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Severance pay — a payment made when employment ends, usually in a layoff or redundancy — varies enormously by country, and there is no single global standard. Some countries mandate it by law based on tenure; others, like the US, have essentially no general legal requirement, leaving severance almost entirely to employer policy or individual negotiation.

How it varies by country

In the United States, federal law does not generally require severance pay at all (aside from specific situations like the WARN Act's notice requirements for larger layoffs) — any severance is a matter of company policy or a negotiated agreement. The United Kingdom has statutory redundancy pay for employees with at least two years' service, calculated using an age-banded formula (a set number of weeks' pay per year of service, higher for older age bands, up to a capped weekly amount and a maximum number of years counted). Germany has no blanket legal entitlement either, but a widely used benchmark in redundancy negotiations and works-council agreements is roughly half a month's salary per year of service. France and other EU countries generally have statutory minimum redundancy indemnities set in the labor code, scaling with tenure.

Statutory minimum vs. negotiated package

Even where a statutory minimum exists, many employees negotiate for more — particularly in exchange for signing a release of claims (waiving the right to sue). Extras commonly negotiated on top of any base severance include continued health coverage, accelerated vesting of unvested equity, a prorated bonus, positive reference language, and extended notice.

Common pitfalls

Assuming a US "market rate" (often cited informally as roughly one to a few weeks per year of service in voluntary corporate packages) applies everywhere is a mistake — it doesn't reflect true statutory entitlements in Europe, which can be considerably higher for long-tenured employees. Severance is also generally taxable income in most countries (sometimes at a different rate or with partial exemptions up to a threshold), and voluntary resignation typically forfeits any statutory redundancy entitlement, since those protections are usually tied to employer-initiated termination.