Severance payments for dismissed employees in Germany

This contribution investigates severance payments for dismissed employees in Germany. Particularly, it responds to two questions: “Who receives severance payments?” and “By which characteristics is the level of severance payments determined?”. Individual and collective dismissals are analyzed separately. This is the first study on this issue using individual representative data—the German Socio-Economic Panel—and multivariate methods. The results indicate that rather women, persons with many years of tenure and working in large firms receive severance payments. There is a huge variance in the size of the payments. The most important determinants are the previous wage, tenure and age.