Those who receive severance pay as employees must pay full tax on it. A not inconsiderable part of the severance pay is lost due to the tax liability – this dampens the joy about the compensation payment for many affected persons. As reduced taxation, the quintuple regulation reduce the tax deductions. We will tell you under what conditions you can use the quintuple rule in the case of severance pay, how to do it and when it makes sense to have the severance pay paid later by the former employer.
What is the rule of five and what is it for??
When an employment relationship ends, employers sometimes pay severance to former employees. The special payment can be agreed for example in the context of a termination agreement or a settlement. Also in the case of layoffs and extraordinary cancellations by the employee, employees have under certain conditions are entitled to receive compensation. For the departing employees, the transition is eased by the compensation payment, the loss of the job and the loss of the salary are compensated to a certain extent.