Compensations related to the end of an employment relationship

An employment relationship can end because of the expiry of a fixed term, because of notice given to terminate, or because of cancellation. An employment relationship can also be ended by mutual agreement between employee and employer concerning when, and on what terms. Sometimes the termination of an employment relationship can be legally disputed.

When your employment relationship ends, your employer might pay you not just the pay for your period of notice, but also additional compensation for the termination. If such compensation is not provided for by law or collective agreement, but is paid by the employer voluntarily or on the basis of an agreement between you and the employer, then that compensation will have an impact on when your right to a daily allowance will begin. The compensation you receive will be periodised as of the end of the employment relationship.

It does not matter what such compensation is called or when it is paid; what is essential is that it is related to the end of the employment relationship. The compensation may be severance pay, a support package, a ‘golden handshake’, an unwarranted pay rise or an extra bonus. The compensation may be paid in money or in kind, or may even comprise something like you being sold a car for less than its fair value. The compensation may also be training provided by the employer, if paid to you in money.