How to calculate severance pay: everything you need to know

What is the severance pay and when should I receive it?

A severance payment is a document that a company must provide when ending the employment relationship with an employee. This may occur as a result of voluntary resignation, termination of contract or dismissal.

This document must specify the exact amount that must be paid to the employee for the days worked before the end of the employment relationship. In other words, it shows the amount of money that the worker is entitled to receive according to the  Workers’ Statute .

Differences between severance pay and severance pay

When calculating a severance payment, this term is often confused with compensation in the event of dismissal. The truth is that both concepts turn out to be completely different.

The severance pay is a right of all workers, regardless of whether they were fired or the  type of dismissal applied. It includes voluntary resignation, dismissal, termination of contract and even retirement. Every employee must receive a severance pay at the end of their employment relationship with the company.

Compensation is a right of employees who have been dismissed without grounds, so that the dismissal has been declared unfair or void. However, this does not apply to  disciplinary dismissals .

Importance of severance pay at the end of an employment relationship

The severance pay is an important document for both employees and the company. It details the amounts to which the employee is entitled, so it must be calculated with great care.

When signing the termination of contract, the person accepts the amount presented and waives any future claims, unless irregularities in the calculation are proven. It also acts as proof that the employee received the money in full.

The document undoubtedly helps to maintain clarity and transparency between the company and its employee at the end of their relationship. It is even used as a requirement for the person to apply for unemployment benefits or carry out other similar administrative procedures.

Elements that make up the settlement

To understand how severance pay is calculated, you must first know what elements are taken into consideration. In general, each case is usually different, since it depends on the benefits that the employee has based on his/her activity in the company.

In this sense, the calculation of the elements of the severance pay is done in the same way, but the amounts can vary for each employee and also depend on the collective agreement. Let’s see then what the netherlands email list  components of the document are.

Daily salary pending

Initially, the severance pay amount corresponding to the days worked  lead nurturing: guide to nurturing your leads with email marketing and paid into Social Security after the last payroll has been paid must be calculated.

To do this, you need to identify the amount of money that corresponds whatsapp number  to each day of work, which is obtained by dividing your salary by 30. However, keep in mind that this may depend on the company’s payroll policy, and some companies may use actual calendar days of the month (28, 30 or 31 days). Then, you must multiply the result by the number of days worked in the current month.

Unused vacations

All employees are entitled to receive 30 days’ pay for their vacation, and if they have not enjoyed this right, it must be included in their severance pay at the end of the contract.

A rule of three must be followed to determine the number of vacation days that correspond to the worker according to the period of the year worked. All of this is illustrated below with several practical examples.

Extra payments

This includes all additional benefits or bonuses that the employee receives in addition to his or her base salary, such as a Christmas bonus. The idea of ​​the calculation is simply to find out how much money is due per day worked according to these bonuses. This only applies if the bonuses are not prorated throughout the year.

Overtime

Overtime is only applied if the employee uses this benefit and has to receive any unpaid amount. The lump sum is calculated by multiplying the additional hours worked by the hourly rate specified by the company and the collective agreement.

Compensation (if applicable)

Finally, any applicable compensation must be included. This refers to compensation that applies if we are talking about an objective dismissal, for economic, organizational or production reasons. It also applies to unfair dismissals or when the contract is terminated by mutual agreement.

Formula to calculate a severance payment

To understand how severance pay is calculated, it is best to look at the procedure through an example. Let’s imagine that a worker has a monthly salary of €2,000 and was fired from his job on October 20. The person received an additional payment of €1,500 every six months of the year as a bonus and had accrued but unused vacation time.

1. Pending salary

In this case, the calculation starts with the outstanding daily wage. We first need to know how much money the employee earned per day, dividing the €2000 by 30 days. This gives us a result of €66.6/day.

Since he was fired on October 20, it means that he has to receive payment for the last 20 days worked. The above amount must be multiplied by the number of days pending, which gives the following result: