Employment Release Agreement Template for Germany

A German Employment Release Agreement (Aufhebungsvertrag) is a mutually agreed document between an employer and employee that terminates their employment relationship. Governed by German labor law, particularly the Civil Code (BGB) and Protection Against Dismissal Act (KSchG), this agreement outlines the terms and conditions of the employment termination, including termination date, severance payments, final benefits, confidentiality obligations, and mutual release of claims. The document ensures compliance with German legal requirements while providing clarity and protection for both parties, addressing aspects such as reference letters (Arbeitszeugnis), company property return, and ongoing obligations.

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What is a Employment Release Agreement?

The Employment Release Agreement (Aufhebungsvertrag) is a crucial document in German employment law, used when both employer and employee agree to terminate their employment relationship by mutual consent. This approach differs from unilateral termination and offers advantages in terms of legal certainty and flexibility in determining the separation terms. The document becomes necessary in various scenarios, including corporate restructuring, amicable separations, or as an alternative to contentious dismissals. It must comply with German labor law requirements, particularly the Civil Code (BGB) and Protection Against Dismissal Act (KSchG), while addressing all financial, practical, and legal aspects of the employment termination. The agreement typically includes provisions for severance payments, final benefits settlement, confidentiality obligations, and reference letters, providing a comprehensive framework for employment termination that protects both parties' interests.

What sections should be included in a Employment Release Agreement?

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

2. Background: Brief context of the employment relationship and mutual decision to terminate

3. Definitions: Key terms used throughout the agreement

4. Termination of Employment: Clear statement of mutual agreement to terminate, specifying the effective date

5. Final Salary and Benefits: Details of final regular salary payment and treatment of outstanding benefits

6. Severance Payment: Amount, calculation basis, and payment terms of any severance payment

7. Company Property: Requirements and timeline for returning company property

8. Confidentiality Obligations: Ongoing confidentiality obligations post-employment

9. Reference Letter: Commitment to provide a reference letter (Arbeitszeugnis) and its basic terms

10. Release of Claims: Mutual release of claims related to the employment relationship

11. Final Settlement: Confirmation that the agreement represents full and final settlement

12. Governing Law: Specification of German law as governing law

13. Severability: Standard clause on the validity of remaining provisions if others are invalid

What sections are optional to include in a Employment Release Agreement?

1. Garden Leave: Used when employee is to be released from duty before termination date

2. Post-Contractual Non-Compete: Include when maintaining or modifying existing non-compete obligations

3. Continued Benefits: When certain benefits will continue post-employment

4. Works Council Agreement: Required when works council exists and has been involved in the termination

5. Company Housing: Include when employee has been provided with company housing

6. Stock Options/Share Plans: Treatment of existing equity compensation plans

7. Outplacement Services: When company provides career transition support

8. Insurance Continuation: Details of any continued insurance coverage

9. References and Communications: Agreed approach to external and internal communications about the departure

What schedules should be included in a Employment Release Agreement?

1. Schedule 1 - Severance Calculation: Detailed calculation of severance payment including any bonus pro-ration

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

3. Schedule 3 - Outstanding Benefits: Detailed list of accrued but unused vacation days and other benefits

4. Schedule 4 - Reference Letter Draft: Agreed form of reference letter

5. Schedule 5 - Handover Plan: Timeline and responsibilities for knowledge transfer and handover

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

Jurisdiction

Germany

Publisher

Genie AI

Cost

Free to use

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