If you receive a so-called golden handshake when your employment ends, it will not reduce your earnings-related allowance. However, it may postpone the date from which the allowance can be paid.
What does a golden handshake mean?
A golden handshake is additional compensation paid to an employee when their employment ends, which the employer is not required to pay under legislation or a collective agreement. The compensation is usually agreed upon in a termination agreement. Under the Unemployment Security Act, this type of compensation is referred to as a financial benefit.
How does it affect earnings-related allowance?
A golden handshake does not affect the amount of your earnings-related allowance. However, it may postpone the start of the payment of the allowance.
The compensation is periodised, meaning that its amount is converted into a calculated number of days based on the daily wage from your most recent employment. The calculated number of days is called the periodisation period. Earnings-related allowance can only be paid after this period has ended. The periodisation period runs for five days a week, from Monday to Friday. Weekends are not counted towards the periodisation period.
Compensation subject to periodisation includes, for example
- a golden handshake
- severance pay
- a support package based on a termination agreement
- other similar compensation that the employer would not have been required to pay under legislation or a collective agreement.
Remember to apply for earnings-related allowance in time
A golden handshake does not reduce the amount of your earnings-related allowance. However, it may postpone the start of the payment of the allowance because the compensation is periodised before your entitlement to the allowance begins. Remember to apply for earnings-related allowance within three months, even if the payment of the allowance does not begin until later.
Keep your job search valid during the periodisation period
Keep your job search valid even when earnings-related daily allowance is not paid due to the periodisation of a financial benefit. If you are absent from the labour market for more than six months without an acceptable reason, you may lose your right to earnings-related daily allowance. In that case, you can receive earnings-related daily allowance again only after you have fully met the employment condition again.
Being in the labour market includes, for example, working, entrepreneurship, studying and services organised by the employment authority. Being registered as a jobseeker with the employment authority also counts as being in the labour market.
An acceptable reason for being absent from the labour market may be, for example, illness, rehabilitation, studying, military or non-military service, a grant period or caring for a young child.
Therefore, keep your job search valid throughout the entire periodisation period.
Example:
Your employment ends on 31 July, and under a termination agreement you receive additional compensation of €6,000, equivalent to three months’ salary. The compensation does not reduce your earnings-related allowance, but it results in a periodisation period of approximately three months. The payment of earnings-related allowance can only begin after this period has ended.