The Mutual Termination of Employment agreement is utilized when both employer and employee agree to end their employment relationship consensually, rather than through unilateral termination. This document is particularly relevant in German employment law contexts where parties seek to avoid potential disputes or legal proceedings associated with unilateral terminations. It provides a structured framework for documenting the agreed terms of separation, including financial settlements, ongoing obligations, and transitional arrangements. The agreement must comply with German employment law requirements, including the Civil Code (BGB) and Protection Against Dismissal Act (KSchG), while ensuring adequate protection for both parties. It's commonly used in corporate restructuring, amicable separations, or situations where alternative employment arrangements have been secured. The document typically includes comprehensive provisions for final settlements, benefits, reference letters, and addresses specific German legal requirements such as the mandatory written form and works council consultation where applicable.
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1. Parties: Identification of the employer and employee with full legal names and addresses
2. Background: Brief history of employment relationship, including start date and current position
3. Definitions: Key terms used throughout the agreement
4. Termination Date: Specific date when employment relationship will end
5. Final Salary and Benefits: Details of final regular salary payment, including treatment of any outstanding bonuses, commissions, or benefits
6. Holiday Entitlement: Settlement of remaining vacation days and any compensation for unused leave
7. Company Property: Requirements and timeline for returning company property
8. Confidentiality Obligations: Ongoing obligations regarding confidential information
9. Final Settlement: Details of any severance or settlement payment
10. Release of Claims: Mutual release of employment-related claims
11. Reference Letter: Commitment to provide a reference letter (Arbeitszeugnis) as required by German law
12. Social Security and Tax Treatment: Clarification of social security and tax implications
13. Governing Law: Confirmation that the agreement is governed by German law
14. Severability: Standard clause ensuring rest of agreement remains valid if any part is found invalid
1. Garden Leave: Used when employee will be placed on garden leave until termination date
2. Post-contractual Non-compete: Include if maintaining or modifying existing non-compete obligations
3. Ongoing Projects Handover: Required for employees with significant project responsibilities
4. Works Council Agreement: Reference to works council involvement where applicable
5. Company Housing: Include if employee has company housing arrangements
6. Share Options/Long-term Incentives: Treatment of outstanding share options or other long-term incentives
7. Outplacement Support: Include if company is providing career transition services
8. Legal Costs: Include if employer will contribute to employee's legal costs
9. Insurance Continuation: Used when addressing continued insurance coverage
10. References and Communications: Include if specific agreements about future references or internal/external communications are needed
1. Schedule 1: Financial Settlement Calculation: Detailed breakdown of all financial elements of the settlement
2. Schedule 2: Company Property List: Itemized list of company property to be returned
3. Schedule 3: Benefit Details: Comprehensive list of benefits and their treatment post-termination
4. Appendix A: Data Privacy Notice: Required information about handling of personal data post-employment
5. Appendix B: Reference Letter Draft: Draft of the agreed reference letter content
6. Appendix C: Handover Plan: Detailed plan for handover of responsibilities where applicable
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Relevant Teams
Human Resources
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Finance
Operations
Information Technology
Sales
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Research and Development
Customer Service
Administration
Production
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Business Development
Corporate Communications
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