ARTICLE · 19 AUGUST 2026

Separating From High Earners: Why The Planned Reform In Germany Could Reduce Severance Payments

Littler Mendelson

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Germany's proposed employment law reform would allow employers to terminate high earners earning above EUR 177,450 annually in exchange for court-determined severance, even after losing unfair dismissal litigation.

GermanyEmployment and HR

Carolin Hartmann

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At a Glance

Beginning in 2027, employers in Germany may be able to terminate employment relationships with so-called high earners in exchange for court-determined severance.
This option is expected to be available even after an employer loses unfair dismissal litigation.
This ASAP discusses what the proposed reform could mean for companies.

What Is the German Federal Government Planning?

The starting point is the reform package titled, “Program for Growth and Employment,” adopted on July 2, 2026 by the German Coalition Committee of the CDU/CSU (conservative political party union) and SPD (social democratic political party). The package contains 34 measures. One of them concerns so-called high earners:

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