Jobs are being cut all over Germany, even beyond headline-grabbing examples like Volkswagen. The ifo employment barometer fell to 92.3 points in June 2026, one of the lowest values since the Corona period. According to the economic survey by the German Economic Institute, one in three companies is planning to cut jobs this year. The more people lose their jobs, the more important the question of severance pay becomes.
Anyone who immediately signs a termination agreement including severance pay after termination is often wasting money. According to the 2026 termination report from the software provider HR Works, only 16 percent of employees with a severance payment offer reject the first offer and later negotiate better conditions. Around 6,000 employees were surveyed for the report in April 2026, including 825 who had been laid off in the past five years.
The small group of those who renegotiate get measurably more out of it. 54 percent of them hire a lawyer, and in 32 percent of cases the separation ends in court. Across all severance pay cases, the rate of legal settlements is only eight percent, the proportion with legal assistance is 40 percent.
The vast majority of those who are laid off choose the easy route. 62 percent of employees with an offer accept the initial offer without negotiation, the report says. 26 percent sign during the termination meeting, another 36 percent agree verbally and sign shortly afterwards under the conditions mentioned. According to the information, there is rarely much time left to weigh things up. Most termination conversations last ten minutes or less, and a signed offer feels like security.
No demands, no automatism
The fact that so many leave empty-handed is also due to the fact that there is no general right to severance pay under German labor law. 47 percent of those laid off receive no financial compensation at all; in small businesses the figure is 60 percent. If the employer offers something on its own initiative that only a quarter of those affected experience, it is usually based on the standard severance payment in accordance with Section 1a of the Dismissal Protection Act.
This amounts to half a month’s salary per year of employment in return for waiving a lawsuit. This route is particularly intended for operational dismissals, which is by far the most common reason for dismissal.
By the way, there is a reason for the difference between large and small employers: in companies with a maximum of ten employees, the general protection against dismissal does not apply. This means that there is no lever from which a severance payment can be derived at all.
The lever is time
There are primarily legal reasons why employees often achieve better conditions through negotiations. The scope for negotiation often only arises through the possibility of a dismissal protection claim. However, there are only three weeks left after receipt of the notice of termination (§ 4 KSchG). Anyone who misses the deadline is out of luck.
Many severance payments actually only arise in the dismissal protection process, as a comparison between withdrawal of the lawsuit and payment. How high the settlement is depends on the litigation risk, i.e. how vulnerable the termination is. Things get particularly tricky when a termination agreement is signed immediately. As a result of contributing to your own job loss, you can trigger a blocking period for unemployment benefits of usually twelve weeks (§ 159 SGB III). In addition to the possibly too low severance payment, there is also a gap in unemployment benefits.
From the employer’s perspective, this quick, lawsuit-free agreement is definitely desirable. In an interview with ZEIT, employer lawyer Astrid Krüger describes a common lawsuit waiver bonus. Anyone who does not sue against the dismissal will receive a surcharge on their severance pay, meaning that companies could lay off hundreds of employees without anyone going to court. Half the monthly salary is just the starting point.
If the termination is unstable, for example due to incorrect social selection, or if the person concerned is older, the factor often rises to values of 0.75 to 1 and, depending on the industry and the company’s earnings situation, has an open limit.
In retrospect, divided
If the company and the departing employee finally come to an agreement, the evaluation of the separation is mixed according to the termination report. 58 percent of those severance pay consider their compensation to be appropriate. A good one in four think it is too low, even though most offers were accepted early on. However, the clarification is rarely conflict-free.
30 percent experience them as conflict-ridden, 35 percent each as neutral or amicable. The offer itself acts as a signal. Those who are offered a severance package feel that they are treated with respect in 65 percent of cases. Without an offer it is only 38 percent.
What this means for HR
The results of the termination report make it clear that severance payments are not only important in terms of labor law, but also in terms of communication. The question for HR departments is how separation processes can be made legally compliant without giving the impression that employees are being pressured into making a quick decision.
The requirement of fair bargaining developed by the Federal Labor Court sets an important benchmark for this. The decisive factor is whether the employee has sufficient freedom of choice, emphasizes Ruven Bäsemann, labor lawyer at the Graf von Westphalen law firm, in a blog post. “If there is a violation of the requirement of fair negotiation, this leads to the invalidity of the termination agreement concluded. The original employment relationship subsequently continues,” writes the lawyer.
Designing a comprehensible separation process therefore includes, among other things, giving employees sufficient time to think about it, basing an offer transparently on the statutory standard severance payment and pointing out the possible consequences of a termination agreement. In GvW’s opinion, what is most important is the “remaining freedom of choice for the other person”.
If a works council is involved, the issue of balancing interests and a social plan (Section 111 ff of the Works Constitution Act) can also play a role.
However, the severance payments provided for there – as well as certain scenarios such as a so-called reconciliation of interests with a list of names, where employees can only take limited action against their dismissal – are legally different from the regulation under Section 1a of the Dismissal Protection Act. The termination report also points out that offers of support – such as letters of recommendation – can help reduce emotional stress from the perspective of those affected.
Termination agreements should therefore not be seen as a mere formality, the termination report also emphasizes. The Federal Labor Court has made it clear that a termination agreement can be invalid if it is concluded in violation of the requirement of fair negotiations. Specialist articles therefore recommend transparent processes, sufficient time for the decision and comprehensible documentation of the conversation.
Sven Frost is responsible for HR tech, which includes the areas of digitalization, HR software, time and access, SAP and outsourcing. He also writes about recruiting and employer branding. He continues to be responsible for the editorial planning of various special human resources publications.
