Termination by agreement

Mutual termination agreements in Germany

In Germany, employees and employers can terminate an employment relationship without notice by signing a termination agreement . If the employer initiates the exit interview, severance payments are almost always part of the mutually agreed termination . But be careful: A job termination agreement can have serious negative consequences for you. Before you sign an agreement termination letter , you should have it checked by the German employment law experts at AHS Lawyers. Additionally, it is important that you are aware of all the advantages and disadvantages of a termination agreement in Germany so that you know what you are getting into.

What are the advantages and disadvantages of a job termination agreement?

The advantages and disadvantages of a termination agreement depend very much on your personal situation – do you have a new job lined up or do you want to keep your current job.

Possible advantages of a termination agreement

• If you already have a new job offer, a termination by agreement offers you flexibility and allows you to avoid notice periods .
• If the employment relationship is unpleasant for you, a termination agreement can provide a short-term and financially attractive exit .
• Although you are not legally entitled to severance package , you can often negotiate this in a termination agreement.
• You have a say in the conditions under which you leave the company and the communication about it.
• With a termination agreement, you may be able to prevent a termination for cause. Possible reasons for termination by the employer are not disclosed.
• If your employer is very interested in the termination agreement, they will generally agree to provide you with a favorable employment reference.

Possible disadvantages of a termination agreement

• Waiver of protection against unfair dismissal , no consultation of the works council.
• No protection against dismissal for pregnant women or severely disabled people.
• Probable blocking period for unemployment benefit (the termination agreement can lead to a 3-month suspension of unemployment benefits ).
• Possible impact on company pension schemes.

Content of a termination agreement

• Date of termination : The date on which the employment relationship ends.
• Cash benefit : Amount and payment of severance pay.
• Leave of absence : Many agreements state that the employee will be released from work until the termination date.
• Vacation pay : The termination agreement contract often states how many days of vacation the employee has left. If your employer gives you time off with vacation days included, you should think carefully about whether this is "worth it" for you.
• Overtime pay : If you still have overtime credit in your work time account, this is an important issue for the termination agreement.
• Provision of references: A "reference clause" is usually part of the termination agreement. This clause typically reads: "The employer undertakes to provide the employee with a positive reference".
• Miscellaneous: In most cases, the contract also contains provisions on confidentiality and the return of keys and work equipment.

The end of the employment contract is sealed when an agreement cancellation letter is signed. An action for unfair dismissal can no longer be filed thereafter. If the terms of the termination agreement are disadvantageous, this can no longer be corrected once the agreement has been signed.