Workers Compensation

workers compensation

Compensation Definition

A workers compensation is a one-time payment of the employer to the employee. It is usually paid when the employee is terminated and the company wishes to avoid a labor lawsuit.

With compensation, the employer grants a one-off payment in connection with the termination of an employment relationship.There is no general claim to this. In the case of an ordinary termination, the employer pays the wage until the end, there are no additional financial obligations. In practice, however, compensation often occur. A distinction must be made between compensation which a court determines against the will of the employer and compensation which both parties agree to.This may be out of court or in court.

Purpose of Compensation

Often, the payment of compensation is of mutual interest. The employee is allowed a financial bridging if he or she then becomes unemployed or a poorly paid job. In addition, he can view the compensation as a kind of compensation as well as a retrospective bonus for his performance. Employers benefit from operational, financial and legal security. Notice of prosecution can take a long time, resulting in legal and judicial costs. In addition, the deceased can win the process. A special risk is the default of acceptance: In certain cases employers have to pay salary after expiry of the notice period, even though the employee does not actually perform any activity.

Compulsory Compensation

They are the exception. Labor courts can set a compensation if the employee can no longer be expected to continue the employment relationship after a successful termination protection prosecution. There are strict requirements.In principle, the courts deal with numerous complaints proceedings, but these usually end at the latest in the second instance with a comparison between the two parties.

Payments on a Voluntary Basis

These comparisons before courts are among the voluntary solutions, which applies to out-of-court comparisons. In addition, both parties can agree on a compensation without legal dispute, they sign a termination agreement with severance agreement. This category also includes collective solutions such as collective bargaining agreements and social plans negotiated between the employer and the works council . These provisions also require the consent of both parties, in the case of collective agreements such as employers’ organizations and trade unions. The scope is in many cases limited to mass dismissals. The employment protection legislation also provides for the possibility for employers to make a redundancy payment in the event of termination. Employees must waive a prosecution if they wish to claim this option.


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