- What amount of reparation am I entitled to?
When it comes to discussing tax optimization, there's another question that often piques interest among employees facing a company downsizing: What kind of severance package should they anticipate for their long-time dedication to the company?
As per the Protection Against Dismissal Act, employers are required to give up to 15 months' worth of salary as severance pay to employees over the age of 50 who have worked for the company for at least 15 years. For those aged 55 with at least 20 years of service, the severance pay can reach up to 18 months' gross salary. However, legally, employees can only claim severance pay in exceptional circumstances, such as when it's agreed upon in a social plan or collective agreement.
This rule also applies to dismissals due to operational reasons. In such scenarios, employers should offer at least half a month's salary for every year of service in the dismissal notice, to prevent the employee from suing in exchange for this compensation.
In reality, many companies opt to provide financial compensation beyond any legal obligation, aiming to prevent prolonged labor court disputes and soften the blow of job loss.
The amount of this compensation is generally open for negotiation. As a guideline, employees can expect to use figures ranging between half to a full month's gross salary for every year of service as a starting point for negotiations. Those with exceptional performance records or unique knowledge and insights about the company that could be beneficial to competitors might be able to negotiate for more with compelling arguments.
During negotiations for compensation, employees may request additional funds beyond legal obligations, aiming to minimize lengthy labor court disputes. Employees who have provided exceptional service or possess unique company knowledge may be able to negotiate for increased compensation with convincing arguments.
