Waiting period for unemployment benefit following a termination agreement: When it may apply and how to avoid mistakes
- A mutual termination agreement can result in a waiting period of up to 12 weeks for unemployment benefit
- The Jobcentre will assess whether you played a part in bringing about the end of your employment
- Not every termination agreement automatically leads to a waiting period
- Our employment lawyers will assess how risks can be avoided or minimised
Specialist solicitor in employment law
Over 15 years’ experience in employment law
Why a termination agreement can lead to a waiting period
A termination agreement does not end the employment relationship through dismissal by the employer, but by mutual agreement. That is precisely where the problem lies.
In such cases, the Job Centre checks whether you actively contributed to the termination of your employment. If the authorities conclude that you did, you may face a waiting period for unemployment benefit. One question is particularly important for the assessment: could you have kept your job if you hadn’t signed the agreement? If the answer is ‘yes’, a waiting period often applies.
This is precisely why signing a termination agreement is not a neutral step, but a decision with direct financial consequences.
"A termination agreement often triggers a waiting period for unemployment benefits, as the Jobcentre regards it as 'voluntary resignation'. In addition, there is a risk that entitlement will be suspended if a severance payment is made and the contractual notice period is not observed. Taken together, this can mean: no money for months, even though the job is gone."
Should you sign a termination agreement if you are facing a waiting period?
It may be advisable to sign if:
- you have already secured a new job
- the employer could terminate your contract effectively anyway
- the severance pay offsets the potential financial loss
You should be cautious if:
- you are dependent on unemployment benefit
- it is unclear whether dismissal would be legally possible
- the employer is putting pressure on you
- the severance pay is low
In these cases, a mutual termination agreement often results in a worse position than a dismissal.
How long is the waiting period for unemployment benefit?
In many cases, the waiting period is 12 weeks. During this time, you will generally not receive any unemployment benefit. In addition, the total duration of your entitlement is often reduced.
In practical terms, this means you lose not only time but also money. Anyone who signs too hastily therefore risks a double burden.
Does every termination agreement automatically result in a waiting period?
No. A waiting period is not imposed automatically. The Jobcentre assesses each case individually. The following factors, amongst others, are taken into account:
- Was there a valid reason for the termination agreement?
- Would the employer have terminated the contract anyway?
- Was the dismissal legally permissible?
- Did the agreement prevent you from suffering any disadvantages
- Are the timing and circumstances appropriate?
A well-drafted agreement can reduce the risk. A hastily drawn-up agreement increases it significantly. Our employment lawyers will assess your specific situation and determine whether arguments can be made against a waiting period.
When you should register as unemployed following a termination agreement
You should register with the Jobcentre as soon as possible. As soon as it is clear that your employment is coming to an end, you need to take action. If you wait, you risk facing further disadvantages. Problems can quickly arise, particularly with short-term termination agreements, if deadlines are not met.
If a termination agreement is already on the table, you should have the situation reviewed at an early stage by a solicitor specialising in termination agreements.
You should check these points before signing
Before you sign, you shouldn’t just focus on the severance pay. Important questions to ask are:
- Is there a waiting period for unemployment benefit?
- How much is the severance pay really worth in relation to the risk?
- When does the employment relationship end?
- What are the arrangements regarding leave of absence and holiday entitlement?
- What will the reference say?
- Are there any outstanding bonuses or commissions?
If you do not check these points, you are making a decision without a full understanding of the facts. You should also take a closer look at the issues of severance pay and contract drafting, as both have a direct impact on your situation. Our employment lawyers will review your contract and show you what risks exist and what adjustments would be advisable.
"No termination agreement without a specific ALG check:
- Is the standard notice period being observed or is it shorter?
- Is there a valid reason that can be plausibly documented for the agency (e.g. otherwise certain redundancy)?
- How much is the potential loss due to the waiting period and suspension compared to the severance pay?
Only once these points are clear can a sound decision be made as to whether, on balance, the proposed termination agreement is really worthwhile."
When a legal review is particularly important
You should have the situation reviewed if:
- your employer presents a termination agreement at short notice
- there is a possibility of a waiting period
- you do not yet have a new job
- the severance payment is modest
- you are unsure whether your employer could terminate your employment
Our lawyers specialising in termination agreements will analyse your specific situation and advise you on the best course of action.
"An employee signed a mutual termination agreement providing for a severance payment and an earlier departure date. What he had not considered was that the contractual notice period had not been observed and no valid reason for the agreement had been documented.
Consequence: The Job Centre imposed a waiting period and additionally suspended his entitlement. Result: no unemployment benefit for several months, even though the employment relationship had already ended. We reviewed the situation retrospectively and were only able to mitigate the consequences to a limited extent.
The difference lies in what happens before the contract is signed. Once it’s signed, corrections are often only possible to a limited extent."
