Legally mandated severance compensation increases with seniority

Quick info
Data type	Numeric
Scale	Metric
Value labels	Not applicable in the strict sense since the scale is quasi-metric, but for coding the following values were used for orientation: 1 = the statutory law provides increasing steps each year of service 0.67 = the statutory law provides increasing steps for each year of service but are capped 0.33 = the statutory law provides increasing steps only once 0 = the statutory law do not provides increasing steps / equal for all workers concerned New template for Version 2 adds: further gradations between 0 and 1 reflect changes in the strength of the law
Technical name	labor_redcomp_sen
Category	Labour and labour market
Label	Legally mandated severance compensation increases with seniority
Related indicators	Legally mandated notice period increases with seniority Seniority is a decisive redundancy selection criterion

This WoL indicator measures whether and in which steps the severance pay due upon termination of the labour contract increases with progressive length of service.

Labour law not only protects workers, but also creates segmentation, by privileging the standard employment relationship through higher standards of protection. The standard employment relationship is the classic model of the permanent, full-time employee with long-term employment with one employer. Other forms of work – part-time, temporary agency work, work under a fixed-term contract, frequent changes of employee – receive less protection, even though the employment relationships in which they are found already inherently entail greater social risks. This leads to a further disadvantage for employees who are already in a precarious position.

Length of service is a common factor used for prioritisation. However, the purpose of prioritisation is not to protect older employees, who are assumed to have a harder time finding a new job – after all, the prioritisation of length of service is almost always capped after about ten years. The situation of employees who have to change employers frequently is socially more precarious than that of those with many years of service. The purpose of prioritisation is thus evidently not to provide special protection, but to cement the standard employment relationship.

Employees are existentially dependent on the income from their employment relationship, so termination of this by the employer also means the termination of the employee's ability to make a living. A mandatory severance payment upon termination somewhat cushions the consequences for the employee and provides them with a financial bridge from which they can look for other paid work. The higher the severance payment to be made, the greater the protection.

Coding rules

The WoL is a leximetric dataset on individual employment protection. It quantifies the strength of the standard-setting, privileging, and equalising function of individual labour law (see Dingeldey et al. 2022). The scale ranges from "0" to "1" where "1" corresponds to statutory law that prescribes severance or redundancy payments in case of dismissal to increase for at least 15 years, while "0" corresponds to no legislation or no consideration of seniority for the determination of severance/redundancy payments. Coding instructions and description of indicators are laid down in a technical paper (Fechner/Carlino, forthcoming). For country-specific information see WoL documentation (forthcoming).

Bibliographic info

Citation: Irene Dingeldey, Heiner Fechner, Jean-Yves Gerlitz, Jenny Hahs, Ulrich Mückenberger, Worlds of Labour: Introducing the Standard-Setting, Privileging and Equalising Typology as a Measure of Legal Segmentation in Labour Law, Industrial Law Journal, Volume 51, Issue 3, September 2022, Pages 560–597, https://doi.org/10.1093/indlaw/dwab016

Related publications:

• Mückenberger, Ulrich, 1985. "Die Krise des Normalarbeitsverhältnisses - Hat das Arbeitsrecht noch Zukunft?" Zeitschrift für Sozialreform 31: 415-434; 457-475
• Mückenberger, Ulrich, and Simon Deakin. 1989. "From Deregulation to a European Floor of Rights: Labour Law, Flexibilisation and the European Single Market." Zeitschrift Für Ausländisches Und Internationales Arbeits- Und Sozialrecht 3: 153–207.
• Carlino, M., Fechner, H., & Schäfer, A. (2024). Using leximetrics for coding legal segmentation in employment law: The development and potential of the Worlds of Labour database. In I. Dingeldey, H. Fechner, & U. Mückenberger (Eds.), Constructing Worlds of Labour. Coverage and Generosity of Labour Law as Outcomes of Regulatory Social Policy. Palgrave Macmillan.

Misc

Project manager(s):
Responsible for data coding: Heiner Fechner (2018-2025)
Responsible for data editing and entry: Heiner Fechner (2024-2025), Andrea Schäfer (2021-2025), Jean-Yves Gerlitz (2018-2020)
Principal Investigators: Irene Dingeldey, Ulrich Mückenberger
Student assistants (2018-2025): Julia Bode, Jessica Bonn, Daniel Euler, Maxime Fischer, Jan-Christopher Floren, Jennifer Götte, Désirée Hoppe, Irina Kyburz, Alexandra Kojnow, Tarek Mahmalat, Karolin Meyer, Johanna Nold, Tanusha Pali, Johannes Ramsauer, Max Sudhoff, Kristina Walter, Caroline Zambiasi.

Data release:

• Version 0.001: Initial release

Revisions: The template has been revised in 2024, but coding for the completion of the revised dataset is still ongoing; values in WeSIS Version 0.001 correspond to the original template.

Sources

Own coding.