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Employee Settlement And Release Agreement for Germany

Employee Settlement And Release Agreement Template for Germany

A comprehensive legal document governed by German labor law that formalizes the mutual agreement between an employer and employee to terminate their employment relationship. This agreement outlines the terms of separation, including severance payments, final benefits, ongoing obligations, and mutual releases of claims. It ensures compliance with German employment regulations, including the Protection Against Dismissal Act (Kündigungsschutzgesetz) and relevant provisions of the German Civil Code (BGB). The document provides legal certainty for both parties and helps prevent future disputes by clearly defining all aspects of the employment termination.

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Employee Settlement And Release Agreement

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What is a Employee Settlement And Release Agreement?

The Employee Settlement And Release Agreement (Aufhebungsvertrag) is a critical document in German employment law used when an employer and employee mutually agree to end their employment relationship. It serves as a comprehensive settlement instrument that addresses all aspects of the employment termination, including financial compensation, benefit arrangements, and mutual releases. This document is particularly relevant in situations where parties wish to avoid potential litigation or when a clean break is desired. Under German law, such agreements must comply with strict regulatory requirements, including those set forth in the Protection Against Dismissal Act and the German Civil Code. The agreement typically includes provisions for severance payments, final salary arrangements, treatment of benefits, confidentiality obligations, and reference letter requirements. It provides both parties with legal certainty and protection while ensuring all aspects of the termination are properly documented and agreed upon.

What sections should be included in a Employee Settlement And Release Agreement?

1. Parties: Identification of the employer and employee with full legal names and addresses

2. Background: Context of the employment relationship, including start date, position, and reason for termination

3. Definitions: Definition of key terms used throughout the agreement

4. Termination Date: Specific date and terms of employment termination

5. Final Salary and Benefits: Details of final regular salary payment and treatment of outstanding benefits

6. Severance Payment: Amount, calculation basis, and payment terms of the severance package

7. Company Property: Requirements and timeline for return of company property

8. Confidentiality Obligations: Ongoing confidentiality obligations post-employment

9. Release of Claims: Mutual release of claims between employer and employee

10. Tax Treatment: Tax implications and responsibilities regarding payments

11. Data Protection: Handling of personal data post-employment in compliance with GDPR

12. Reference Letter: Agreement regarding the content and issuance of the final reference letter

13. Final Provisions: Governing law, jurisdiction, and standard boilerplate clauses

14. Signatures: Execution blocks for all parties

What sections are optional to include in a Employee Settlement And Release Agreement?

1. Garden Leave: Terms of garden leave period if applicable - used when employee is placed on paid leave until termination date

2. Post-Contractual Non-Compete: Terms of any continuing non-compete obligations - used when original employment contract contained non-compete provisions

3. Ongoing Projects Handover: Process for transitioning ongoing work - used for senior positions or complex roles

4. Stock Options/Equity: Treatment of outstanding stock options or equity - used when employee has equity-based compensation

5. Pension Arrangements: Special provisions regarding company pension schemes - used when employee has pension benefits

6. Works Council Agreement: Reference to works council involvement - used when works council exists and was involved in negotiation

7. Outplacement Services: Details of any career transition support - used when outplacement services are offered

8. International Assignments: Special provisions for international assignments - used for employees with cross-border responsibilities

What schedules should be included in a Employee Settlement And Release Agreement?

1. Schedule 1 - Calculation of Final Payment: Detailed breakdown of final salary, benefits, and severance calculation

2. Schedule 2 - Company Property List: Itemized list of company property to be returned

3. Schedule 3 - Benefits Summary: Detailed summary of treatment of various benefits and entitlements

4. Appendix A - Reference Letter Draft: Agreed form of employment reference letter (Arbeitszeugnis)

5. Appendix B - Data Privacy Notice: Detailed information about post-employment data handling

6. Appendix C - Tax Declaration: Required tax forms and declarations for severance payment

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions






























Clauses






























Relevant Industries

Technology

Manufacturing

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Human Resources

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Finance

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Chief Executive Officer

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Administrative Assistant

Factory Worker

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Industries









Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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