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A Severance Agreement (Aufhebungsvertrag) is a legal contract between an employer and employee that sets out the terms for ending their working relationship by mutual consent. Under German labor law, this document spells out the final compensation package, including any additional payments beyond the regular salary, continued benefits, and specific conditions both parties must follow.

German companies often use these agreements to avoid lengthy dismissal proceedings and potential lawsuits. They typically include a release of claims, details about reference letters (Arbeitszeugnis), and any non-compete obligations. The agreement must comply with strict German labor protection standards and requires careful consideration from both sides, as it's legally binding once signed.

Consider using a Severance Agreement when you need a clean, mutually beneficial end to an employment relationship in Germany. This could be during corporate restructuring, when resolving workplace conflicts, or if an employee wants to leave before their contract ends. It's especially valuable when both parties prefer to avoid the strict German dismissal protection rules and lengthy court proceedings.

The agreement becomes crucial in sensitive situations like executive departures, performance-related separations, or when protecting trade secrets after employment ends. German companies often use these agreements during mergers and acquisitions, offering enhanced benefits in exchange for a smooth transition and release of potential claims.

• Mutual Severance Agreement: Standard form used when both parties amicably agree to end employment, typically including balanced terms and mutual releases
• Severance Pay Agreement: Focuses specifically on compensation terms, including detailed payment schedules and tax considerations
• Layoff Separation Agreement: Designed for group redundancies or restructuring, often including social plan provisions
• Job Separation Agreement: Comprehensive version covering all separation aspects, including non-compete clauses and reference letters
• Employee Severance Letter: Simplified format for straightforward separations, often used with lower-level employees

• HR Managers: Typically initiate and coordinate the Severance Agreement process, ensuring compliance with German labor laws and internal policies
• Legal Counsel: Draft and review agreements to ensure they meet German legal requirements and protect company interests
• Works Councils: Must be consulted in many cases, especially during restructuring or when agreements affect multiple employees
• Department Heads: Provide input on operational impacts and transition planning
• Employees: Review and negotiate terms, often with support from their labor unions or legal representatives
• Financial Officers: Calculate severance payments and assess budget implications

• Employee Details: Gather complete employment history, current position, salary, and benefits information
• Termination Specifics: Document the exact end date, reason for separation, and any transition period requirements
• Financial Calculations: Determine severance amount, outstanding vacation pay, and bonus entitlements under German law
• Company Assets: List all items for return, including equipment, documents, and access credentials
• Post-Employment Terms: Define non-compete clauses, confidentiality requirements, and reference letter content
• Works Council Input: Obtain necessary approvals and documentation from employee representatives
• Document Generation: Use our platform to create a legally compliant agreement that includes all required elements

• Party Information: Full legal names, addresses, and roles of employer and employee
• Termination Details: Clear statement of employment end date and mutual agreement to terminate
• Compensation Terms: Detailed breakdown of severance payment, timing, and tax treatment
• Release Clause: Mutual waiver of claims under German civil and labor law
• Reference Letter: Terms for providing the mandatory qualified Arbeitszeugnis
• Confidentiality: Scope of post-employment secrecy obligations and data protection
• Non-Compete: Any competitive restrictions, including duration and geographic scope
• Social Security: Impact on unemployment benefits and insurance coverage
• Revocation Period: Standard 14-day withdrawal right under German law

A Severance Agreement differs significantly from a Conciliation Agreement in German employment law, though both deal with resolving workplace situations. Let's examine the key differences:

• Primary Purpose: Severance Agreements end employment relationships with financial compensation, while Conciliation Agreements resolve ongoing workplace disputes without necessarily ending employment
• Timing of Use: Severance Agreements are used at employment termination, whereas Conciliation Agreements can be implemented at any point during employment
• Legal Effects: Severance Agreements permanently end the employment relationship, but Conciliation Agreements focus on specific dispute resolution while maintaining the employment contract
• Financial Terms: Severance Agreements always include compensation packages, while Conciliation Agreements may or may not involve financial elements
• Works Council Role: Severance Agreements often require Works Council consultation for validity, while Conciliation Agreements typically involve them as mediators