Retirement severance — when it is due and how much

Retirement severance is a one‑off benefit paid when employment ends in connection with retirement. The key is the link between termination and retirement — without it, the benefit is usually not due. Below is a practical explanation of when the retirement severance applies and how the amount is determined.

When retirement severance is due

In general, the benefit is due when the employment ends because the employee is retiring. This typically means the employee meets retirement conditions and the contract ends at that time. Merely reaching retirement age is not enough; the formal transition to retirement and termination of employment are decisive.

Amount and calculation rules

The amount is often defined by the Labour Code, but it can also be set by a collective agreement, internal rules or the contract. In practice it is most often one month’s pay, although some sectors offer more favorable terms.

If your employer has special rules, check them carefully — they can provide a higher amount or additional conditions.

Retirement severance and disciplinary dismissal

After a disciplinary dismissal, retirement severance is usually not due, because the termination is based on employee fault and is not linked to retirement. Exceptions may follow from a collective agreement or contract.

Retirement severance and sick leave (L4)

Being on sick leave does not automatically exclude retirement severance. What matters is whether the employment ends in connection with retirement. If so, the benefit may still apply even during L4.

When retirement severance is not payable

Most common reasons:

• no formal retirement at the time of termination,
• termination for other reasons (e.g., disciplinary),
• retirement severance already paid earlier (usually a one‑off benefit).

Documents and procedure

1. Confirmation of retirement entitlement (e.g., ZUS decision).
2. Termination document.
3. Check internal rules or a collective agreement for the amount.

Example

An employee ends employment by mutual agreement and retires. Retirement severance is paid in the amount defined by the employer’s rules — most often one month’s pay.

Calculate in practice

Use the severance calculator, select “retirement” and enter the number of months from your employer rules. You’ll get an indicative result to compare with company policy.

See also

• Severance on dismissal — when it is due and how much
• L4 and severance — when is it due?

Sources

• Labour Code (ISAP)
• PIP — termination of employment contract