Definition
A termination agreement is a written agreement between an employer and an employee to voluntarily terminate the employment relationship on a specific date. Notice periods and grounds for termination are not required. Typical provisions include: the end date, severance pay, leave of absence and arrangements regarding the reference. Important: Signing the agreement usually triggers a twelve-week waiting period for unemployment benefit. If the employee was pressured or taken by surprise, the agreement may be contested.
Specialist solicitor in employment law
With over 15 years’ experience in employment law
Classification under employment law
A termination agreement brings the employment relationship to an end by mutual consent – without notice and without a claim for unfair dismissal. Please note: It may result in a waiting period for unemployment benefit (up to 12 weeks) and, once signed, is effectively non-contestable.
Distinction from related terms
Settlement agreement: A termination agreement terminates the employment relationship itself. A settlement agreement merely regulates the consequences of a notice of termination that has already been given.
Amendment agreement: In the case of an amendment agreement, the employment relationship continues and only individual terms are adjusted. The termination agreement terminates it completely.
Practical tip
Never sign a termination agreement straight away. Since the Federal Labour Court’s ruling on the principle of fair negotiation, a termination agreement forced under pressure may be open to challenge – but it is far better to seek the advice of a solicitor specialising in termination agreements beforehand than to end up in a dispute afterwards.
