The Labor Settlement Agreement (Aufhebungsvertrag) is a fundamental 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 commonly used in scenarios involving restructuring, redundancies, or when parties wish to avoid potential legal disputes. The agreement must comply with strict German legal requirements, including written form requirements under the Civil Code (BGB) and consideration of various labor laws such as the Protection Against Dismissal Act. It typically addresses key aspects such as termination date, severance payments, final salary arrangements, benefit treatments, and confidentiality obligations. The document is particularly relevant in situations where a clean break is desired, or when the standard notice period may not suit either party's needs. Special attention must be paid to social security implications and tax considerations, as these can significantly impact both parties.
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1. Parties: Identification of the employer and employee with full legal names, addresses, and roles
2. Background: Brief context of the employment relationship, including start date, position, and reason for settlement
3. Definitions: Key terms used throughout the agreement
4. Mutual Termination: Agreement to terminate the employment relationship, specifying the exact termination date
5. Final Payment of Regular Remuneration: Details of final salary, bonuses, and outstanding vacation days
6. Severance Payment: Amount, calculation basis, and payment terms of the severance package
7. Company Property: Obligations regarding return of company property and documentation
8. Confidentiality: Ongoing obligations regarding company secrets and confidential information
9. Release of Claims: Mutual release of employment-related claims
10. Reference Letter: Employer's obligation to provide a qualified reference letter
11. Tax and Social Security: Clarification of tax treatment and social security implications
12. Final Provisions: Severability clause, governing law, and form requirements
1. Post-Contractual Non-Compete: Used when parties agree on post-employment competition restrictions
2. Outplacement Services: Include when employer provides career transition support
3. Stock Options/Benefits: Required when addressing outstanding company shares or special benefits
4. Works Council Approval: Necessary when works council is involved in the termination process
5. Garden Leave: Include when employee is released from duty before termination date
6. Pension Arrangements: Required when addressing company pension schemes or retirement benefits
7. Continued Use of Company Benefits: Used when certain benefits extend beyond termination date
8. Training Costs Repayment Waiver: Include when waiving repayment of training investments
1. Schedule 1: Calculation of Final Payment: Detailed breakdown of final salary, bonus, and vacation compensation
2. Schedule 2: Severance Payment Calculation: Detailed calculation of severance amount including any special factors
3. Schedule 3: Company Property List: Itemized list of company property to be returned
4. Schedule 4: Benefit Details: Specific details about treatment of various benefits post-termination
5. Appendix A: Data Privacy Declaration: Special declarations regarding personal data handling post-employment
6. Appendix B: Reference Letter Draft: Agreed format and content of the employment reference letter
Authors
Relevant legal definitions
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Relevant Industries
Manufacturing
Technology
Financial Services
Healthcare
Retail
Professional Services
Construction
Education
Telecommunications
Energy
Transportation
Media and Entertainment
Real Estate
Hospitality
Pharmaceutical
Automotive
Consumer Goods
Insurance
Relevant Teams
Human Resources
Legal
Finance
Payroll
Compliance
Employee Relations
Executive Management
Administration
Works Council
Relevant Roles
Chief Executive Officer
Managing Director
Department Head
Senior Manager
Project Manager
Software Developer
Sales Representative
Financial Analyst
Human Resources Manager
Operations Manager
Marketing Director
Research Scientist
Account Manager
Production Supervisor
Administrative Assistant
Technical Specialist
Customer Service Representative
Business Development Manager
Legal Counsel
Quality Assurance Engineer
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