| Key Takeaways | |
| Only Taiwan and Hong Kong require statutory severance on redundancy: half a month's average wage per year in Taiwan's current pension system, capped at six months, and, after 24 months of service, two-thirds of a month's wages per year in Hong Kong, on wages capped at HKD 22,500 and a HKD 390,000 total. | |
| Singapore, the United States and Germany set no general statutory severance. A few US states, New Jersey among them, mandate it for mass layoffs. Singapore's tripartite norm is advisory, and Germany's Section 1a payment applies only if the employer offers it. | |
| Notice runs from none for an individual US dismissal to seven months in Germany after 20 years of service. Taiwan sets 10 to 30 days by tenure. | |
| Final pay is due immediately in Taiwan, on the day of dismissal in Singapore (within three working days if that is not possible), within seven days in Hong Kong, and immediately on a California dismissal. | |
| Exit filings have their own deadlines, from Taiwan's layoff report 10 days before departure to Singapore's IR21 for non-citizen employees and Hong Kong's IR56F and IR56G, each due a month before the last day or departure. | |
In This Guide
Take one employee in each of five countries: same role, same salary, five years of service, laid off because the role is no longer needed. In Taiwan, the law sets severance at two and a half months' average wage under the current pension system, plus 30 days' notice. In Hong Kong, it is HKD 75,000 before any Mandatory Provident Fund (MPF) offset for anyone earning HKD 22,500 a month or more. In Singapore and Germany, no statute fixes the amount, but a published norm or a statutory offer gives employers a figure to work from. In most of the United States, the legal minimum is nothing.
Severance pay by country ranges from a fixed statutory formula in Taiwan and Hong Kong to a norm, a state law or the employer's offer everywhere else.
Notice pay, unused leave, final pay deadlines and tax clearances also differ by country, and several carry fines when they run late. This guide compares severance pay by country alongside those rules, each checked against the statute or the government agency's own guidance in October 2026.
| Country | Reason needed to dismiss? | Employer notice | Statutory severance | Final pay deadline | Unused leave paid out? |
|---|---|---|---|---|---|
| Taiwan | Yes: one of five statutory grounds, or six misconduct grounds for dismissal without notice | 10, 20 or 30 days by tenure, from 3 months of service | Half a month's average wage per year, capped at 6 months (current pension system) | Wages at termination, no later than the agreed payday; severance within 30 days | Yes |
| Singapore | No stated reason generally required with notice; wrongful dismissal barred | As agreed; if the contract is silent, 1 day to 4 weeks by tenure | None; the advisory norm is 2 weeks to 1 month's salary per year of service, from 2 years of service | On the day of dismissal, or within 3 days; on the last day in a retrenchment | Yes, unless dismissed for misconduct |
| Hong Kong | No, for termination with notice; after 24 months, a dismissal without a valid reason can lead to a claim | As agreed, at least 7 days; 1 month if a monthly contract is silent | Two-thirds of a month's wages per year, capped (severance payment after 24 months, long service payment after 5 years) | Within 7 days; severance payment within 2 months of the employee's claim | Yes |
| United States | No in most states (at will); Montana requires good cause after probation | None for an individual dismissal; 60 days for layoffs covered by the Worker Adjustment and Retraining Notification (WARN) Act | None federally; states such as New Jersey and Maine mandate it for covered mass layoffs | Set by each state, from immediately to the next payday | Depends on the state |
| Germany | Yes: social justification after 6 months, in establishments with more than 10 employees | 4 weeks to 7 months by tenure | None; 0.5 month per year if offered under Section 1a | At the end of the last pay period | Yes |
The table compares the legal minimum for one employee laid off for redundancy, with no collective agreement and a contract that says nothing extra on notice or severance. Severance is in months of pay (average wage in Taiwan) unless shown in currency or weeks.
| Country | Severance after 2 years | After 5 years | After 10 years | Notice after 5 years |
|---|---|---|---|---|
| Taiwan (current pension system) | 1 month | 2.5 months | 5 months | 30 days |
| Hong Kong (salary HKD 22,500 a month or more, before any MPF offset) | HKD 30,000 | HKD 75,000 | HKD 150,000 | 1 month |
| Hong Kong (salary below HKD 22,500) | 1.33 months | 3.33 months | 6.67 months | 1 month |
| Singapore (tripartite norm, not law) | 4 weeks to 2 months | 10 weeks to 5 months | 20 weeks to 10 months | 4 weeks |
| United States (federal law, individual dismissal) | None | None | None | None |
| New Jersey (covered mass layoff, full notice given) | 2 weeks | 5 weeks | 10 weeks | 90 days |
| Germany (Section 1a offer, not an entitlement) | 1 month | 2.5 months | 5 months | 2 months |
Before you budget from the table:
Taiwan has no at-will dismissal. Article 11 of the Labor Standards Act (LSA) allows notice-based termination for business closure/transfer, losses/contraction, force majeure suspending work for over one month, operational changes leaving no suitable reassignment, or clear inability to perform. Article 12 lists six grounds for dismissal without notice or severance; five require action within 30 days of discovering the facts.
Notice depends on continuous service (LSA Article 16):
The statute sets no notice period under three months of service. You can pay wages in lieu of notice, and during the notice period the employee may take paid time off to look for work, up to two days of working time a week.
Severance depends on which pension system covers the service:
Both are due within 30 days of the contract ending. Average wage is total wages in the six months before termination divided by the days in that period (LSA Article 2). The LSA Enforcement Rules list year-end bonuses and festival payments as non-regular payments that do not count as wages (Article 10).
Since January 1, 2026, foreign professionals doing professional work are in the new system with or without permanent residency, under the amended Act for the Recruitment and Employment of Foreign Professionals. Those already employed could opt to stay in the old system by June 30, 2026. Everyone else moved across, with earlier service kept under the old formula.
On the way out:
Dismissal is barred during maternity leave or occupational-injury treatment unless force majeure stops operations and authority approval is obtained (LSA Article 13). Severance is taxed as lump-sum retirement income. For 2026, multiply each threshold by years of service: up to TWD 206,000 is tax-free, half of the portion between TWD 206,000 and TWD 414,000 is taxable, and amounts above that are fully taxable.
Our Taiwan termination guide walks through the termination process step by step.
Singapore employers do not need a reason to end employment with notice, as the Ministry of Manpower (MOM) states. Dismissal without notice is reserved for misconduct established after due inquiry.
Notice comes from the contract and must be the same for both sides. If the contract is silent, Section 10 of the Employment Act sets it by length of service: 1 day under 26 weeks, 1 week up to 2 years, 2 weeks up to 5 years, and 4 weeks after that. Notice must be in writing, and either side can pay salary in lieu instead.
The Employment Act gives no retrenchment benefit to employees with under two years of service (Section 45) and sets no amount for anyone else. The figure comes from the contract, a collective agreement or negotiation.
The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment sets the expectation: "The prevailing norm is to pay a retrenchment benefit varying between 2 weeks to one month salary per year of service, depending on the financial position of the company and taking into consideration the industry norm." Employees with two years of service or more are eligible, and where a collective agreement fixes the amount, the norm is one month per year. No Central Provident Fund (CPF) contributions are payable on a retrenchment benefit, according to MOM's retrenchment guidance.
Final pay is due on the day of dismissal, or within three days if that is not possible, excluding rest days and public holidays (Section 22). An employee who resigns with notice is paid on the last day, and one who resigns without notice within seven days.
In a retrenchment, MOM expects all salary, unused leave and notice pay on the last day of work. Unused annual leave is paid at the gross rate unless the employee is dismissed for misconduct, and notice cannot be given during an employee's maternity leave, or timed to expire during it (Section 81).
Two filings matter:
Wrongful dismissal claims go to the Tripartite Alliance for Dispute Management within one month of the last day. The Workplace Fairness Act 2025 has passed but is not yet in force.
IRAS treats compensation for loss of office as capital and not taxable, while salary in lieu of notice, ex-gratia payments and gratuities are taxable, and so is leave encashment.
Either side can end a Hong Kong employment contract with notice or pay in lieu, without giving a reason, under the Employment Ordinance. Dismissal without notice is allowed for willful disobedience, misconduct inconsistent with the employee's duties, fraud or dishonesty, habitual neglect, or another ground that justifies it at common law.
After 24 months of service, an employee dismissed without a valid reason (conduct, capability, redundancy, a statutory requirement or another substantial reason) can claim terminal payments, or reinstatement if both sides agree.
For unreasonable and unlawful dismissal, the Labour Tribunal may award up to HKD 150,000 without minimum service, or order reinstatement without employer consent where appropriate and practicable. Breaching dismissal bans can attract fines up to HKD 100,000.
Notice is the agreed period, at least seven days, or one month where a monthly contract says nothing. No notice is needed in the first month of probation.
Hong Kong has two statutory payments, and an employee never receives both:
Both use the same formula: two-thirds of the last full month's wages for each year of service, with the wage capped at HKD 22,500. That is at most HKD 15,000 per year and HKD 390,000 in total, according to the Labour Department.
MPF offsetting ended for terminations on or after May 1, 2025. Employers can no longer use the accrued benefits from their own mandatory MPF contributions to reduce the part of the payment earned from that date. The part earned before May 1, 2025 is calculated on the last full month's wages before that date and can still be offset. A 25-year government subsidy scheme covers part of the post-May 2025 portion, but the employer pays in full first and applies within three months.
Wages, long service payment and pay for untaken annual leave are due within seven days of termination. A severance payment is due within two months of the employee's written claim, which must be made within three months of the dismissal or lay-off taking effect.
Three filings follow a departure:
Statutory severance and long service payments are not subject to salaries tax, while payment in lieu of notice and pay for untaken leave are, as GovHK sets out. Our MPF compliance guide covers contributions in more detail.
Most US employment is at will. Without an agreement that says otherwise, either side can end it "at any time for any reason, or even for no particular reason at all, with or without notice," as the Texas Workforce Commission describes its state's rule. Anti-discrimination law, public policy and contracts set the limits. Montana is an exception: under its Wrongful Discharge from Employment Act, a discharge without good cause after probation is wrongful.
Federal law sets no notice period for an individual dismissal. The Worker Adjustment and Retraining Notification (WARN) Act requires 60 calendar days' notice before a plant closing or mass layoff by an employer with 100 or more employees, under 20 CFR Part 639:
Skipping it costs back pay and benefits for up to 60 days. State versions go further: California covers establishments with 75 or more employees, and New York requires 90 days' notice.
The Fair Labor Standards Act does not require severance. It comes from a contract, a plan or a policy. A few states mandate it for large layoffs. Since April 10, 2023, New Jersey's WARN Act requires employers with 100 or more employees to give 90 days' notice of a covered mass layoff or closure and to pay one week of pay for every full year of service, plus four more weeks if notice was short.
Maine requires one week's pay per year of service, for employees with at least three years, when an establishment with 100 or more employees closes or has a mass layoff.
When severance is offered for a release of claims, employees aged 40 and over must get at least 21 days to consider it (45 in a group layoff) and seven days to revoke, according to the Equal Employment Opportunity Commission.
Federal law does not require immediate final pay. Many states set their own deadlines:
| State | Employee dismissed or laid off | Employee resigns |
|---|---|---|
| California | Immediately, including accrued vacation | Within 72 hours without notice; on the last day with 72 hours' notice or more |
| New York | By the next regular payday | By the next regular payday |
| Texas | Within 6 calendar days | By the next regular payday |
California also requires all earned, unused vacation to be paid out and charges a waiting-time penalty of a day's wages for each day final pay is willfully late, up to 30 days. In Texas, a vacation payout is owed only if a written policy promises one.
Severance is taxable wages, with optional flat federal withholding of 22% and a mandatory 37% above USD 1 million in a year, per IRS Publication 15 for 2026.
Germany's general dismissal protection normally applies after six months in establishments exceeding 10 staff under statutory counting rules, including part-time weighting and pre-2004 exceptions. The Protection Against Dismissal Act (Kündigungsschutzgesetz, KSchG) requires personal, conduct or urgent operational grounds; operational dismissals also require lawful selection among comparable staff.
Three procedural rules decide whether a dismissal holds:
The basic notice period is four weeks to the 15th or to the end of a calendar month. For a dismissal by the employer, Section 622 of the Civil Code extends it with service, to the end of a calendar month: 1 month after 2 years, 2 months after 5, 3 after 8, 4 after 10, 5 after 12, 6 after 15 and 7 months after 20 years. During an agreed probation of up to six months, two weeks apply.
German law gives no general right to severance. Three routes create one:
Dismissing more than a set number of employees within 30 calendar days, starting at more than 5 in an establishment of 21 to 59, requires a mass dismissal notification to the Federal Employment Agency. Pregnant employees, severely disabled employees after six months of service and employees who have requested or are on parental leave cannot be dismissed without an authority's approval.
On the way out:
An Employer of Record (EOR) is a third-party organization that becomes the legal employer of your staff in a country where you have no entity. When an employee is hired through an EOR, the decision to end the role is yours. The legal steps belong to the EOR: serving notice in the required form, consulting where the law requires it, filing with the authorities, and paying final wages and severance on the statutory deadlines.
An EOR does not remove notice, severance or accrued-leave obligations; coverage depends on law and the employment arrangement. Germany's dismissal-protection threshold uses establishment-level statutory counting, not the EOR's total headcount. Before approval, obtain an itemized estimate separating employee entitlements, payroll charges and service fees.
We act as the legal employer, through our own entities or in-country partners, so the termination process runs through us, on local law and local deadlines, from the first conversation to the last payslip.
From the decision to end the role through the final payment:
For the full product scope, see our Employer of Record and Global Payroll services, and our employee offboarding checklist for the steps around the final payment.
We support payroll and hiring in over 150 countries across 130+ currencies, serving more than 1,000 companies worldwide, and we hold ISO 27001 certification for information security.
Taiwan and Hong Kong do, on redundancy, with Hong Kong's payment starting after 24 months of service. In the United States, states such as New Jersey and Maine require it for covered mass layoffs. Singapore and Germany set no amount by law: Singapore publishes an advisory norm, and Germany's Section 1a payment applies only when the employer offers it.
Not for an ordinary resignation. In Taiwan, though, a worker who quits under Article 14 of the Labor Standards Act because the employer breached the contract or labor law, for example by not paying wages, is owed severance as if dismissed. In Hong Kong, an employee with five years of service can claim long service payment on resigning at 65 or over, or on a medical certificate of permanent unfitness.
For service spanning May 1, 2025, calculate both portions separately: two-thirds of relevant monthly wages per service year, capped at a HKD 22,500 wage base and HKD 390,000 overall. Employees may elect the relevant 12-month average. Mandatory employer MPF benefits offset only earlier service; permitted voluntary-benefit offsets remain.
It depends on the country. Statutory severance is tax-free in Hong Kong, and compensation for loss of office is not taxable in Singapore, but notice pay is taxable in both. Taiwan taxes severance as retirement income above TWD 206,000 per year of service in 2026, the US taxes it as wages, and Germany taxes it without social security contributions.
Taiwan requires wages immediately and severance within 30 days. Singapore pays a dismissed employee on the day or within three days, and Hong Kong allows seven days, with a severance payment due within two months of the employee's claim. California requires immediate payment on a dismissal, and Germany pays at the end of the last pay period.
Under the table's assumptions: Taiwan, 2.5 months' average wage; Hong Kong, HKD 75,000 before offsets if both wage bases reach HKD 22,500. Singapore's norm: 10 weeks–5 months; qualifying German Section 1a offer: 2.5 months. No general US federal minimum applies. Add notice and accrued entitlements.
If your employees are hired through us, we run each termination as the legal employer: grounds check, notice, filings and final pay on local deadlines. Book a call with our team to map the exit cost and steps for a specific employee before you act.
Sources
Taiwan: Taiwan Labor Standards Act; Taiwan LSA Enforcement Rules; Taiwan Labor Pension Act; Taiwan Employment Service Act; Taiwan Act for Worker Protection of Mass Redundancy; Taiwan Act for the Recruitment and Employment of Foreign Professionals; Taiwan Ministry of Labor: final wages; Taiwan Ministry of Finance: retirement income exemptions.
Singapore: Singapore Employment Act 1968; MOM: termination with notice; MOM: wrongful dismissal; Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment; MOM: responsible retrenchment; MOM: Mandatory Retrenchment Notifications; IRAS: tax clearance (IR21); IRAS: retrenchment benefits; IRAS: other payments.
Hong Kong: Hong Kong Employment Ordinance (Cap. 57); Labour Department: Concise Guide chapter 11; Hong Kong MPF offsetting subsidy scheme FAQ; MPFA: terminating MPF accounts; IRD: PAM46; GovHK: termination payments.
United States, Federal rules and tax treatment: US Department of Labor: severance pay; 20 CFR Part 639 (WARN); 29 U.S.C. 2104 (WARN liability); EEOC: severance agreement waivers; IRS Publication 15 (2026).
United States, State dismissal and layoff rules: New Jersey WARN Act; Maine severance pay statute; Texas Workforce Commission: wrongful discharge; Montana Wrongful Discharge from Employment Act; California EDD: WARN; New York DOL: WARN.
United States, Final pay and accrued leave: US Department of Labor: last paycheck; California DIR: final pay; New York DOL: frequency of pay; Texas Workforce Commission: final pay; California DIR: vacation; Texas Workforce Commission: accrued leave payouts.
Germany, Dismissal, notice and employee protections: German Civil Code: Sections 614: 622 and 623; German Protection Against Dismissal Act; German Protection Against Dismissal Act: Section 1a; German Works Constitution Act: Section 102; German Works Constitution Act: Section 112; German Maternity Protection Act: Section 17; German Social Code IX: Section 168; German Parental Allowance and Parental Leave Act: Section 18.
Germany, Leave, tax and social insurance: German Federal Leave Act: Section 7; German Income Tax Act: Section 34; Growth Opportunities Act 2024; Deutsche Rentenversicherung: severance.
Slasify Services: Slasify Employer of Record; Slasify Global Payroll.
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