In principle, the transition allowance is due if the employment contract was terminated or dissolved at the employer’s initiative and the start date of the employment contract was at least two years before the termination date. The transition allowance amounts to approximately one sixth of the monthly salary for each six months of a year worked. From 10 service years onwards, one quarter of a monthly salary is allocated for each six months of employment. For older employees with more than 10 years’ service with the employer, half of the monthly salary is allocated for each six months worked above the age of 50, until the year 2020. The transition allowance is not due in the event of severe imputable actions of the employee and also if the employer is a small company (fewer than 25 employees); in a challenging financial situation, the transition rules apply until the year 2020. In the event of termination by agreement between both parties (settlement agreement), there is no legal right to a transition allowance. However, parties are in that case free to make a mutual arrangement of their own choice.