The Cancellation Agreement (Aufhebungsvertrag) is a critical document in German employment law used when both employer and employee agree to end their employment relationship by mutual consent. Unlike unilateral termination, this agreement allows parties to negotiate terms that may be more favorable than statutory minimums and bypass standard notice periods. It's particularly useful in situations involving restructuring, voluntary departures, or when parties wish to avoid potential litigation. The document must comply with strict German legal requirements, including written form requirements under § 623 BGB, and typically covers severance payments, final settlements, continuing obligations, and benefit arrangements. Care must be taken to ensure the agreement is not executed under duress and includes all mandatory provisions to be legally enforceable under German law.
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1. Parties: Identification of the employer and employee with full legal names and addresses
2. Background: Context of the employment relationship including start date, current position, and reason for mutual termination
3. Definitions: Key terms used in the agreement
4. Termination Date: Clear specification of the employment end date and last working day
5. Final Salary and Benefits: Details of final regular salary payment, including treatment of any outstanding benefits
6. Severance Payment: Amount, calculation basis, and payment terms of any severance payment
7. Company Property: Provisions for return of company property and documents
8. Confidentiality Obligations: Ongoing confidentiality obligations post-termination
9. Release of Claims: Mutual release of claims related to the employment relationship
10. Final Settlement: Confirmation that the agreement represents full and final settlement
11. Governing Law: Confirmation of German law application
12. Signatures: Execution blocks for both parties with date fields
1. Garden Leave: Terms of garden leave if employee is released from duty before termination date
2. Reference Letter: Agreement regarding the content and timing of the employment reference letter
3. Post-contractual Non-compete: Terms of any continuing non-compete obligations and compensation
4. Vacation Days Settlement: Treatment of remaining vacation days (payment or time off)
5. Company Housing: Arrangements regarding company-provided accommodation if applicable
6. Company Car: Terms for return or purchase of company car if applicable
7. Stock Options/Benefits: Treatment of outstanding stock options or long-term benefits
8. Insurance Continuation: Provisions for continuation of insurance benefits if applicable
9. Works Council Notice: Reference to works council involvement if relevant
10. Revocation Rights: Information about any applicable revocation rights
1. Schedule 1 - Severance Calculation: Detailed calculation of severance payment including tax considerations
2. Schedule 2 - Outstanding Benefits: List and calculation of all outstanding benefits, bonuses, and reimbursements
3. Schedule 3 - Company Property List: Itemized list of company property to be returned
4. Appendix A - Reference Letter Draft: Draft or agreed form of employment reference letter
5. Appendix B - Benefits Summary: Summary of post-termination benefits and insurance arrangements
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