Sozialplan (severance/redundancy plan, §§ 111+ BetrVG, § 123 InsO)

A Sozialplan (§§ 111 et seq. BetrVG, the Works Constitution Act) sets out financial compensation — typically severance pay — for employees affected by a business change such as headcount reduction, closure of a business unit, or major restructuring. It's negotiated between the employer (or administrator) and the works council; if no agreement is reached, a conciliation board (Einigungsstelle) decides.

A special insolvency rule applies (§ 123 InsO): the total volume of a Sozialplan is capped at a maximum of 2.5 months' salary per affected employee, and overall at one-third of the estate that would otherwise be available for distribution to creditors. This protects the estate from being economically hollowed out by a severance obligation.

Relevant for buyers whenever the acquisition involves adjusting headcount — e.g. a partial rather than full takeover under § 613a BGB: a capped Sozialplan negotiated by the administrator before signing creates clarity on personnel costs and prevents the buyer from facing unresolved severance claims from staff not taken over, after closing.