The Dismissal Protection Act contains no general entitlement to severance pay. It protects the continued existence of the employment relationship: a socially unjustified dismissal is invalid (§ 1 KSchG), and the job remains in place. Only two provisions of the Act lead to severance pay: § 1a and §§ 9, 10 KSchG.
§ 1a KSchG gives employees 0.5 months’ salary per year of the employment relationship in a redundancy dismissal, if the employer offers this in the dismissal letter and no claim is filed. Under §§ 9, 10 KSchG, the labour court dissolves the employment relationship against severance pay of at most 12 to 18 months’ salary.
Besides these, most severance payments arise without these provisions, through a termination agreement or a court settlement. Whether you have an entitlement to severance pay on dismissal (currently available in German only) is covered in a separate guide; an overview of the topic of severance pay after dismissal is given on the main page.
The two severance provisions of the KSchG compared
Both provisions require that the Dismissal Protection Act applies to the employment relationship; the next section covers that. After that, the paths diverge. § 1a rewards waiving the claim, while §§ 9, 10 require a claim that has been filed and is well-founded.
| Feature | § 1a KSchG | §§ 9, 10 KSchG |
|---|---|---|
| Trigger | Redundancy dismissal with a severance notice in the dismissal letter | Application for dissolution in unfair dismissal proceedings where the dismissal is invalid |
| Requirement | No claim filed before the three-week deadline of § 4 sentence 1 KSchG expires | Continuation unreasonable for the employee, or no further cooperation serving the business purposes to be expected |
| Amount | 0.5 months’ salary per year of the employment relationship (§ 1a para. 2 KSchG) | Reasonable severance pay, capped under § 10 KSchG at 12 to 18 months’ salary |
| Who decides | The employee, by letting the filing deadline pass | The labour court, by judgment |
When the Dismissal Protection Act applies
The dismissal protection of the First Section applies in businesses that, as a rule, employ more than ten employees (§ 23 para. 1 KSchG). Part-time staff count proportionally: at 0.5 for up to 20 weekly hours, at 0.75 for up to 30 hours.
A cut-off date rule applies to older employment relationships. Anyone already employed before 1 January 2004 already has dismissal protection if the business, as a rule, employs more than five employees whose employment relationship also began before that cut-off date (§ 23 para. 1 KSchG).
The second hurdle is the qualifying period. The employment relationship must have existed without interruption for more than six months (§ 1 para. 1 KSchG). If either requirement is missing, neither § 1a nor §§ 9, 10 apply; severance pay can then only come about through negotiation or contract.
§ 1a KSchG: severance pay for a redundancy dismissal
The entitlement under § 1a para. 1 KSchG arises when three requirements come together. The employer issues a redundancy dismissal, based on urgent operational requirements (§ 1 para. 2 sentence 1 KSchG).
Two further conditions are added. The dismissal letter states that the dismissal is based on such requirements and that the employee can claim severance pay if they let the filing deadline pass. And the employee does not file an unfair dismissal claim before the three-week deadline of § 4 sentence 1 KSchG expires.
The entitlement arises once the notice period expires. § 1a para. 2 KSchG sets the amount: 0.5 months’ salary for each year of the employment relationship; periods of more than six months are rounded up to a full year. Monthly salary means whatever the employee is due in cash and benefits in kind at their regular working hours in the month employment ends (§ 10 para. 3 KSchG).
A worked example: 3,600 euros gross monthly salary, eight years and seven months of service. The seven months round up to a full year, so the calculation uses nine years: 0.5 x 3,600 euros x 9 = 16,200 euros. § 1a does not provide for more than this formula.
Three judgments determine the entitlement in practice. First: anyone who files an unfair dismissal claim loses the § 1a entitlement for good; even a later withdrawal of the claim does not revive it (BAG, judgment of 13 December 2007, case 2 AZR 971/06). The decision within the three weeks is irreversible.
Second: the employer may offer less than 0.5 months’ salary per year. In that case, however, the employer must make unmistakably clear that it is not an offer under § 1a KSchG; if that clarification is missing, the employer owes the statutory amount (BAG, judgment of 13 December 2007, case 2 AZR 807/06).
Third: severance pay under § 1a does not suspend the entitlement to unemployment benefit, because it is not a dismissal compensation within the meaning of SGB III (BSG, judgment of 8 December 2016, case B 11 AL 5/15 R). What otherwise applies to a suspension period for unemployment benefit is set out in the guide on that topic.
§§ 9, 10 KSchG: severance pay through a dissolution judgment
If the employee wins the unfair dismissal proceedings, the employment relationship continues. § 9 KSchG breaks through this principle: on application, the labour court dissolves the employment relationship despite the invalid dismissal and orders the employer to pay reasonable severance.
The employee can make the application if continuing the employment relationship is unreasonable for them. The employer can make it if no further cooperation serving the business purposes is to be expected. In both cases, the employment relationship ends in exchange for money.
For the amount, § 10 KSchG sets caps, staggered by age and length of the employment relationship:
| Case group | Cap |
|---|---|
| General rule (§ 10 para. 1 KSchG) | up to 12 months’ salary |
| Age 50 completed and employment relationship for at least 15 years (§ 10 para. 2 KSchG) | up to 15 months’ salary |
| Age 55 completed and employment relationship for at least 20 years (§ 10 para. 2 KSchG) | up to 18 months’ salary |
The increased rates of 15 and 18 months’ salary no longer apply once the employee has reached the standard retirement age of the statutory pension insurance (§ 10 para. 2 KSchG). Monthly salary: cash and benefits in kind at regular working hours in the month employment ends (§ 10 para. 3 KSchG).
Dissolution judgments are the exception. The normal case in proceedings is the settlement, in which both sides freely negotiate the severance pay; the process and deadlines are described in the guide on the unfair dismissal claim.
What the KSchG does not regulate
The Dismissal Protection Act does not answer the most common severance questions in practice at all. German employment law nowhere provides for a general entitlement to severance pay on dismissal; severance from social plans is governed by the Works Constitution Act (BetrVG). For everything outside § 1a and §§ 9, 10, separate guides therefore apply:
- Whether an entitlement to severance pay on dismissal (currently available in German only) exists at all
- Which formula determines how much severance pay you are entitled to
- What to check before you have a termination agreement reviewed
