Employee Release Agreement - Germany

Employee Release Agreement for Germany

Employee Release Agreement Template for Germany

A legally binding agreement under German law that formally terminates an employment relationship by mutual consent between an employer and employee. This document outlines the terms and conditions of the employment termination, including severance payments, outstanding benefits, confidentiality obligations, and mutual releases of claims. It ensures compliance with German labor laws, including the Civil Code (BGB), Employment Protection Act (Kündigungsschutzgesetz), and relevant social security regulations. The agreement provides legal certainty for both parties and helps prevent future disputes by clearly defining all termination terms and post-employment obligations.

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What is a Employee Release Agreement?

The Employee Release Agreement (Aufhebungsvertrag) is a crucial document in German employment law used when both employer and employee agree to terminate their employment relationship by mutual consent. It serves as an alternative to unilateral termination and is particularly valuable in situations where traditional dismissal might be legally challenging or when parties wish to ensure an amicable separation. The agreement must comply with stringent German labor law requirements, including specific provisions for severance calculations, notice periods, and social security implications. This document is commonly used during corporate restructuring, voluntary departures, or when negotiating executive exits. It must address all aspects of the employment termination, from financial settlements to ongoing obligations, while ensuring compliance with works council requirements where applicable.

What sections should be included in a Employee Release Agreement?

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

2. Background: Brief context of the employment relationship and reason for mutual termination

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specific date when employment relationship ends and final working day

5. Financial Settlement: Details of severance payment, outstanding salary, bonus, and other compensation

6. Company Property: Requirements for return of company property and documents

7. Confidentiality Obligations: Ongoing duties regarding confidential information

8. Release of Claims: Mutual release of employment-related claims

9. References: Commitment to provide employment reference (Arbeitszeugnis)

10. Tax and Social Security: Clarification of tax treatment and social security implications

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

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

1. Garden Leave: Used when employee is to be placed on paid leave until termination date

2. Post-contractual Non-compete: Include when maintaining existing or establishing new non-compete obligations

3. Outplacement Services: When employer provides career transition support

4. Company Benefits Continuation: For cases where certain benefits continue post-employment

5. Works Council Approval: Required for companies with works councils

6. Stock Options/Equity: Needed for employees with company shares or stock options

7. Pension Arrangements: For employees with company pension entitlements

What schedules should be included in a Employee Release Agreement?

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

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 GDPR-compliant information about personal data handling

5. Appendix B: Reference Letter Draft: Draft of the agreed employment reference letter

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

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Agreement Between Company And Employee

German law-compliant employment agreement establishing terms and conditions between employer and employee, incorporating essential protections under German labor legislation.

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What is a Employee Release Agreement?

What sections should be included in a Employee Release Agreement?

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

What schedules should be included in a Employee Release Agreement?

Authors

Alex Denne

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