Cases in Which an Employee Is Entitled to Severance Pay Upon Termination of Employment

Employees are entitled to severance pay when they are dismissed by their employer. As a general rule, they are not entitled to severance pay if they resign. However, the law provides for exceptions to this rule. Some of these exceptions require the employer’s consent, leading to confusion about whether severance pay can be validly claimed in cases of resignation. Below is a summary of these cases.

Prerequisite: Indefinite-Term Employment Relationship

Severance compensation is exclusively granted to employees with an indefinite-term employment contract.

Employees with fixed-term contracts or those connected to the employer through agreements other than an employment contract are not entitled to severance compensation, unless a court determines that their relationship qualifies as an indefinite-term employment relationship.

Six-Month Statute of Limitations

A claim for severance compensation must be filed in the competent court and served to the employer within six months from the termination of the employment relationship. If this deadline is missed, the employee’s claim is forfeited.

Cases of Severance Compensation Payment

1. Employer’s Obligation Upon Dismissal
   • If an employer dismisses an employee with an indefinite-term contract after at least one year of employment, they must pay the full statutory severance amount.
   • The amount can be reduced to half if the employer provides a notice period of up to four months.
2. Employer’s Obligation If the Employee Finds a New Job During the Notice Period
   • If an employer releases an employee from work obligations during the notice period, full severance compensation is due if the employee secures another job before the notice period ends.
3. Employer’s Obligation If They Consent to Employee’s Departure During Notice Period
   • If an employer agrees to the employee’s departure during the notice period, full severance compensation must be paid.
4. Employee’s Voluntary Resignation or Retirement
   • An employee with an indefinite-term contract who resigns or is dismissed after reaching full retirement age is entitled to 40% of the severance amount, or 50% if they were not covered by supplementary insurance.
5. Employee’s Resignation After 15 Years of Service
   • An employee with at least 15 years of service at the same employer may receive 50% of the severance amount upon voluntary resignation, provided the employer consents.

Employer’s Legal Obligation vs. Discretionary Choice

The employer is legally required to pay severance in three of the five scenarios mentioned above:

1. a) When dismissing the employee.
2. b) When releasing the employee from work obligations during the notice period and the employee leaves before its expiration.
3. c) When an employee retires after meeting full pension requirements.

However, the employer’s consent is required in two cases:
a) When the employee has completed 15 years of continuous employment.
b) When the employee resigns during the notice period without being released from work obligations.

In the latter case, there is a risk of undermining the employee’s right to severance compensation, while the employer benefits from halving the severance amount by issuing a notice. This could pressure employees to leave before the four-month notice period ends to secure new employment, allowing the employer to reduce severance costs. A fairer balance of interests would be to limit the employer’s financial obligation to waiving the wages for the remainder of the notice period instead.