €17,500 | €22,500 | €30,000 | €40,000 |
| 12 | 6 | €15,000 | €21,000 | €27,000 | €36,000 | €48,000 |
| 15 | 7.5 | €18,750 | €26,250 | €33,750 | €45,000 | €60,000 |
| 20 | 10 | €25,000 | €35,000 | €45,000 | €60,000 | €80,000 |
| 25 | 12.5 | €31,250 | €43,750 | €56,250 | €75,000 | €100,000 |
| 30 | 15 | €37,500 | €52,500 | €67,500 | €90,000 | €120,000 |
| 35 | 17.5 | €43,750 | €61,250 | €78,750 | €105,000 | €140,000 |
| 40 | 20 | €50,000 | €70,000 | €90,000 | €120,000 | €160,000 |
The "1 year" row only applies after more than 6 months of service, because before that the Protection Against Dismissal Act does not apply (Sec. 1 (1) KSchG). How much of it remains after tax is explained in our guide on taxation of severance pay.
Severance after 2, 3 and 4 years
Even after a short time, severance may be possible: you are protected against dismissal after more than 6 months if the business normally employs more than 10 employees (Sec. 1 and 23 KSchG). According to the rule of thumb, this means 1 monthly salary after 2 years, 1.5 after 3 years and 2 after 4 years. At €3,500 gross, that is €3,500, €5,250 or €7,000.
With small amounts, the factor has a particularly strong effect: whether 0.25 or 1.0 is negotiated makes a multiple difference. After 2 years, the employer's notice period is 1 month to the end of the month (Sec. 622 (2) no. 1 BGB).
Severance after 5 years
After 5 years, the rule of thumb gives 2.5 gross monthly salaries, i.e. €8,750 at €3,500 and €11,250 at €4,500. From now on, the employer's notice period is 2 months to the end of the month (Sec. 622 (2) no. 2 BGB).
Severance after 10 years
Severance after 10 years is 5 gross monthly salaries according to the rule of thumb: €17,500 at €3,500, €22,500 at €4,500, €30,000 at €6,000 gross. After 10 years, the employer's notice period is 4 months to the end of the month (Sec. 622 (2) no. 4 BGB), after 12 years 5 months. How to determine your notice period is explained in our guide on notice periods for employees.
In a dismissal for operational reasons, length of service counts in the social selection (Sec. 1 (3) KSchG). After 10 years, this can increase your room for negotiation.
Severance after 15 years
After 15 years, the rule of thumb gives 7.5 monthly salaries, i.e. €33,750 gross at €4,500. The employer's notice period is now 6 months to the end of the month (Sec. 622 (2) no. 6 BGB). If you are at least 50 years old, the cap for severance on dissolution by the court also rises from 12 to 15 monthly earnings (Sec. 10 (2) KSchG).
Some collective agreements completely exclude ordinary dismissal after long service and from a certain age. Then only a dismissal for good cause is possible.
Severance after 20 years
Severance after 20 years of service is 10 gross monthly salaries according to the rule of thumb: €35,000 at €3,500, €45,000 at €4,500, €60,000 at €6,000 gross. The employer's notice period reaches its statutory maximum of 7 months to the end of the month (Sec. 622 (2) no. 7 BGB).
If you are at least 55 years old, the court can award up to 18 monthly earnings on dissolution (Sec. 10 (2) KSchG). In negotiations, age and job market prospects are arguments for a factor above 0.5.
Severance after 25, 30 and more years
After 25 years, the rule of thumb gives 12.5 monthly salaries, after 30 years 15, after 35 years 17.5 and after 40 years 20. At €4,500 gross, that is €56,250, €67,500, €78,750 and €90,000.
The standard severance is therefore above the caps in Sec. 10 KSchG. However, these only apply if the court dissolves the employment. There is no statutory cap for a settlement, a termination agreement or an offer under Sec. 1a KSchG.
Two special features with very long service:
- Close to retirement: The higher caps of 15 and 18 monthly earnings do not apply if you have reached the standard retirement age at the time of dissolution (Sec. 10 (2) sentence 2 KSchG). Social plans may graduate severance by age and exclude employees who are financially secure because they can draw a pension, if necessary after receiving unemployment benefit (Sec. 10 sentence 3 no. 6 AGG).
- Old cases in small businesses: If your employment started before 1 January 2004, the Protection Against Dismissal Act may already apply in businesses with more than 5 employees (Sec. 23 (1) sentences 2 and 3 KSchG). Colleagues who started after 31 December 2003 do not count, as long as the business normally employs no more than 10 employees.
Cap on dissolution by the court
If the dismissal is invalid but continuing the employment cannot reasonably be expected of you, the court must dissolve the employment at your request and order the employer to pay appropriate severance (Sec. 9 (1) sentence 1 KSchG). The amount is capped:
| Age | Length of service | Maximum | Example at €4,000 |
|---|---|---|---|
| any age | any length | 12 monthly earnings | €48,000 |
| from age 50 | at least 15 years | 15 monthly earnings | €60,000 |
| from age 55 | at least 20 years | 18 monthly earnings | €72,000 |
Dissolution by judgment is rare in practice. Most severance payments result from an agreement.
Why the rule of thumb is only a starting value
The amount of severance is a matter of negotiation. The employer pays to get rid of the litigation risk: the greater that risk is for them, the more they pay. The table shows arithmetically what different factors mean after 10 years at €4,000 gross.
| Factor per year | Severance | Typical situation (guidance) |
|---|---|---|
| 0 | €0 | no protection against dismissal, deadline for the claim missed |
| 0.25 | €10,000 | dismissal probably valid, little leverage |
| 0.5 | €20,000 | standard value under Sec. 1a KSchG, open litigation situation |
| 0.75 | €30,000 | recognisable errors, for example in the social selection or works council consultation |
| 1.0 and more | €40,000 and more | dismissal clearly challengeable or special protection against dismissal |
These points shift the factor:
- Reason for dismissal: A dismissal for operational reasons often fails because of the social selection or a lack of evidence that the job has been eliminated.
- Form and procedure: If written form is missing (Sec. 623 BGB) or the dismissal was given without consulting the works council (Sec. 102 (1) sentence 3 BetrVG), the dismissal is invalid.
- Special protection against dismissal: for example in case of pregnancy, parental leave, severe disability or as a works council member.
- Age and job market: Anyone who will find it hard to get a new job has a stronger argument.
- The employer's interest: If the employer wants to part ways quickly, for example during a restructuring, the willingness to pay increases.
When is there no severance even after many years?
Long service alone does not create an entitlement. Usually it stays at zero:
- Small business: With normally 10 or fewer employees, general protection against dismissal does not apply (Sec. 23 (1) KSchG), except for old cases.
- Deadline missed: Anyone who does not file a claim within 3 weeks of receiving the dismissal loses protection against dismissal; the dismissal is deemed valid (Sec. 4 and 7 KSchG).
- Your own resignation: If you resign yourself, the employer usually pays nothing.
- Valid dismissal for misconduct or summary dismissal: In case of serious misconduct, employers rarely pay. More in our guide on summary dismissal.
- Fixed term: If a fixed-term contract ends validly by expiry, there is no dismissal you could challenge.
How to get severance
- Offer under Sec. 1a KSchG: If your employer offers 0.5 monthly earnings per year in a dismissal for operational reasons, you receive it if you do not file a claim. Check the offer before the 3 weeks expire.
- Unfair dismissal claim and settlement: Most severance payments are negotiated during proceedings. Everything about the procedure and costs in our guide on the unfair dismissal claim.
- Termination agreement: Watch out for the suspension of unemployment benefit (Sec. 159 SGB III). Details in our guide on the termination agreement.
- Social plan: In the case of a change to the business, a social plan may provide for severance according to a fixed formula (Sec. 112 BetrVG).
Checkliste: Dismissed after many years
- Note the date on which you received the dismissal. From then on, 3 weeks are running.
- Recalculate the notice period under Sec. 622 (2) BGB or the collective agreement.
- Do not sign anything, especially not a termination agreement.
- Register as a jobseeker with the employment agency at the latest 3 months before the end, or within 3 days if the period is shorter (Sec. 38 (1) SGB III).
- Have the dismissal and severance offer reviewed before the 3 weeks expire.
What is left after tax?
Severance pay is subject to income tax; social security contributions are generally not due. The one-fifth rule under Sec. 34 EStG can reduce the tax, but since 2025 only via the tax return. How this works and why the payment date matters is explained in our guide on taxation of severance pay. Outstanding holiday is not part of the severance; it is paid out separately (see remaining holiday on dismissal).
FAQ
How much severance after 10 years?
According to the rule of thumb, 5 gross monthly salaries: €17,500 at €3,500 gross, €22,500 at €4,500. Depending on the situation, the actual severance can be well below or above this.
How much severance after 20 years of service?
The rule of thumb gives 10 gross monthly salaries, i.e. €45,000 at €4,500. If the court dissolves the employment, up to 18 monthly earnings are possible from age 55 (Sec. 10 (2) KSchG). There is no fixed limit in negotiations.
What severance am I entitled to after 3 years?
According to the rule of thumb, 1.5 gross monthly salaries, i.e. €5,250 at €3,500. You only have a right to this in exceptional cases, for example with an offer under Sec. 1a KSchG or under a social plan.
How much severance after 30 years?
The rule of thumb gives 15 gross monthly salaries, i.e. €67,500 at €4,500. The caps in Sec. 10 KSchG only apply on dissolution by the court. More or less can be agreed in a settlement or termination agreement.
After how many years do you get severance?
There is no minimum period. There is room for negotiation mainly if the Protection Against Dismissal Act applies, i.e. after more than 6 months in a business that normally employs more than 10 employees.
Is the employer obliged to pay severance after 10 years?
No. Even after 10 or more years, there is no general entitlement. An obligation only exists if the employer makes an offer under Sec. 1a KSchG and you do not file a claim, if a social plan or collective agreement provides for it, if the court dissolves the employment, or if the employer deviates from a reconciliation of interests without compelling reason in the case of a change to the business (compensation for disadvantages, Sec. 113 BetrVG).
Is there a cap on severance?
Only on dissolution by the court: at most 12 monthly earnings; from age 50 with 15 years of service 15, from age 55 with 20 years of service 18 (Sec. 10 KSchG). The same caps apply to compensation for disadvantages under Sec. 113 (1) BetrVG. There is no statutory limit for settlements and termination agreements.
Terms used in this guide
About the author
Dr. Georg Schröder, LL.M.
Dr. Georg Schröder is a lawyer and writes the guides of Recht 24/7. He explains legal questions so that you can follow them without legal training, and he reviews every guide before it is published.
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