Severance Pay

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The severance pay is a one-time, usually after a certain period of time, the monetary compensation to be paid to employees after leaving the company. Contractual agreements are often the basis for the legal claim arising from them, so that in the event of the dissolution of a contractual relationship a compensation for the associated disadvantages is exerted.

In the case of executives, it is customary to stagger the frequently large severance payments in order to assess the effect of the previous participation of the manager. As a result, there are regular quarrels between companies and employers, so that it is difficult to pay severance payments in one-time.

In the case of shareholders of corporations, however, the person who leaves the company is entitled to his share of the relevant assets. (Profit brought forward, including hidden reserves) To this end, a so-called winding-up balance is set up, which accounts for all business transactions at the time of the departure and serves as the basis for the calculation.