A landmark decision from Germany’s Federal Fiscal Court (Bundesfinanzhof) on 5 February 2026 is reshaping how companies plan for restructurings. Provisions for early-retirement models can now be booked as soon as the entitlement is written into the employment contract. An individual release agreement is no longer required. For employers, that makes severance pay more predictable and long-term financial planning easier.
The ruling arrives as a new report paints a stark picture of the negotiating gap between companies and workers. According to the 2024 Kündigungsreport, 62 percent of dismissed employees accept the first severance offer. More than a quarter sign the agreement on the spot, during the termination meeting. Only 16 percent reject the initial draft and try to improve the terms.
Almost half of all workers who lose their job receive no severance at all, the report shows. In small businesses, the figure shoots to about 60 percent. The statutory baseline is half a month’s salary per year of service, but bonuses, target agreements and company-car clauses often add substantial bargaining leverage – leverage that many employees never use.
Three high-profile cases illustrate how severance and power struggles are playing out across German industry. In Cologne, AWB Köln is parting ways with both managing directors, Thomas Thalau and Uwe Unterseher-Herold, over strategic differences. They must leave by 30 September 2026; an interim management team will take over. The company posted a surplus of 22 million euros in 2025. A search committee is now looking for permanent successors.
At Volksbank Köln-Bonn, a board member has been suspended following an external special audit. The reason cited is ties to a credit-lending affair linked to organized crime. The bank stresses that it is cooperating with the Düsseldorf public prosecutor’s office and that the presumption of innocence applies.
Volkswagen, meanwhile, is locked in a boardroom battle over the appointment of a new human-resources director. A decision was postponed on 9 July. Worker representatives are blocking the nomination of a new HR chief, and are making their approval conditional on the creation of a technology-board position. The company plans to shrink its executive board from eight to four portfolios, but the clash between labor and ownership could derail the entire restructuring.
In the automotive-supplier sector, the situation is turning confrontational. Magna is closing its plant in Dorfprozelten by mid-2027, eliminating more than 200 jobs. Unions accuse the company of a breach of trust after a 2023 commitment to keep the site open was abandoned. Social-plan and severance negotiations have now begun.
Legal experts warn that employees often overlook their rights. A unilateral suspension imposed by the employer is only valid if a legitimate interest exists; workers have a fundamental claim to continue working. Yet precisely such suspensions can open the door for severance talks. When target agreements become impossible to meet because of a work ban, claims for damages may arise – potentially amounting to thousands of euros. The new court ruling strengthens companies’ ability to set aside funds early, but it does not change the basic arithmetic: those who sign without a fight are likely giving up money they could have kept.
