Companies must have robust procedures for implementing fair severance agreements and before conducting restructuring measures following the jailing of an HR manager in Germany for awarding an excessively high pay-off.
The German Federal Court of Justice’s Criminal Senate (7-page / 151KB PDF, ruling in German) sentenced an HR manager to 10 months in prison after awarding a former employee with a tenure of 11 years a 264,800 severance payment, which was deemed excessive compared to their former salary of 45,100.
The court ruled it as a case of embezzlement, with the recipient of the payout also being found guilty of aiding and abetting and being fined by the court alongside being told to repay the severance sum.
Andreas Schöberle, an employment law expert with Pinsent Masons in Munich, said organisations should review and update their compliance policies for approving severance payments to establish clear lines of responsibility and analyse what is an acceptable amount.
“The recent verdict by the German Federal Court of Justice demonstrates that HR professionals and employees can be held criminally liable for approving or accepting excessive severance payments,” he said.
“The risk of granting excessively high severance payments arises particularly in the context of mass layoffs, so that in these cases criminal liability risks are especially present. To prevent criminal prosecution of responsible individuals and financial harm to the organization, compliance procedures must...
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