Two ways out of an employment relationship
An employment relationship usually ends with notice. Notice is unilateral: one side declares it and the other does not have to accept it. The notice period then runs automatically. A termination agreement (Aufhebungsvertrag), by contrast, is a mutual arrangement. Employer and employee agree together when and on what terms the employment ends. No notice period has to be observed.
Advantages of a termination agreement
The biggest advantage is flexibility. If you can start a new job on the first of next month, you do not have to wait out a three-month notice period. Conversely, a later end can be agreed, for example to finish a project. A termination agreement can also cover severance pay, garden leave, remaining holiday, the reference and the return of company property.
For employers it removes the risk of an unfair dismissal claim. That is why they are often willing to pay severance, although there is no statutory right to it. The severance calculator shows the usual amount and what remains after tax.
The downsides: dismissal protection and benefit block
By signing, employees give up the protection of the Protection Against Dismissal Act and any special protection, for example due to pregnancy, parental leave or severe disability. A signed termination agreement can only be challenged in exceptional cases, such as unlawful threats. There is no right of withdrawal as for doorstep sales. The Federal Labour Court only checks whether the requirement of fair negotiation was breached.
The second major downside concerns unemployment benefit. If you end your employment by agreement, you have usually ended it yourself. The employment agency then normally imposes a block period of up to twelve weeks (§ 159 SGB III), and the duration of the entitlement is reduced. As a rule no block period applies if there is an important reason, for example if a lawful dismissal for operational reasons would otherwise have taken effect at the same time and the severance does not exceed half a monthly salary per year of service.
Suspension if the period is shortened
If the employment ends earlier than would have been possible with the employer's ordinary notice period and severance is paid, the entitlement to unemployment benefit is suspended (§ 158 SGB III). The agency assumes that part of the severance is pay for the shortened period. It is therefore worth aligning the end date of a termination agreement with the notice period the employer would have to observe. The notice period calculator works this out when you select employer and enter your length of service.
Comparison at a glance
| Notice | Termination agreement | |
|---|---|---|
| Consent of the other side | not required | required |
| Notice period | must be observed | freely agreed |
| Dismissal protection | remains | lost |
| Severance | only in exceptions | often agreed |
| Unemployment benefit block | yes if you resign, no if the employer dismisses | usually yes, unless there is an important reason |
| Form | written (§ 623 BGB) | written (§ 623 BGB) |
When each option makes sense
A termination agreement is mainly worthwhile if you already have a new job and want to switch earlier, or if the employer offers attractive severance and you do not depend on unemployment benefit. If, on the other hand, you face a dismissal you could challenge, be careful. Take your time, do not sign anything in the first meeting and seek advice from a specialist employment lawyer or your trade union.
Do not forget the formalities
A termination agreement also requires written form with the signatures of both sides on the same document. An agreement by email is invalid. Register as a job seeker at least three months before the agreed end, or within three days if the gap is shorter. Also check how much holiday you have left, the holiday entitlement calculator works out your entitlement.
The basics of all statutory periods are covered in our main guide calculating notice periods in Germany.