Termination Agreement (Aufhebungsvertrag): Blocking Period, Severance and What to Watch Out For

Unlike a dismissal, the employer and employee end the employment relationship by mutual agreement at an agreed point in time. The agreement must be in written form (§ 623 BGB); the electronic form is excluded.

Anyone who signs a termination agreement is co-responsible for ending the employment relationship. The Agentur für Arbeit (the German Federal Employment Agency) therefore often imposes a blocking period (Sperrzeit) of up to twelve weeks during which no unemployment benefits are paid; in addition, the overall benefit period may be shortened. A blocking period can only be avoided if there is a compelling reason.

Once you have signed a termination agreement, you generally cannot withdraw from it — there is no statutory right of withdrawal here as there is for consumer contracts. For this reason, never sign under pressure or "on the spot".

A severance payment (Abfindung) is not guaranteed by law but is a matter of negotiation; its amount is often based on half a gross monthly salary per year of employment. In addition, pay attention to the following points:

• An end date that observes the ordinary notice period (otherwise unemployment benefits are suspended).
• The amount and due date of the severance payment.
• A favorable, qualified reference letter with a fixed grade.
• Remaining holiday, overtime and any release from work duties.
• The scope of the settlement clause that disposes of all claims.

Take your time and review the draft before you sign. An automated check uncovers missing provisions (e.g. regarding the reference letter or release from work) and disadvantageous clauses, and points out the blocking-period risk.