Employee Exit Agreement for Germany

Employee Exit Agreement Template for Germany

A legally binding agreement under German employment law that formally documents the mutual termination of an employment relationship between an employer and employee. This document comprehensively outlines the terms and conditions of the employment termination, including the termination date, financial settlements, continuing obligations, and release of claims. It must comply with German labor law requirements, including works council consultation where applicable, and contains mandatory provisions regarding reference letters (Arbeitszeugnis) and notice periods. The agreement provides legal certainty for both parties and helps prevent future disputes by clearly documenting all aspects of the separation.

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What is a Employee Exit Agreement?

An Employee Exit Agreement (Aufhebungsvertrag) is a crucial document used in German employment relationships when both employer and employee agree to terminate the employment relationship by mutual consent. It serves as an alternative to unilateral termination and is commonly used in scenarios involving restructuring, voluntary departures, or dispute resolution. The agreement must comply with strict German labor law requirements, including consideration of notice periods, severance calculations, and works council rights. It typically includes provisions for financial settlements, benefit considerations, and post-employment obligations. The document must be carefully drafted to ensure compliance with German employment protection laws (Kündigungsschutzgesetz) and other relevant legislation, while also addressing practical aspects such as company property return and confidentiality obligations.

What sections should be included in a Employee Exit Agreement?

1. Parties: Identification of the employer and employee, including full legal names and addresses

2. Background: Context of the employment relationship, including start date and current position

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specific date when employment relationship ends and last working day if different

5. Financial Settlement: Details of all payments including final salary, severance, bonus, and holiday pay

6. Company Property: Requirements for returning company property and documents

7. Confidentiality: Ongoing obligations regarding confidential information

8. Release of Claims: Mutual release of employment-related claims

9. Reference Letter: Commitment to provide a reference letter (Arbeitszeugnis) as required by German law

10. Final Declarations: Standard closing provisions including severability and governing law

What sections are optional to include in a Employee Exit Agreement?

1. Garden Leave: Terms of garden leave if applicable between last working day and termination date

2. Non-Compete: Post-employment competition restrictions, only if specifically agreed and compensated

3. Works Council Statement: Required for companies with works councils confirming their involvement

4. Pension Arrangements: Special provisions for company pension schemes if applicable

5. Stock Options/Share Rights: Treatment of existing equity compensation

6. Outplacement Support: Details of any career transition services provided

7. Insurance Continuation: Provisions for continuing any company insurance benefits

8. References: Specific agreements about the content of references beyond the statutory minimum

What schedules should be included in a Employee Exit Agreement?

1. Schedule 1 - Financial Statement: Detailed breakdown of all financial settlements and payments

2. Schedule 2 - Company Property List: Itemized list of company property to be returned

3. Schedule 3 - Benefit Summary: Summary of treatment of various benefits and entitlements

4. Appendix A - Release Form: Detailed release of claims form if required separately

5. Appendix B - Data Privacy Notice: Mandatory information about handling of personal data post-employment

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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What is a Employee Exit Agreement?

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What sections are optional to include in a Employee Exit Agreement?

What schedules should be included in a Employee Exit Agreement?

Authors

Alex Denne

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