End of Employment Contract: What Severance Pay Applies by Country?

In France, we distinguish between fixed-term contracts (CDD) and permanent contracts (CDI).

When a CDD reaches its end, the employee is entitled to a “precarity bonus.” Its main purpose is to compensate for the instability of their situation due to the use of a fixed-term contract. It is at least equal to 10% of the total gross salary paid to the employee during the contract, but this amount can be limited to 6% if a collective agreement provides for it (other benefits must then be offered to the employee, notably preferential access to professional training).

Note that this precarity bonus is not always owed. For instance, the employer is not required to pay it in cases of: hiring on a CDI at the end of the CDD, refusal of a CDI offered to the employee for the same or a similar position with at least equivalent pay, gross misconduct, force majeure, CDDs for specific temporary usage, subsidized contracts, contracts for which the employer has committed to providing additional professional training, contracts concluded with young people during school or university holidays, or seasonal contracts.

Regarding the end of a CDI, only dismissal gives rise to compensation, except in cases of serious or gross misconduct by the employee. To qualify, the employee must have at least 8 months of uninterrupted seniority with the same employer. This compensation amounts to ¼ of a month’s salary per year of service for employees with up to 10 years of seniority, and 1/3 of a month’s salary per year after 10 years.

Also, if your employer waives your notice period (asks you not to come to work), they are required to pay you a compensatory notice indemnity.

For temporary workers, the rules are slightly different. At the end of each assignment, the temporary employee receives, in addition to their final salary, an end-of-assignment indemnity. This is at least 10% of the total gross remuneration, including contract renewals. It is not owed in cases of immediate hiring on a CDI with the client company after the assignment, waiver of additional training by the client company, early termination initiated by the employee, early termination by the employer for gross misconduct or force majeure, and seasonal contracts.

Note that collective agreements may provide more favorable provisions. It is therefore recommended to consult the texts applicable to your company.

In Germany, CDDs (befristeter Vertrag) and temporary work (Zeitarbeit) do not entitle employees to any end-of-contract compensation. At the end of a contract or assignment, you are only entitled to your last salary and payment for unused vacation days.

For permanent contracts (Unbefristeter Vertrag), severance pay is not mandatory but can be negotiated in the context of a mutually agreed termination (Aufhebungsvertrag). In this case, the amount usually ranges between 0.5 and 1 month’s gross salary per year of service.

By exception, in the case of economic dismissal, the employer may offer severance (typically 0.5 month’s salary per year of service) provided you waive the right to contest the dismissal in court.

However, as in France, more favorable measures can be established by agreement. Certain sectors (metallurgy, chemicals, etc.) have highly protective agreements, called Tarifverträge, which can provide for higher severance or more favorable departure conditions than the law.

In Luxembourg, neither CDDs nor temporary work entitle employees to severance pay. Negotiations with your employer are still always possible.

Dismissal with notice for a CDI does entitle employees to severance based on seniority, except in cases of serious misconduct. Employees with less than 5 years of seniority receive no compensation. Employees with 5–10 years of service are entitled to 1 month’s salary, 10–15 years: 2 months, 15–20 years: 3 months, 20–25 years: 6 months, 25–30 years: 9 months, and from 30 years onward: 12 months’ salary. Again, your employment contract or collective agreement may provide more favorable terms.

However, if you are hired by a French temporary employment agency for an assignment in Luxembourg under a posting arrangement, French law applies, and you could receive severance pay.

Belgian law also does not require end-of-contract or assignment indemnity at the end of a CDD or temporary assignment. However, a year-end bonus may be granted if provided for in a collective agreement or employment contract. If applicable, it can be paid pro-rata for the period worked, including in the case of departure during the year, according to the applicable conditions.

When an employer dismisses an employee, the principle is that notice compensation is only due if the employer chooses to waive the employee’s notice period. This compensation then corresponds to the salary the worker would have received if they had worked their notice. However, in the case of dismissal for serious misconduct with immediate effect, no notice indemnity is due.