A severance package after termination can be financially critical for employees. But when is this severance pay immediately due? The Lower Saxony Labor Court (LAG) has clarified in a ruling dated July 7, 2026, that severance pay agreed in a settlement is immediately due, at the latest after a reasonable accounting period of 14 days. This decision has far-reaching consequences for employees negotiating or settling a severance package. The immediate due date of severance pay is a crucial aspect every employee should know.
Severance Pay Immediately Due: The Case and the LAG Lower Saxony Decision
In the case at hand, an employee had agreed to a severance payment of 38,000 euros in a court settlement. The settlement contained no specific due-date provision. The employee demanded immediate payment, while the employer argued that the severance should only fall due with the next available payroll run. The Hannover Labor Court had already set the costs of enforcement, which the employer refused to accept. The LAG Lower Saxony has now confirmed the labor court’s decision and clarified that the severance pay is immediately due.
The court referred to the wording of Section 271(1) of the German Civil Code (BGB), which states that the creditor may demand performance immediately if a time for performance is neither fixed nor determinable from the circumstances. Since the settlement contained no specific due-date provision, the severance was immediately due. The employer’s argument that accounting and payment of labor court settlements typically occur with the next available payroll run was rejected. More on severance pay for operational termination.
Legal Basis: Section 271 BGB and the 14-Day Period
Section 271(1) BGB provides that performance may be demanded immediately if a time for performance is neither fixed nor determinable from the circumstances. This also applies to court settlements governing severance pay. Severance pay is therefore immediately due as a matter of principle, unless the settlement contains a specific due-date provision. In practice, a reasonable accounting period of 14 days is often recognized to give the employer sufficient time for payroll processing.
Employees should ensure that the settlement includes a clear due-date provision to avoid misunderstandings. If no such provision is made, the severance is immediately due and can be enforced accordingly. For further information on severance pay after summary dismissal, you can read here.
Why the Common Practice “With the Next Payroll Run” Is Wrong
Many employers argue that severance payments should only fall due with the next available payroll run. This practice is not prescribed by law and does not reflect the legal position. The LAG Lower Saxony has now clarified that such a practice does not apply automatically if the settlement contains no specific due-date provision. Employees therefore have the right to demand immediate payment of their severance.
The immediate due date of severance pay can be of great importance for employees, especially when they need to plan their finances quickly. If you are negotiating a severance package, you should ensure that the due-date provision is clear and unambiguous. For further tips on negotiating severance pay, you can read here.
Immediate Enforceability: What Does This Mean for Employees?
The LAG Lower Saxony’s decision means that employees can demand their severance immediately and, if necessary, enforce it if the settlement contains no specific due-date provision. This is an important clarification that gives employees more certainty and planning security. If the employer does not pay the severance voluntarily, employees can initiate enforcement proceedings to obtain their money.
It is important that employees know their rights and, if necessary, seek professional legal assistance. A specialist lawyer for labor law can help you enforce your severance and ensure that the due-date provision is clear and unambiguous. For further information on the immediate enforceability of severance payments, you can read here.
Tips: How to Govern the Due Date of Your Severance in the Settlement
To ensure that the due-date provision for your severance is clear and unambiguous, you should observe the following tips:
- Clear due-date provision: Ensure that the settlement contains a clear due-date provision. If no provision is made, the severance is immediately due.
- Immediate payment: Demand immediate payment of the severance if the settlement contains no specific due-date provision.
- Legal assistance: Seek professional legal assistance if needed to enforce your severance and ensure that the due-date provision is clear and unambiguous.
- Enforcement proceedings: If the employer does not pay the severance voluntarily, you can initiate enforcement proceedings to obtain your money. For further information on enforcement of severance payments, you can read here.
Conclusion: Clear Rights Regarding Severance Payments
The LAG Lower Saxony’s decision clarifies that severance pay agreed in a settlement is immediately due if no specific due-date provision is included. This gives employees more certainty and planning security when negotiating and settling their severance. If you are negotiating a severance package, you should ensure that the due-date provision is clear and unambiguous, and seek professional legal assistance if necessary. RechtStark can support you with the financing of a potential legal dispute to enforce your claims. For further information on the financing of unfair dismissal and severance claims, you can visit our website.
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.