Is a severance payment credited against my unemployment benefits?
December 9, 2023 | 40,00 EUR | answered by Lorenzo Zimmermann
Dear tax advisor,
My name is Christian Meier and I recently received a severance payment from my former employer. Now I am concerned whether this severance payment will be deducted from my unemployment benefits and what impact this could have on my financial situation.
My previous employment contract was terminated due to operational reasons and my employer offered me a severance payment. I accepted this severance payment as I anticipated it would take some time to find a new job. Now I am relying on unemployment benefits and I am wondering if the severance payment will affect my unemployment benefits.
I am worried that the severance payment could reduce my entitlement to unemployment benefits and that I could face financial difficulties as a result. I have heard that in some cases, severance payments are deducted from unemployment benefits, but I am unsure if this applies in my situation.
Could you please explain to me whether and to what extent my severance payment will be deducted from my unemployment benefits? Are there any ways I can prevent or at least minimize this? I would greatly appreciate your support and professional advice on this matter.
Thank you in advance.
Best regards,
Christian Meier
Dear Mr. Meier,
Thank you for your question regarding the offsetting of your severance payment against your unemployment benefits. It is understandable that you are concerned about your financial situation and want to clarify whether the severance payment will affect your entitlements.
Generally, a severance payment is usually offset against unemployment benefits. This means that the severance payment is considered as income and may therefore affect your entitlement to unemployment benefits. The severance payment is offset against the benefit entitlements that are paid for the period for which the severance payment is intended.
However, there are some ways in which you can avoid or at least minimize the offsetting of the severance payment against your unemployment benefits. One possibility would be to divide the severance payment and not receive it all at once, but in installments over a longer period of time. This way, the severance payment cannot be considered as a one-time income and will not be fully offset against the unemployment benefits.
Another option would be to use the severance payment for specific purposes that are not counted as income. This could be, for example, for further training measures or starting a self-employment. In this case, the severance payment would not be considered as income and therefore not offset against the unemployment benefits.
However, it is important that you seek individual advice in your specific case, as the regulations on the offsetting of severance payments against unemployment benefits can depend on various factors, such as the amount of the severance payment, the duration of employment, and other personal circumstances.
I recommend that you consult a tax advisor or labor lawyer to discuss your specific situation and receive tailored advice.
I hope that this information has been helpful to you and I am available for any further questions.
Sincerely,
Lorenzo Zimmermann
