Severance Pay at Cariad 2026: Job Cuts & Your Rights

Job cuts at Cariad: what’s happening right now?

At Cariad SE, Volkswagen’s software subsidiary, reports from 1 October 2026 indicate that around 1,000 jobs are set to go, roughly a quarter of the remaining workforce of about 4,300 employees. Staff were informed at a works meeting (WirtschaftsWoche, 1 October 2026; dpa-AFX ROUNDUP, 1 October 2026).

This isn’t the first round: at the end of 2023, Cariad still had around 6,500 employees. So the cuts are hitting a workforce that’s already been reduced. At the same time, investment for 2027 to 2031 is reportedly set to fall by around €6.1 billion.

Important context: according to the reports, how this will be implemented and on what timeline is still open, and negotiations between the company and employee representatives haven’t started yet. That means there’s still no social plan to measure any offer against, which is more an argument for waiting than for signing. For the wider group picture, see Severance Pay at Volkswagen; this page deals exclusively with Cariad SE as its own legal entity with its own works council.

Terminated collective agreements: the critical point

According to the reports, Cariad is set to terminate its collective agreements. For anyone affected, that’s the key piece of news, because the job security clause (Beschäftigungssicherung), the commitment not to issue dismissals for operational reasons, is usually found precisely in agreements like these. In the March 2025 round of cuts, reports at the time said dismissals for operational reasons were ruled out until 2029; back then, the works council also disputed the job-cut figure the company had given.

The consequence for you: don’t rely on the old commitment. Ask your works council or HR department in writing which rule currently applies to your employment and whether collective agreement entitlements continue to have effect. The answer changes your negotiating position considerably: someone who can’t be dismissed negotiates very differently from someone who can.

Your rights: social plan, termination agreement, protection against dismissal

A reduction of this scale counts as a change of operations (Betriebsänderung): the employer must negotiate a reconciliation of interests and a social plan with the works council (§ 111 BetrVG, § 112 BetrVG). If it goes ahead without a reconciliation of interests, those affected can claim compensation for disadvantage (Nachteilsausgleich) (§ 113 BetrVG), a claim that’s often overlooked in the phase before a social plan is agreed.

If you do receive a dismissal, the strict three-week deadline applies: your unfair dismissal claim (Kündigungsschutzklage) must reach the labour court within three weeks of receiving notice (§ 4 KSchG), after that, the dismissal is deemed valid no matter how questionable it was. If the employer offers severance in exchange for waiving a claim, that’s the case covered by § 1a KSchG, with 0.5 months’ pay per year of service as a minimum benchmark, not a ceiling.

How much severance pay can you expect at Cariad?

Cariad hasn’t published a formula, and no social plan was in place as of October 2026. So here’s just the standard reference calculation. The rule of thumb is 0.5 months’ gross salary per year of service. For a typical developer role, with €7,500 gross and 6 years of service, that gives:

0.5 × €7,500 × 6 = €22,500 gross.

That’s a calculated figure, not an entitlement. At Cariad, years of service are often short, since the group’s software unit was only set up in 2020, so the rule of thumb tends to come out low. That makes the other items all the more important: paid garden leave (Freistellung) until the termination date, a pro-rata bonus and variable pay, outstanding holiday, cover for training costs, a strong reference (Zeugnis), and above all the termination date, which determines the suspension period and tax year. If you only negotiate the severance figure, you usually give away the bigger part. Work through your case in the severance calculator, including the one-fifth rule and net pay.

Received an offer from Cariad? Check it before you sign

Check the following: the amount relative to your age, length of service, and chances in court, the suspension period risk for unemployment benefit (§ 159 SGB III, § 158 SGB III), the waiver and settlement clauses (bonuses, variable pay, company pension, share and participation schemes), and the tax side: for larger packages, the payout timing determines how the one-fifth rule applies (§ 34 EStG). Upload your document and we’ll flag the critical points, at no cost. More on this topic: termination agreement, the three-week deadline, benefit suspension period, social plan and severance pay, and received a dismissal, what now?

How it works with us

An initial consultation at no upfront cost, your offer reviewed by our partner law firm specialising in employment law, and if you instruct them, negotiation funded via litigation funding, with no upfront cost risk to you. See how the cost model works.

Note: Team Abfindung is an independent provider and has no connection to Cariad SE or Volkswagen AG.