Expert Insights and Recommendations - Translating the gender pay gap issue into different words:
Females generally receive lower, on average, than their male counterparts in terms of severance pay, despite having similar jobs and qualifications. This wage gap in severance pay is well-known, with women receiving approximately one-third less than men during this period. This severance pay gap is even more pronounced than the wage gap, which was 18% in 2020. Women can enhance their negotiation position by preparing well and employing effective strategies.
Preparation and Negotiation Strategies
According to an analysis conducted by law firm Chevalier in 2023, women typically receive about 6,300 euros in severance pay, while men receive 9,100 euros - a difference of 31%.
Nina Rummel, a specialist lawyer for employment law at Chevalier Capital, attributes this disparity to the gender pay gap. The initial severance amount is calculated based on the gross monthly salary, which was 18% lower for females than males in 2023, as reported by the Federal Statistical Office. Individual contract agreements, duration of employment, reasons for termination, and position within the company all contribute to the severance amount.
Severance pay may increase with extended employment or dismissals due to operational reasons. Executive and higher management positions often result in better severance packages. Individuals who can present persuasive arguments often have the opportunity to negotiate further, suggests Rummel. Women are advised not to accept the initial offer without proper preparation. For instance:
- Gather pertinent documents that can strengthen your position, such as employment contracts, performance evaluations, proof of special accomplishments or company contributions, and dismissal-related correspondence.
- Research common severance practices in your industry and position to establish a reasonable demand basis.
- Familiarize yourself with the applicable legal provisions, such as the existence of a social plan with a fixed severance for dismissals due to operational reasons.
There is no legal entitlement to severance pay, as noted by Alexander Bourzutschky, a lawyer for employment and social security law at the law firm Rödl and Partner. The rule of thumb with half a month's salary per year of employment only applies under specific circumstances when an employee waives their right to a dismissal protection lawsuit.
Rummel stresses the importance of women initiating negotiations to establish an anchor point and considering that the employer rarely agrees to the initial offer directly. Instead, they often attempt to reduce the amount. It is advisable to think about an acceptable amount before negotiating and starting higher than the target. Additionally, consider the overall severance package, which may include further training opportunities, recommendation letters, and job placement assistance.
The limited number of women in leadership positions is one of the factors contributing to the disparity in severance pay. Annual analyses of the gender pay gap show that women are less likely to hold leadership positions, concentrate in lower-paying industries, and work part-time three times as often, contributing to wage inequality and consequently to severance pay inequality.
"In industries characterized by lower wages and high turnover, such as hospitality, retail, and care work, severance tends to be lower," explains Rummel. "Women who work part-time or in less secure positions in these industries may receive lower severance pay."
On the other hand, it appears favorable in the financial sector, pharmaceuticals, and IT, as these industries provide higher salaries and consider severance as part of their incentive system. However, these sectors have lower female participation rates.
Employers often base the initial severance pay amount on an employee's gross monthly salary, which can be influenced by the gender pay gap. For instance, in 2023, females earned 18% less than males, leading to lower severance pay amounts.
To potentially negotiate for a higher severance pay, employers may consider the individual's contract agreements, length of employment, reasons for termination, and position within the company. Preparing relevant documents, researching common practices, and familiarizing oneself with applicable legal provisions can also strengthen a negotiation position.
