Option of reducing cash benefits at the time of terminating employment

An employer may reduce severance pay, compensation or other cash benefits disbursed in connection with terminating employment to 10 times the minimum wage for work. This pertains to benefits stemming from legal regulations.

Statutory severance pay for terminating an employment contract for reasons not attributable to an employee is undoubtedly such a benefit. To date, it has been capped at 15 times the minimum wage. 

Severance pay or compensation stipulated in a collective bargaining agreement may also be reduced on these grounds. For a collective bargaining agreement is treated as the law applicable to an employer. 

This option does not extend to severance pay or compensation stipulated in an employment contract or in agreements concerning its termination.  

What about civil law contracts? 

It is also possible to reduce benefits in a mandate agreement or some other service agreement to which the regulations concerning mandate agreements apply or in connection with ceasing to serve in a given capacity for pay (e.g. in a management board). In practice, however, there will be fewer such cases because there are no regulations calling for the payment of benefits in these instances. 

Moreover, the option to reduce the benefits paid in an agency agreement has been precluded.

Term of validity of these legal regulations

These regulations are applicable solely for the duration of the epidemiological threat or the epidemic announced on account of COVID-19.

More in the newsletter dedicated to HR law issues - PRO HR July 2020.