Will my severance pay be deducted from my unemployment benefits?
July 8, 2024 | 50,00 EUR | answered by Edith Hartmann
Dear tax advisor,
I am about to sign a termination agreement with my employer and will receive a severance payment. However, I am concerned about whether this severance payment will be deducted from my unemployment benefits.
Background: After many years of service, I have decided to leave the company and pursue a new career path. My employer has offered me a severance payment, which I would like to accept. At the same time, I plan to register as unemployed and apply for unemployment benefits until I find a new job.
My concerns revolve around the possibility that the severance payment could affect my unemployment benefits, leading to financial losses. I want to ensure that I consider all legal regulations and possibilities to optimize my financial situation.
Therefore, my question to you is: Will my severance payment be deducted from my unemployment benefits? If so, are there ways to avoid or minimize this? I would greatly appreciate your support and advice on this matter.
Thank you in advance.
Best regards,
Rolf Zimmermann
Dear Mr. Zimmermann,
Thank you for your inquiry regarding the impact of your severance payment on your unemployment benefits. This is an important issue that affects many employees who find themselves in a similar situation to yours.
In general, a severance payment is taken into account when calculating unemployment benefits, as it is a financial benefit that you receive from your employer as part of a termination agreement. This means that your severance payment may result in a reduction or even a temporary suspension of your unemployment benefits. It is important to be aware of this in advance in order to make appropriate financial plans.
However, there are ways to avoid or minimize the impact of the severance payment on your unemployment benefits. One option is to agree to receive the severance payment in installments rather than as a lump sum. This way, you could continue to receive unemployment benefits for a longer period of time without an immediate offset of the severance payment.
Another option is to use the severance payment for specific purposes that are not directly related to unemployment. For example, you could use the payment for further training, retraining, or starting a business to improve your professional situation. In this way, the severance payment could be seen as an investment in your future career rather than as income that is deducted from your unemployment benefits.
It is important to consult with your tax advisor or an employment law expert in advance to find the best solution for your individual situation. Each case is unique and requires a customized solution.
I hope this information is helpful to you and assists you in making your decision. If you have any further questions, please do not hesitate to contact me.
Kind regards,
Edith Hartmann
