Employment Settlement Agreement

Employment Settlement Agreement Template for Germany

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Key Requirements PROMPT example:

"I need a German Employment Settlement Agreement for a senior software engineer leaving amicably, with garden leave from January 15, 2025, until the termination date of March 31, 2025, including provisions for unvested stock options and continuation of health benefits."

Document background

The Employment Settlement Agreement (Aufhebungsvertrag) is a crucial document in German employment law used when an employer and employee mutually agree to terminate their employment relationship. It serves as an alternative to unilateral termination and helps avoid potential employment litigation. The agreement is particularly relevant in situations involving corporate restructuring, leadership changes, or when parties wish to amicably conclude the employment relationship. It must comply with strict German legal requirements, including provisions for employee protection, notice periods, and mandatory benefits. The document typically includes comprehensive terms covering severance payments, final salary, bonus arrangements, company property return, continuing obligations, and the legally required employment reference letter. Given Germany's employee-friendly legal framework, careful consideration must be given to ensure the agreement is fair, transparent, and legally compliant.

Suggested Sections

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

2. Background: Brief description of the employment relationship, including start date and current position

3. Definitions: Key terms used throughout the agreement

4. Termination of Employment: Agreement on the termination date and immediate release from duties if applicable

5. Final Payments: Details of outstanding salary, bonus, commission, and holiday pay up to the termination date

6. Severance Payment: Amount, timing and conditions of the severance payment (Abfindung)

7. Tax and Social Security: Provisions regarding tax treatment and social security implications of payments

8. Company Property: Requirements and timeline for returning company property

9. Confidentiality: Ongoing obligations regarding confidential information

10. Release of Claims: Mutual waiver of claims, subject to statutory limitations

11. Reference Letter: Agreement regarding the provision and content of the employment reference (Arbeitszeugnis)

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

13. Execution: Signature blocks and date

Optional Sections

1. Garden Leave: Used when employee is to be released from duties before termination date

2. Post-contractual Non-compete: Include if maintaining or modifying existing non-compete obligations

3. Outplacement Support: Include if employer is providing career transition services

4. Company Benefits Continuation: Used when certain benefits will continue post-termination

5. Works Council Approval: Required if works council exists and their involvement is necessary

6. Press Release/Communications: Include if parties agree on public/internal communications about the departure

7. Share Options/LTIP: Include if employee participates in share schemes or long-term incentive plans

8. Legal Costs: Include if employer is contributing to employee's legal costs

Suggested Schedules

1. Schedule 1 - Payment Calculation: Detailed breakdown of all payments including salary, severance, and benefits

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

3. Schedule 3 - Reference Letter: Agreed form of employment reference (Arbeitszeugnis)

4. Schedule 4 - Continuing Obligations: Detail of any continuing post-employment obligations

5. Appendix A - Benefits Summary: Summary of treatment of various benefits and insurances

6. Appendix B - Tax Information: Information about tax treatment of various payment components

Authors

Alex Denne

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking and Financial Services

Technology

Manufacturing

Professional Services

Retail

Healthcare

Education

Telecommunications

Energy

Construction

Media and Entertainment

Automotive

Pharmaceuticals

Consumer Goods

Insurance

Real Estate

Transportation and Logistics

Hospitality

Relevant Teams

Human Resources

Legal

Finance

Compliance

Executive Leadership

Corporate Governance

Employee Relations

Compensation and Benefits

Talent Management

Relevant Roles

Chief Executive Officer

Managing Director

Department Head

Senior Manager

Project Manager

Sales Director

Financial Controller

Software Engineer

Account Manager

Operations Manager

Marketing Manager

HR Business Partner

Regional Director

Technical Lead

Research Scientist

Product Manager

Business Development Manager

Legal Counsel

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Let's create your Employment Settlement Agreement

Authors

Alex Denne

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