Tips from an expert: Women receive lower severance payments than men: How to change that

This article is adapted from the business magazine Capital and is available here for ten days.

Tips from an expert: Women receive lower severance payments than men: How to change that

This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at www.capital.de. Like stern, Capital belongs to RTL Deutschland.

Even with similar jobs and similar résumés, women earn less on average than their male colleagues. This so-called gender pay gap is now quite well known - but there are differences between women and men not only in terms of salary: as a current survey shows, women receive almost a third less in severance pay than men: the difference in severance pay is almost twice as high as the difference in earnings, which has been 18 percent since 2020. However, with preparation and a good strategy, women can improve their negotiating position.

When women leave the company, they receive an average severance payment of around 6,300 euros, men 9,100 euros - a difference of 31 percent, shows the evaluation by the law firm Chevalier from 2023.

The reason for this also lies in the gender pay gap, says Nina Rummel, labor law specialist at Chevalier Capital. The severance payment amount is initially calculated based on the gross monthly salary, which, according to the Federal Statistical Office, was on average 18 percent lower for women than for men in 2023. The amount of the severance payment is also influenced by individual contractual agreements, the length of service, the reasons for terminating the employment relationship and the position in the company.

The severance payments can be higher if you have been with the company for a longer period of time or are laid off for operational reasons. Leadership and higher management positions are also often associated with better severance pay. Those who can present good arguments are often still able to negotiate, says Rummel. Women should also not automatically be satisfied with the first offer and should prepare well for the negotiation. The following is advisable:

In general, there is no legal right to severance pay. “In the law, this possibility is only indicated in one place, namely when the employee waives a claim for protection against dismissal,” said Alexander Bourzutschky, lawyer for labor and social law at the law firm Rödl and Partner, in a recent Capital interview. "This is where the so-called rule of thumb comes from: half a month's salary per year of employment. The employer can offer this voluntarily if, in return, the employee waives the right to sue for his job."

Rummel believes it is particularly important that women make the first suggestion in the negotiation in order to set an anchor point. You should also take into account that the employer will rarely say 'yes' to an offer directly. “He will usually want to renegotiate and reduce the amount,” says the specialist lawyer. “You should therefore think beforehand about what sum would be adequate and then start the negotiations at a higher rate.” To do this, it is advisable to consider the entire severance package, which can also include training offers, letters of recommendation or support in finding a job.

According to Bourzutschky, many people base the amount of severance pay on half a month's salary per year of employment - but this rule of thumb only applies to normal employees. “Managers then end up in completely different spheres,” he reports from experience.

The truth, however, is that women were less likely to be in leadership positions than men. As the analysis of the gender pay gap shows year after year, women are less likely to reach managerial positions, work in lower-paying jobs overall and are three times more likely to work part-time, which, in relation to gross monthly earnings, is the driver of earnings inequality and therefore also severance pay inequality.

“In industries that are characterized by lower wages and high fluctuation, severance payments also tend to be lower,” says Rummel, meaning, for example, the hospitality industry, retail or care. "Women, who often work part-time or in less secure employment relationships in these sectors, could experience lower severance pay."

However, things are looking better in the financial sector, the pharmaceutical industry and the IT industry, because on the one hand these sectors generally offer higher salaries and, given the shortage of skilled workers, also see severance pay as part of the incentive system. But these are exactly industries in which fewer women work.

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