The Settlement Agreement Between Employee And Employer is a crucial document in German employment law, used when both parties agree to terminate their employment relationship by mutual consent. It serves as an alternative to unilateral termination and is commonly used in situations involving redundancies, performance issues, or general restructuring. The agreement must comply with German labor law requirements, including the Civil Code (BGB), Protection Against Dismissal Act (KSchG), and relevant tax regulations. It typically includes provisions for severance payments, final salary arrangements, treatment of benefits, confidentiality obligations, and mutual releases. Special attention must be paid to German-specific requirements such as works council involvement where applicable and the mandatory fair and clear language requirements under German law. The document provides legal certainty by preventing future employment-related claims while ensuring all statutory entitlements are properly addressed.
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1. Parties: Identification of the employer and employee with full legal names and addresses
2. Background: Brief history of employment relationship, reason for settlement, and reference to any ongoing disputes if applicable
3. Definitions: Key terms used throughout the agreement
4. Termination of Employment: Specific date and terms of employment termination, including last working day and garden leave if applicable
5. Settlement Payments: Details of all financial compensation, including severance pay, outstanding salary, bonus, and holiday pay
6. Tax and Social Security: Treatment of payments for tax and social security purposes
7. Company Property: Requirements and timeline for return of company property
8. Confidentiality: Ongoing obligations regarding confidential information
9. Post-termination Restrictions: Confirmation of which existing post-termination restrictions remain in force
10. Mutual Release: Waiver of claims by both parties
11. Reference: Agreement on the form and content of employment reference
12. Final Provisions: Governing law, severability, and entire agreement provisions
13. Execution: Signature blocks and date
1. Works Council Approval: Required when works council exists and their involvement is necessary
2. Outplacement Support: Include when employer provides career transition services
3. Company Pension: Required when addressing treatment of pension rights
4. Stock Options/Share Awards: Include when dealing with existing equity compensation
5. Legal Costs: Include when addressing payment of employee's legal fees
6. Garden Leave: Include when employee will be placed on garden leave
7. Insurance Continuation: Include when addressing continued insurance coverage
8. Cooperation in Pending Matters: Include when employee's assistance may be needed post-termination
1. Schedule 1 - Payment Calculation: Detailed breakdown of all payment components including severance, bonus, and other entitlements
2. Schedule 2 - Company Property List: Itemized list of company property to be returned
3. Schedule 3 - Agreed Reference: Form of agreed employment reference (Arbeitszeugnis)
4. Schedule 4 - Existing Post-termination Restrictions: Copy of relevant restrictions from employment contract that survive
5. Appendix A - Legal Notice: Statutory information about settlement agreement rights and limitations
Relevant legal definitions
Agreement
Company
Employee
Effective Date
Termination Date
Last Working Day
Settlement Payment
Severance Payment
Outstanding Remuneration
Variable Compensation
Confidential Information
Company Property
Employment Contract
Works Council
Parties
Group Companies
Claims
Reference
Post-Contractual Restrictions
Garden Leave Period
Benefits
Stock Options
Pension Rights
Business Day
Existing Agreements
Company
Employee
Effective Date
Termination Date
Last Working Day
Settlement Payment
Severance Payment
Outstanding Remuneration
Variable Compensation
Confidential Information
Company Property
Employment Contract
Works Council
Parties
Group Companies
Claims
Reference
Post-Contractual Restrictions
Garden Leave Period
Benefits
Stock Options
Pension Rights
Business Day
Existing Agreements
Clauses
Interpretation
Termination of Employment
Settlement Payment
Tax and Social Security
Final Payment Calculation
Company Property Return
Confidentiality
Non-disparagement
Post-termination Restrictions
References
Release of Claims
Continuing Obligations
Data Protection
Works Council Approval
Legal Costs
Tax Indemnity
Garden Leave
Outplacement Support
Company Pension
Insurance Benefits
Stock Options
Cooperation
Announcements
Future Employment
Acknowledgments
Severability
Governing Law
Entire Agreement
Third Party Rights
Counterparts
Waiver
Termination of Employment
Settlement Payment
Tax and Social Security
Final Payment Calculation
Company Property Return
Confidentiality
Non-disparagement
Post-termination Restrictions
References
Release of Claims
Continuing Obligations
Data Protection
Works Council Approval
Legal Costs
Tax Indemnity
Garden Leave
Outplacement Support
Company Pension
Insurance Benefits
Stock Options
Cooperation
Announcements
Future Employment
Acknowledgments
Severability
Governing Law
Entire Agreement
Third Party Rights
Counterparts
Waiver
Relevant Industries
Financial Services
Technology
Manufacturing
Retail
Healthcare
Professional Services
Energy
Telecommunications
Construction
Education
Automotive
Pharmaceuticals
Media and Entertainment
Transportation and Logistics
Real Estate
Relevant Teams
Human Resources
Legal
Compliance
Executive Leadership
Finance
Personnel Administration
Employee Relations
Industrial Relations
Relevant Roles
HR Director
HR Manager
Legal Counsel
Employment Lawyer
HR Business Partner
Compensation and Benefits Manager
Employee Relations Manager
HR Administrator
Chief Human Resources Officer
Recruitment Manager
Personnel Officer
Compliance Officer
Chief Executive Officer
Chief Financial Officer
Department Manager
Line Manager
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