GermanyWhat is a severance payment and when am I entitled to one?
A severance payment (Abfindung) in Germany is a one-time financial compensation paid to an employee upon termination of employment, typically ordered by a court under KSchG § 9 when continued employment is unreasonable — not an automatic right after every dismissal.
What the Law Says
In Germany, there is no general statutory right to severance pay upon termination. The main legal basis for court-ordered severance is the Protection against Dismissal Act (Kündigungsschutzgesetz, KSchG).
Severance (Abfindung) is not automatically owed when your employment ends. It arises primarily in two situations: (1) when a court dissolves the employment relationship under KSchG § 9 because continuing it is unreasonable for you — even though your dismissal was invalid; or (2) when agreed voluntarily (e.g., in a settlement or social plan).
Under KSchG § 9(1), if a court rules that your dismissal was invalid (i.e., the employment relationship continues), but continuing work is not reasonably expected — for example due to severe conflict, loss of trust, or health reasons — the court may dissolve the relationship *at your request* and order your employer to pay an 'appropriate severance'. The same applies if your employer requests dissolution and proves that further cooperation would harm business interests.
The court sets the effective termination date as if the dismissal had been socially justified — meaning it aligns with what would have been lawful notice period timing. Importantly, either party can file this dissolution request only until the end of the final oral hearing in the appeal instance.
Statutory TextStellt 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.
— KSchG § 9(1) — Protection against Dismissal Act
Statutory TextDie gleiche Entscheidung hat das Gericht auf Antrag des Arbeitgebers zu treffen, wenn Gründe vorliegen, die eine den Betriebszwecken dienliche weitere Zusammenarbeit zwischen Arbeitgeber und Arbeitnehmer nicht erwarten lassen.
— KSchG § 9(1) — Protection against Dismissal Act
What Courts Have Said
German courts emphasize that severance is not a default entitlement — it requires specific factual and legal justification, especially where social plans or court dissolution are involved.
In a social plan context, employers and works councils have wide discretion in designing severance rules — but exclusions or caps (e.g., age-based limits) must be objectively justified and non-arbitrary.
What to Do
If you believe your dismissal was unfair and continuing work is untenable, consult a labor lawyer promptly — you must file a claim for wrongful dismissal *and* request dissolution under KSchG § 9 before the final appeal hearing.
Review any existing social plan (Sozialplan) — if applicable, check eligibility criteria and deadlines for applying for severance.
Do not sign a termination agreement without legal review — voluntary severance terms are binding and may waive future claims.
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JapanNot legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: June 2026.