A severance payment after termination is an important financial compensation for many employees. But what if the employer delays or refuses payment altogether? This article explains when a severance payment becomes due, what rights you have if payment is late, and how you can enforce your claims. An immediate severance payment is your legitimate right.
If the employer fails to pay a due severance, you can claim default interest. Under Section 288 of the German Civil Code (BGB), this currently amounts to 4% above the base rate. Additionally, you may assert damages if the late payment caused you financial harm. To enforce your rights, you should first send a formal demand letter to the employer. If that has no effect, you can engage a specialist lawyer for employment law to pursue payment through the courts. RechtStark, as a litigation funder, can support you by financing the costs of an unfair dismissal claim. Find out more about your options by contacting us.
Immediate Severance Payment: When Is Payment Actually Due?
The due date of a severance payment depends on the agreements in the termination agreement or court settlement. As a rule, the severance becomes due immediately once the employment relationship ends. This means the employer may not unilaterally postpone payment. It is crucial to record the due date clearly in the agreement or settlement. Without such a provision, ambiguities may arise that the employer could exploit.
For more information on the one-fifth rule and its impact on your severance, read our article New One-Fifth Rule 2026: What the BMF Guidance Changes for Your Severance.
What the Law Says: No Deferral Without Legal Basis
Under Section 271 BGB, a payment is due immediately if no other payment date has been agreed. This means the employer cannot delay the severance without a valid reason. Even if the employer faces financial difficulties, that is not sufficient grounds to postpone payment. Employees have the right to demand immediate payout.
If you want to learn more about your rights in a dismissal, read our article Dismissal Protection for High Earners: What Is Set to Change from 2027.
Typical Employer Excuses — and Why They Don’t Hold Up
Employers sometimes try to delay severance payment by offering various excuses. Common ones include:
- Financial bottlenecks: Even if the employer is in financial difficulty, this is no reason to delay payment. The severance is a contractual obligation that must be fulfilled.
- Bureaucratic delays: Internal processes causing delays have no legal standing. The severance must still be paid out.
- Alleged legal uncertainties: Employers may feign legal ambiguities to justify delay. Yet without a clear agreement in the contract or settlement, there is no justification for postponement.
If your employer uses any of these excuses, do not hesitate to assert your rights. Also read our article Negotiating Severance — Preparation: How to Succeed in the Meeting for further negotiation tips.
Your Rights If Payment Is Late: Default Interest and Enforcement
If the employer does not pay the severance on time, you can claim default interest. Under Section 288 BGB, this currently stands at 4% above the base rate. You may also claim damages if the late payment caused you financial loss.
To enforce your rights, first send a formal demand letter to the employer. If that fails, engage a specialist lawyer for employment law to pursue the payment through the courts. RechtStark, as a litigation funder, can support you by financing the costs of an unfair dismissal claim. Learn more about your options by contacting us.
Further information on enforcing your rights can be found in our article Dismissal Protection for High Earners: What Is Set to Change from 2027.
Protecting Yourself: Clauses for Termination Agreements and Settlements
To ensure the severance is paid on time, use clear wording in the termination agreement or settlement. Key points include:
- Due date: Stipulate that the severance falls due upon termination of the employment relationship.
- Payment terms: Agree whether the severance is paid as a lump sum or in instalments and when each payment is due.
- Default clause: Include a clause governing default interest and damages in case of late payment.
These measures protect you against delays and strengthen your ability to enforce your rights.
Immediate Severance Payment: Practical Enforcement Steps
If the employer fails to pay the severance on time, take the following steps:
- Demand letter: Send a formal demand letter requiring immediate payment of the severance.
- Lawyer: If the demand letter has no effect, engage a specialist lawyer for employment law. A lawyer can assist you in enforcing your rights.
- Enforcement: If the employer still refuses to pay after a lawyer is involved, you can have the payment enforced through the courts.
These steps help ensure you receive your severance.
Conclusion: Don’t Let a Due Severance Be Delayed Without a Fight
A due severance payment may not be unilaterally postponed by the employer. Employees have the right to demand immediate payout and, in case of late payment, to claim default interest and damages. Clear wording in the termination agreement or settlement, combined with engaging a specialist lawyer, enables you to enforce your rights and secure timely payment. Do not be deterred by employer excuses — enforce your immediate severance payment.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.