- It depends on why employment ends. Several countries pay only on redundancy or dismissal without cause (Australia, South Africa, Poland, Hong Kong's severance payment), while others pay on any termination, such as India's gratuity after 5 years, the UAE's end-of-service gratuity and Italy's TFR.
- Some countries fund it as you go: Austria's employer pays 1.53% of pay into a severance fund each month, and South Korea requires a retirement benefit scheme.
- Some have no statutory severance: in New Zealand, redundancy compensation is payable only if the employment agreement provides for it.
- Through an EOR, severance is a cost of the hire you pay when it ends. Ask how the provider bills it, and budget for it before you hire. For notice, see notice periods by country.
| Country | What the law requires | Law |
|---|---|---|
| Argentina | After the trial period, one month's salary for each year of service or fraction over three months, with a minimum of one month. The base is the best normal, regular monthly pay in the last year, excluding non-monthly items such as the aguinaldo and vacation pay, capped at three times the average salary of the applicable collective agreement (but never below 67% of the employee's own pay). Since the 2026 reform, collective agreements can replace it with a severance fund, and it is the only compensation for dismissal without cause; dismissals found discriminatory owe an extra 50–100%. | Ley de Contrato de Trabajo (Law 20.744) |
| Australia | NES redundancy pay at base rate: 4 weeks (1–2 years' service), 6 (2–3), 7 (3–4), 8 (4–5), 10 (5–6), 11 (6–7), 13 (7–8), 14 (8–9), 16 weeks (9–10 years), falling to 12 weeks from 10 years. Paid on top of notice and unused leave. Some awards set their own scheme, and some employers and employees are exempt. | Redundancy pay |
| Austria | Under the 'new severance' system, the employer pays 1.53% of pay, including special payments, into an employee severance fund each month, instead of paying severance itself when employment ends. | Arbeitsbehelf 2026 für Dienstgeberinnen und Dienstgeber |
| Brazil | Dismissal without just cause is permitted, but the employer must pay notice (or pay in lieu) and deposit a penalty of 40% of all FGTS deposits made during the employment, updated with interest, into the employee's FGTS account, plus accrued 13th salary and vacation. | Lei nº 8.036/1990 (FGTS) |
| Canada | Owed when employment is severed and the employee has worked for the employer for 5 or more years (all time with the employer counts, continuous or not), if the employer has a global payroll of at least C$2.5 million or severed 50 or more employees in six months because all or part of the business permanently closed. The amount is regular wages for a regular work week times completed years of service plus completed months of an incomplete year ÷ 12, up to 26 weeks. Notice weeks, worked or paid in lieu, count toward service. It is on top of termination notice, and an employee who resigns with 2 weeks' written notice during the statutory notice period keeps the right to it. | Your guide to the Employment Standards Act: Severance pay |
| Colombia | An employer can end a contract without just cause by paying an indemnity. Indefinite contracts, salary under 10 minimum wages: 30 days' salary for the first year of service, plus 20 days for each further year (pro-rated). Salary of 10 minimum wages or more: 20 days for the first year, plus 15 days for each further year. Fixed-term contracts: the salary for the rest of the agreed term (for contracts tied to a specific job, at least 15 days). The same indemnity is owed if the employee resigns for a just cause attributable to the employer. | Código Sustantivo del Trabajo, art. 64 |
| Denmark | A salaried employee dismissed after 12 or 17 years of continuous employment receives severance of 1 or 3 months' salary respectively. | Funktionærloven (LBK nr 1002 af 24/08/2017) |
| France | A dismissal for personal reasons must have a real and serious cause and follow a formal procedure. After 8 months' uninterrupted service, an employee on a CDI dismissed other than for serious misconduct is entitled to severance of at least 1/4 month's salary per year of service for the first 10 years and 1/3 month per year after that. | Labour Code (Code du travail) |
| Hong Kong | Severance payment is due after 24 months' service on dismissal for redundancy; long service payment after 5 years on dismissal for other reasons (not serious misconduct) and in some other cases. Either is two-thirds of the last month's wages (capped at HK$22,500) per year of service, up to HK$390,000. | A Concise Guide to the Employment Ordinance |
| India | 15 days' wages for each completed year of service (or part above six months), payable on leaving after 5 years of continuous service, capped at ₹20 lakh. | Code on Social Security, 2020 (as on 21 November 2025) |
| Ireland | Statutory redundancy is two weeks' normal weekly pay per year of service plus one extra week, subject to a statutory cap on weekly pay (Unfair Dismissals Act 1977, s. 2; Redundancy Payments Act 1967, s. 7 and Schedule 3). | Minimum Notice and Terms of Employment Act 1973, Unfair Dismissals Act 1977 and Redundancy Payments Act 1967 (revised) |
| Italy | The accrued TFR is paid on any termination, including resignation (Codice Civile art. 2120). | CCNL Terziario, Distribuzione e Servizi (CNEL code H011) |
| Mexico | An employee dismissed without proven cause can choose reinstatement or three months' salary, plus back pay of up to 12 months if the employer loses the case. Where the employer is exempt from reinstating, including employees with less than a year's service and trusted (confianza) staff, it also owes 20 days' salary per year of service. A seniority premium of 12 days' salary per year applies on any dismissal. | Federal Labour Law (Ley Federal del Trabajo) |
| Netherlands | A dismissal at the employer's initiative carries a transition payment, unless the employee was seriously culpable, of one third of monthly salary per year of service, capped at €102,000 or one year's salary if higher (arts. 7:669, 7:671, 7:671a, 7:671b, 7:673). | Dutch Civil Code, Book 7, Title 10 (employment contracts) |
| New Zealand | Redundancy must be genuine and follow a fair process, including exploring redeployment. There is no statutory redundancy compensation; it is payable only if the employment agreement provides for it. | Redundancy |
| Philippines | Labor Code arts. 292(b), 294, 297 and 298. Authorised-cause dismissals need written notice to the employee and DOLE at least one month ahead, plus separation pay of at least one month's pay per year of service for redundancy, or half a month per year for retrenchment or closure not due to serious losses (minimum one month in each case). | Labor Code of the Philippines (renumbered, 2022 edition) |
| Poland | An employer giving notice must state a valid reason, for fixed-term as well as open-ended contracts. Employers with at least 20 employees must pay severance when dismissing for reasons not attributable to the employee: 1 month's pay with under 2 years' service, 2 months with 2–8 years and 3 months above 8 years, capped at 15 times the minimum wage. | Act on terminating employment for reasons not attributable to employees (Ustawa z dnia 13 marca 2003 r.) |
| Portugal | 'At-will' termination does not exist (arts. 351, 359, 367, 373). Collective dismissal carries compensation of 14 days' base pay and seniority payments per complete year of service, pro-rated for part years. Monthly pay counted is capped at 20 times the minimum wage, and the total at 12 months' pay or 240 times the minimum wage (art. 366). | Labour Code (Código do Trabalho), Law 7/2009, consolidated |
| Singapore | Employees with at least 2 years' service are eligible. The amount is whatever the contract or collective agreement provides, otherwise negotiated; the prevailing norm is 2 weeks to 1 month's salary per year of service (1 month in unionised companies). No CPF is payable on it. All salary, unused annual leave and notice pay are due on the last day. Applies to permanent staff and contract workers on terms of at least 6 months. | Responsible retrenchment |
| South Africa | An employee dismissed for operational requirements (economic, technological, structural or similar needs) is owed at least one week's pay for each completed year of continuous service. An employee who unreasonably refuses an offer of alternative employment loses the entitlement. | Basic Conditions of Employment Act, 1997 |
| South Korea | Employers must set up a retirement benefit scheme for employees with a year or more of service working 15 or more hours a week. Severance pay is at least 30 days' average wages for each year of service; under a defined contribution plan, the employer pays at least one twelfth of annual wages each year. | 근로자퇴직급여 보장법 (Act on the Guarantee of Employees' Retirement Benefits) |
| Spain | Dismissal must be disciplinary (serious, culpable breach) or on objective grounds. Objective dismissal requires written notice of the cause, 15 days' notice and compensation of 20 days' salary per year of service (max. 12 months' pay). If a court finds the dismissal unfair, the employer chooses between reinstatement with back pay and compensation of 33 days' salary per year of service (max. 24 months' pay) (arts. 52–54, 56). | Workers' Statute (Estatuto de los Trabajadores), consolidated text |
| United Arab Emirates | For expatriates with at least one year's continuous service: 21 days' basic salary for each of the first 5 years and 30 days for each year after, pro-rated for part years, capped at 2 years' wages and paid within 14 days of the end of employment. Emiratis receive pension benefits instead. | End of service benefits for workers in the private sector |
Is severance pay mandatory in Spain?
How much severance is paid in Brazil?
What is gratuity in India?
How is end-of-service gratuity calculated in the UAE?
Is there statutory severance in New Zealand?
- 1Argentina: Ley de Contrato de Trabajo (Law 20.744)
Argentina.gob.ar (InfoLEG)
Consolidated text including Law 27.802 (6 March 2026): trial period (art. 92 bis), aguinaldo (arts. 121–122), vacation (arts. 150–155), overtime (arts. 197 bis, 201), notice (arts. 231–233) and severance (art. 245).
- 2Australia: Redundancy pay
Fair Work Ombudsman
NES redundancy pay scale (4–16 weeks by service), what it is paid on, and award-specific schemes.
- 3Austria: Arbeitsbehelf 2026 für Dienstgeberinnen und Dienstgeber
Österreichische Gesundheitskasse (ÖGK)
Contribution groups and base rates (salaried employees: 39.05% total, 20.98% employer, 18.07% employee); BV contribution of 1.53% of monthly pay including special payments.
- 4Brazil: Lei nº 8.036/1990 (FGTS)
Presidência da República (planalto.gov.br)
Monthly FGTS deposit of 8% of remuneration, including the 13th salary; art. 18 §1: 40% penalty on dismissal without just cause.
- 5Canada: Your guide to the Employment Standards Act: Severance pay
Government of Ontario
Who qualifies for severance pay and how much.
- 6Colombia: Código Sustantivo del Trabajo, art. 64
Secretaría del Senado (Colombia)
Termination without just cause: indemnity scales as modified by Law 789 of 2002, art. 28.
- 7Denmark: Funktionærloven (LBK nr 1002 af 24/08/2017)
Retsinformation
Scope (§ 1), notice (§ 2), severance after 12 and 17 years (§ 2 a), unfair dismissal compensation (§ 2 b) and sickness (§ 5).
- 8France: Labour Code (Code du travail)
Légifrance
Current text of arts. L8241-1 (staff lending), L1221-2, L1242-8 and L1242-8-1 (CDI and CDD), L1221-19 and L1221-21 (probation), L3121-27 (35-hour week), L3141-3 (paid leave), L1234-1 (notice), L1232-1, L1234-9 and R1234-2 (dismissal and severance).
- 9Hong Kong: A Concise Guide to the Employment Ordinance
Labour Department
Continuous contract (from 18 January 2026), statutory holidays (15 from 2026, 16 from 2028, 17 from 2030), annual leave, sickness allowance, notice, severance and long service payment, and the abolition of MPF offsetting from 1 May 2025.
- 10India: Code on Social Security, 2020 (as on 21 November 2025)
India Code (Legislative Department)
s. 53 (gratuity), ss. 59–61 (maternity benefit), provident fund, ESI and other schemes.
- 11Ireland: Minimum Notice and Terms of Employment Act 1973, Unfair Dismissals Act 1977 and Redundancy Payments Act 1967 (revised)
Law Reform Commission (Revised Acts)
Minimum notice (1973 Act s. 4), one year's service for unfair dismissal (1977 Act s. 2), redundancy after 104 weeks at two weeks' pay per year plus one week (1967 Act s. 7 and Schedule 3).
- 12Italy: CCNL Terziario, Distribuzione e Servizi (CNEL code H011)
CNEL – Archivio dei contratti collettivi
Consolidated text (Testo Unico 30 March 2015, as deposited with the 2019 renewal): probation (art. 121), 13th and 14th salaries (arts. 220–221), notice (arts. 247–248). These articles were not among those amended by the 22 March 2024 renewal.
- 13Mexico: Federal Labour Law (Ley Federal del Trabajo)
Cámara de Diputados
Consolidated text, last reform DOF 14-05-2026: subcontracting (arts. 12–15), written conditions and contract duration (arts. 24, 35, 37), probation (art. 39-A), dismissal and compensation (arts. 47–50), working time, vacation, aguinaldo, PTU (art. 127) and seniority premium (art. 162).
- 14Netherlands: Dutch Civil Code, Book 7, Title 10 (employment contracts)
wetten.overheid.nl
Arts. 7:629 (sick pay), 7:634 (leave), 7:652 (probation), 7:668a (chain rule), 7:669–7:671b (dismissal), 7:672 (notice) and 7:673 (transition payment).
- 15New Zealand: Redundancy
Employment New Zealand (MBIE)
Fair process and redeployment; redundancy compensation only if stated in the employment agreement.
- 16Philippines: Labor Code of the Philippines (renumbered, 2022 edition)
Department of Labor and Employment (DOLE)
Arts. 83, 87, 93 (hours, overtime, rest days), 95 (service incentive leave), 106 (contracting), 292(b), 294, 296–298 (probation and termination).
- 17Poland: Act on terminating employment for reasons not attributable to employees (Ustawa z dnia 13 marca 2003 r.)
Kancelaria Sejmu (Sejm ELI)
Unified text (t.j. Dz. U. 2026 poz. 1195): severance of 1, 2 or 3 months' pay, capped at 15× the minimum wage (art. 8), for employers with 20+ staff including individual redundancies (art. 10).
- 18Portugal: Labour Code (Código do Trabalho), Law 7/2009, consolidated
Diário da República
Arts. 40 (parental leave), 112 (probation), 131 (training), 140–149 (fixed-term contracts), 168 (telework expenses), 203, 228 and 268 (working time and overtime), 234–239 (holidays and leave), 263–264 (allowances), 351–373 (dismissal and compensation) and 400 (resignation notice).
- 19Singapore: Responsible retrenchment
Ministry of Manpower
Retrenchment benefit eligibility, the prevailing norm and employer obligations.
- 20South Africa: Basic Conditions of Employment Act, 1997
South African Government
Department of Labour consolidated text as amended to 2002: hours (s9), overtime (s10), Sunday and holiday pay (ss16, 18), annual leave (s20), sick leave (s22), notice (s37) and severance (s41).
- 21South Korea: 근로자퇴직급여 보장법 (Act on the Guarantee of Employees' Retirement Benefits)
Ministry of Government Legislation (law.go.kr)
Retirement benefit scheme required for employees with a year's service and 15+ weekly hours (art. 4); severance of 30 days' average wages per year (art. 8); DC contributions of at least 1/12 of annual wages (art. 20).
- 22Spain: Workers' Statute (Estatuto de los Trabajadores), consolidated text
Boletín Oficial del Estado (BOE)
Arts. 8.3 (contract notification), 14 (probation), 15 (fixed-term contracts), 31 (extra payments), 34 (working time and time recording), 37.2 (public holidays), 38 (annual leave), 43 (worker transfer), 48.4 (birth leave), 49.1.d (resignation), 52–54 and 56 (dismissal). Consolidated text updated 3 October 2026.
- 23United Arab Emirates: End of service benefits for workers in the private sector
The Official Portal of the UAE Government (u.ae)
Article 51 gratuity (21 days a year for the first 5 years, 30 days after, capped at 2 years' wages) and the Savings Scheme (5.83% or 8.33% of basic salary a month).