The revaluation of severance pay (severance pay) is a fundamental aspect for employees, as it makes it possible to adjust the accumulated amount to the change in the cost of living. This guide will provide you with all the information you need to understand how severance pay is calculated, how the revaluation mechanism works and what are the updated coefficients for 2024
.
Table of Contents:
What is severance pay and how does it work
TFR, commonly called ‘liquidation’, is an amount of money that is due to the employee upon the termination of the employment relationship. This sum consists of annual provisions of a portion of the salary, which is revalued over the years based on inflation and the cost
of living.
According to Article 2120 of the Civil Code, every worker is entitled to severance pay, regardless of the cause of the termination of the employment relationship. The provision is calculated annually by dividing the annual wage by 13.5, a conventional value applicable to all workers, regardless of the number of monthly payments received (12,
13 or 14).
The revaluation of severance pay takes place through the application of a coefficient that is updated monthly and takes into account both a fixed component and a variable component linked to the ISTAT index of consumer prices.
How do you calculate the revaluation of severance pay
The revaluation of severance pay is governed by a coefficient consisting of two elements:
- Fixed rate equal to 1.5%.
- Variable rate equal to 75% of the increase in the ISTAT consumer price index compared to the month of December of the previous year.
This calculation system makes it possible to keep the value of severance pay up to date with respect to inflation. If the cost of living increases, the variable part of the revaluation coefficient increases, while in the case of stability or a fall in prices, the revaluation
will be lower.
TFR 2024 Revaluation Coefficient
The TFR revaluation coefficient for the month of August 2024, published on September 16, 2024, is 1.756939%. This value applies to severance pay accrued up to 31 December 2023 and makes it possible to calculate the increase for the current year
.
The revaluation of severance pay is carried out every year at the end of December or at the time of the termination of the employment relationship. For the purpose of the calculation, the ISTAT index for the month in which the relationship ended is used, comparing it with that of December of
the previous year.
Example of TFR calculation
To better clarify the revaluation mechanism, here is a practical example of calculating severance pay for a worker with an annual wage of 24,300 euros and an ISTAT index of consumer prices up 1%.
- Annual severance pay: 24,300€/13.5 = 1,800€
- Revaluation: 1,800€ × 2.25% (1.5% + 0.75% of 1%) = 40.50€
From this amount, it is necessary to subtract the INPS contribution, equal to 0.50%, which in our example is equivalent to 9.20€, bringing the total net set aside to 1,831.30€.
2024 tables for the revaluation of severance pay
Below are the updated revaluation coefficients for 2024, divided by month:
| Mese | Revaluation coefficient | ISTAT Index | Relationships terminated during the period |
|---|---|---|---|
| January 2024 | 0.377313 | 119.3 | Jan 15 — Feb 14 |
| February 2024 | 0.502313 | 119.3 | Feb 15 — Mar 14 |
| March 2024 | 0.690391 | 119.3 | 15 Mar — 14 Apr |
| April 2024 | 0.752313 | 119.3 | 15 April — 14 May |
| May 2024 | 1.003469 | 119.5 | May 15 — Jun 14 |
| June 2024 | 1.128469 | 119.5 | Jun 15 — Jul 14 |
| July 2024 | 1.568860 | 120.0 | 15 Jul — 14 Aug |
| August 2024 | 1.756939 | 120.1 | Aug 15 — Sep 14 |
These coefficients represent the increase applicable to severance pay accrued up to December 31 of the previous year and are used for revaluation based on the date of termination of the employment relationship.
TFR represents an important component of employee compensation, and its annual adjustment through the revaluation coefficient makes it possible to preserve its value over time. Understanding the mechanism for calculating and reevaluating severance pay is essential to know how much you will accrue over time and to prepare for the moment of termination of the employment relationship
.
For 2024, the revaluation coefficients published monthly make it possible to update the severance pay based on the trend of the ISTAT consumer price index.
