The revaluation of severance pay (severance pay) is a fundamental process to ensure that the amount set aside by a worker during the years of service maintains its value over time. Every year, severance pay is revalued using a specific coefficient that takes inflation into account. In this guide, we will review how to calculate the revaluation of severance pay for 2024, with a practical example and updated tables.
How does the revaluation of severance pay work
TFR, also known as liquidation, is a sum set aside each year and allocated to the worker at the end of the employment relationship. The calculation of severance pay is governed by article 2120 of the Civil Code, which provides for a revaluation mechanism based on two components:
- a fixed rate of 1.5%;
- a variable share, calculated as 75% of the increase in the ISTAT consumer price index compared to the month of December of the previous year.
Every month, a new revaluation coefficient is published and is applied to the severance pay accrued up to December 31 of the previous year, ensuring that the amount set aside is adjusted to the cost of living.
TFR 2024 Revaluation Coefficient
The revaluation coefficient for the month of August 2024 was set at 1.756939%. This coefficient applies to severance pay accrued up to December 31, 2023 and takes into account the increase in consumer prices recorded during the year.
Here is how the revaluation coefficient is composed:
- fixed rate: 1.5%
- variable rate: determined by 75% of the increase in the ISTAT price index compared to December of the previous year (in this case, 1%).
Example of calculating the revaluation of severance pay
To better understand the calculation mechanism, let’s see a practical example.
Suppose that a worker received an annual wage of 24,300 euros and that he worked for a full year. the increase in the ISTAT consumer price index compared to the previous year was 1%.
Here’s how you proceed with the calculation:
- annual severance pay:
24,300 euros ÷ 13.5 = - revaluation:
1,800 euros x 2.25% = 40.50 euros
(2.25% derives from the sum of the fixed rate 1.5% and 75% of the increase in the ISTAT index, - total annual accrual:
1,800 euros + 40.50 euros = 1,840.50 euros - INPS contribution (0.50%):
1,840.50 euros x 0.50% = 9.20 euros - total net set aside:
1,840.50 euros — 9.20 euros =
1,800 euros
i.e. 0.75%)
1,831.30 euros
The net amount obtained represents the revalued severance pay for the year of service considered.
TFR 2024 Revaluation Tables
here are the updated tables with the severance pay revaluation coefficients for each month of 2024:
| Mese | Revaluation coefficient | ISTAT Index | Fixed rate (%) |
|---|---|---|---|
| January 2024 | 0.377313 | 119.3 | 1.50 |
| February 2024 | 0.502313 | 119.3 | 1.50 |
| March 2024 | 0.690391 | 119.3 | 1.50 |
| April 2024 | 0.752313 | 119.3 | 1.50 |
| May 2024 | 1.003469 | 119.5 | 1.50 |
| June 2024 | 1.128469 | 119.5 | 1.50 |
| July 2024 | 1.568860 | 120.0 | 1.50 |
| August 2024 | 1.756939 | 120.1 | 1.50 |
these values represent the coefficients to be applied to reevaluate severance pay accrued up to December 31, 2023.
Conclusion
The revaluation of severance pay is an essential mechanism to preserve the purchasing power of workers. Understanding how the calculation works and correctly applying the revaluation coefficients is important to ensure that you obtain the correct amount at the end of the employment relationship. Make sure to consult the updated tables for the year 2024 and to apply the correct coefficients to your severance pay.
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