Termination agreement - Settlement agreement
The initiative for a termination agreement usually comes from the employer.
The main problem here is that a termination agreement, once concluded, generally cannot be revoked. There is no statutory right of withdrawal. Only in exceptional cases can a challenge be successful. Furthermore, by concluding a termination agreement, an employee has contributed to the termination of their employment relationship, which means they risk a waiting period before receiving unemployment benefits.
This can also happen with a so-called settlement agreement. In a settlement agreement, the parties agree on the settlement after a notice of termination has been given and waive their right to a judicial review of the termination.
The employer gains legal certainty through a termination agreement and avoids litigation, while the employee waives their protection against unfair dismissal but usually receives severance pay in return. From the employee's perspective, it is therefore essential to carefully consider whether a termination agreement is an option and, if so, under what conditions. The employer must ensure that the proposed termination agreement truly represents a final settlement.
Reason enough to seek thorough advice before concluding a termination or settlement agreement.
