The Volkswagen Group has begun to inform its staff about the amount of compensation that will be paid under the new savings program. According to information from “Wirtschaftswoche”, the lowest severance payment could be 17,700 euros and the highest could be 404,700 euros.
High earners with 20 years of service at the company receive the highest severance pay
This maximum amount applies to VW-Employees who have worked at Volkswagen for at least 20 years and are within the highest salary level “plus rate”. A special incentive for employees who have been with the company for more than five years and accept the severance offer within two weeks would be the so-called turbo bonus of an additional 50,000 euros. Both bonuses together amount to 454,700 euros.
To put it into perspective: according to the German Pension Insurance, the average salary of all employees subject to insurance is currently 45,358 euros per year. Average earners would have to work for a good ten years to receive VW's maximum severance pay.
The regulation of severance pay is subject to the principle of double voluntariness. According to the report, this means that both the company and the employee must agree to the dismissal. It is not yet clear what the conditions will be for the managers. According to the report, experts suspect that severance payments could be even higher.
VW wants to save ten billion euros in costs
The severance pay program is part of a broader workforce reduction program that Volkswagen began last week. The focus is on expanding the partial retirement and severance pay program, which is scheduled to begin at the end of April.
VW wants to use the program to reduce its (personnel) costs. Volkswagen AG aims to save up to 10 billion euros by 2026.
VW is one of the largest German companies
Volkswagen is one of the largest German companies. At the end of 2023, the group had 684,000 employees. The entire company achieved sales of around 322 billion euros in 2023. Consolidated profit reached 17.9 billion euros. Each eligible employee received a bonus of 4,735 euros for 2023.
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