Severance pay: legal minimums by country (2026 reference)

60-Second Summary

The US is the outlier — no federal statutory severance. Almost everywhere else, severance is a legal floor, not a goodwill gesture.
Nepal: Labour Act 2017 — 1 month's wages per year of service for retrenchment, plus 1 month notice or pay in lieu.
India: Industrial Disputes Act — 15 days' average pay per completed year of service for workmen with 240+ days/year, plus 1 month notice.
EU floor is roughly 1 month notice + 1 month pay per year of service, with wide variance (Germany higher in practice, France formulaic, UK lower statutory but higher contractual).
Practical employer floor is almost always 1.5–2× statutory minimum to avoid wrongful-termination claims, especially for senior staff.

Severance law is the most misquoted area of HR. Founders assume their home-country rules apply globally; HR teams default to a one-size policy. Neither survives the first cross-border layoff. This is the legal floor in 18 jurisdictions — what statute requires, what employers actually pay, and where the floor is misleading.

Reference only — not legal advice

Statutory minimums change. Employment contracts, collective agreements, and case law often impose higher obligations. Always confirm with local counsel before terminating an employee or running a RIF. Figures below are accurate to Q2 2026 to the best of our research.

How to read this table

Notice = statutory minimum notice period the employer must give (or pay in lieu).
Severance = statutory minimum lump sum on involuntary separation, expressed per year of service.
Cap = where statute imposes a maximum.
Cause = whether the rule applies only to no-cause / redundancy terminations (not gross misconduct).

The table

Statutory minimums Q2 2026. Contracts, collective agreements, and case law frequently raise the floor.

Country	Notice (min)	Severance formula	Cap	Applies to
Nepal	30 days	1 month wages × years of service	No statutory cap	Retrenchment / redundancy
India	30 days (Industrial Disputes Act)	15 days avg pay × completed years	No cap (workmen)	Workmen with 240+ days/yr, retrenchment
Bangladesh	60–120 days	30 days basic × years of service	No cap	Retrenchment
Sri Lanka	Notice per contract	Termination of Employment Act formula (1–2.5 months/year by tenure)	No cap	Companies with 15+ employees
Pakistan	30 days	30 days wages × years (Workman classification)	No cap	Workmen, retrenchment
Philippines	30 days	1 month or ½ month × year (whichever higher), reason-dependent	No cap	Authorized cause
Indonesia	Per Cipta Kerja law	0.5–9× monthly wage by tenure + long-service + compensation	Capped by formula	Most terminations
Singapore	1 day–4 weeks (by tenure)	Not statutory; market is 2 weeks–1 month × year	Contractual	Employees with 2+ years
United States	0 (federal) — WARN Act 60 days for 100+ employee RIFs	$0 statutory	—	At-will; WARN for mass layoffs only
Canada	1–8 weeks (statutory) + common law reasonable notice	Statutory + common law (often 1 month / year, cap ~24 months)	Common law: ~24 months	All non-cause terminations
Mexico	None (constructive)	3 months + 20 days × year + seniority premium	No cap	Unjustified dismissal
United Kingdom	1 week / year (statutory min, cap 12)	Statutory redundancy: 0.5–1.5 weeks × year by age	£21,000 (2025/26)	2+ years' service, redundancy
Germany	4 weeks → 7 months (by tenure)	Not statutory; courts award 0.5 month × year (Abfindung norm)	No cap (case-by-case)	Operational dismissals
France	1–3 months	0.25–0.33 month × year (statutory) + collective bargaining	No cap	Non-fault dismissal, 8+ months service
Spain	15 days	20 days × year (objective) or 33 days × year (unfair)	12 months (objective) / 24 months (unfair)	Most terminations
Netherlands	1–4 months	Transitievergoeding: 1/3 month × year	No cap (capped at €94,000 or 1 yr's pay)	All dismissals
UAE	30 days	21 days basic × first 5 years, 30 days × subsequent years	2 years' wages	1+ year service
Saudi Arabia	30–60 days	½ month × first 5 years, 1 month × subsequent	No cap	1+ year service

Deep dive: South Asia

Nepal

Under the Labour Act 2017, redundancy (retrenchment) triggers: (a) 30 days' written notice or pay in lieu, (b) severance equal to one month's wages per completed year of service, and (c) consultation with the labour office and trade union where applicable. Misconduct dismissals follow a separate process with a written warning regime; severance is not owed. Section 145 of the Act governs the calculation. In practice Kathmandu employers pay closer to 1.5× the statutory floor on white-collar redundancies to avoid Labour Court claims, which average 9–14 months to resolve.

India

The Industrial Disputes Act, 1947 (Section 25F) requires 15 days' average pay per completed year of service for 'workmen' with 240+ days of service in the preceding 12 months, plus one month's notice or pay in lieu. The definition of 'workman' excludes managers, supervisors, and most senior roles — meaning the statute does not cover the majority of corporate India. For non-workmen, severance is contractual and the market floor is typically 1–3 months total pay, with VRS schemes paying significantly more.

Deep dive: Europe

Germany

Germany has no statutory severance for ordinary terminations — instead it has Kündigungsschutzgesetz (Protection Against Unfair Dismissal Act), which makes terminating an employee with 6+ months' tenure at a 10+ employee company very difficult. In practice, employers negotiate Aufhebungsverträge (termination agreements) with severance averaging 0.5 month per year of service — sometimes higher for senior staff or older workers. The German labour courts will hear the case if you don't settle, which is why most don't reach court.

France

France distinguishes between 'licenciement pour motif personnel' (personal reasons) and 'licenciement pour motif économique' (economic reasons). The statutory minimum is 0.25 month's salary per year for the first 10 years and 0.33 month thereafter, payable after 8 months' service. Collective bargaining agreements (which cover ~98% of French employees) almost always raise this. Add notice periods of 1–3 months and PSE (collective dismissal plan) obligations for layoffs of 10+ employees in 30 days.

United Kingdom

Statutory redundancy pay is modest — 0.5 to 1.5 weeks per year of service depending on age, capped at 20 years and a weekly maximum (£700 in 2025/26 → £21,000 total max). Most professional UK employees have contractual severance well above this. The real risk in the UK is not statutory pay but unfair dismissal claims (up to £115,000) and discrimination claims (uncapped), which is why settlement agreements are nearly universal in white-collar redundancies.

Practical employer floor

The 1.5× rule

Across most jurisdictions, employers pay 1.5–2× the statutory minimum on a no-fault redundancy. Two reasons: (1) it buys a signed release and waiver of claims, (2) it preserves employer brand among remaining staff and the local hiring market. The exceptions are the US (no statute, pay is purely market — typically 2 weeks per year up to 6 months) and Singapore (no statute, market is 2 weeks–1 month per year).

Market practice for professional roles, 2026. Smaller companies and non-professional roles often pay closer to statutory minimum.

Country	Statutory	Typical actual paid (no-fault)
Nepal	1 month / year	1.25–1.5 months / year + signed release
India (non-workman)	Contractual only	1–3 months total + notice
United States	$0	2 weeks / year, 4 weeks min, often capped at 26 weeks
UK	≤£21,000	1 month / year + statutory + outplacement
Germany	0	0.5 month / year (Aufhebung norm)
France	Formula	Statutory + 1–6 months negotiation
UAE	21–30 days / year	Statutory + 1 month gesture for senior

What this doesn't cover

Notice for resignation (employee → employer) — different rules in most jurisdictions.
Pension / gratuity / provident fund balances — separate statutory schemes (Nepal PF, India EPF + Gratuity, UAE end-of-service, etc.).
Unused PTO encashment — usually mandatory; not part of severance.
Health insurance continuation (COBRA in the US, similar elsewhere).
Equity and vesting acceleration — purely contractual.
Garden leave and non-compete buyouts — case-by-case.
Discrimination, retaliation, and wrongful-termination damages, which can dwarf statutory severance.

FAQ

Frequently asked questions

Can we lower severance below statutory minimum with a signed release?

No. Statutory minimums are a floor — a release can waive additional claims but cannot waive statutory pay. A release that purports to do so is unenforceable in every jurisdiction in this table.

What about for-cause / misconduct terminations?

Most jurisdictions exempt gross misconduct from statutory severance, but require a documented disciplinary process and proportionality. The bar for 'for cause' is much higher than US employers typically assume — confirm with local counsel before invoking it.

Does an EOR (Deel, Rippling, Remote) cover this?

Yes — but the EOR will charge the severance back to you, and they will insist on local statutory compliance even when your home-country instincts say 'just pay 2 weeks.' Budget accordingly.

What's the most expensive jurisdiction to terminate in?

Probably Indonesia or Mexico for long-tenured employees, where the formulas stack (notice + severance + long-service + seniority premium). Single-employee terminations can exceed 24 months of pay.

What's the cheapest?

The United States, by an order of magnitude. This is why US-HQ founders dramatically under-estimate global severance budgets — the home reference point is wrong.

Do these rules apply to contractors?

No — but misclassification risk is high. If a 'contractor' fails the local employee-classification test (often called 'control + integration' or 'IR35' or 'dependent contractor'), back-pay severance, taxes, and penalties stack. Several jurisdictions reclassify automatically after 6–24 months.