Termination Agreement

Key Points and English template

Use a Termination Agreement if ...

… you and an employee have agreed to terminate the employment relationship early (regardless of contractual terms or notice periods)

… you would like to cover the risks associated with the termination of the employment relationship in an agreement for protection purposes (e.g. illness)

… you are prepared to make certain compromises in favour of the employee in return for the early termination of the employment relationship (for example release from work obligation)

Key Points included in a Termination Agreement:

What is a Termination Agreement?

Under a termination agreement, an employer and an employee agree to terminate their employment relationship

The termination agreement is a settlement in which the parties release each other from their employment claims in return for certain payments or waivers

While a termination is unilateral (often by the employer), a termination agreement requires the consent of both parties. If there is agreement, neither notice periods nor termination blocking periods have to be observed. In the event of a subsequent complaint, however, it must be clear that the termination agreement is in the mutual interest and not in the unilateral interest of the employer. It is useful to precisely specify in the agreement the mutual rights and obligations of the parties in connection with the termination, in particular with regard to the salary.

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