Termination agreement related to an employment contract

Template This is only a template of an employment termination agreement and shall be modified and adapted to your situation and needs.

Termination Agreement

Between the
<Employer >
and
<Employee>
§ 1 Consensual termination of the employment relationship
The parties agree that the employment relationship terminates by mutual agreement as requested by the employer on <date>. The employment relationship ends in compliance with the normal period of notice. Reason is the operational cessation of the job.
§  2  Handling of open holiday leaves entitlement
Holiday leaves entitlements arising from the termination of the employee’s employment relationship are granted to the employee until <date>. The parties agree that the actual conditions for further holiday and vacation compensation claims do not exist. The employment relationship is properly handled by both parties until the end of the contract.
§ 3  Severance Payment
For the loss of employment, the employee receives according to §§ 3 no. 9, 24, 34 EStG, §§ 9, 10 KSchG, a settlement in the amount of EUR <amount>. The severance payment is due on <date>. A payment before the end of the contract is excluded.
The severance payment will be paid without deduction of social security contributions and, as far as possible, without payroll tax. The taxation risk is borne by the employee.
§ 4  Instructions
The employee has been advised that in the case of early termination of the employment relationship for no operational reasons, he/she must expect a period of suspension at the employment office.
§ 5  References
The employee receives a benevolent testimony at the end of the employment relationship that also consider the leadership skills and performances of the employee.
§ 6  Non-Disclosure
The employee undertakes to maintain secrecy about all business and trade information even after termination of the employment relationship.
§ 7  Compensation of all claims
The parties agree that all claims arising out of the employment relationship, termination of employment are settle with the above agreement.
§ 8 Severability clause
 
If any provision of this Agreement is or become ineffective, the validity of the remaining provisions shall not be affected. The parties undertake to replace the ineffective provision with a clause that is as close as possible to the interests and importance of the previous provision.
<Place/Date> <Employer> <Place/Date > <Employee>

 

Holiday and leave entitlement in German labour law

The leave entitlement is regulated by the employment contract. The tariff regulations apply.

According to the German Federal Leave Act, an employee is entitled to at least four weeks’ leave per year. This is equivalent to 24 working days or 20 working days for a 5-days week.

However, the employee must first acquire his days off: he must be from six months in the employment relationship, and then he is entitled to his days off. During the first six months, he may apply for partial leave.

Differences between “working days” (Arbeitstagen) and “business days” (Werktagen)

Business days are all days that are not Sundays or Holidays. Working days are the days we worked on.

  • Business days = 6 days per week
  • Working days = 5 days per week

When can you take your days off?

The annual days of leave are to be taken within the current year. If an employee can not take his days off within the year, those days may be transferred to the following year. He has then to take those days in the first three months of the year, otherwise the leave entitlement will be forfeited.

 

Self-Suspension

The employee always has to apply for leave. If he takes days off without authorization, the employer has the right to terminate their employment relationship. If the employer refuses to authorize the days off, the employee can claim for compensation damages in Court.

 

Has your leave entitlement been denied? Contact one of our experts! We are here to help you!

 

Holidays and Sickness

If an employee is sick, the days he is not coming to work are not considered „holiday“. If he falls sick during his holidays, those days are not counted as „days off“: a medical certificate is required.

If the employee is not able to take his days off because of an illness, those days are going to expire.

 

Days off at the end of an Employment Relationship or during an exemption from work

 If the employment relationship is terminated before the holidays have been taken, the employer must pay for those days off. In the case of an exemption, the employer can not offset the “normal” leave to the employee on the exemption period. An exemption from work must not be considered as “holiday”!

Employment agreement

In an employment contract are formulated the rights and obligations of a working relationship between employer and employee.

The following points are important parts of an employment contract:

  • What? – Description of the tasks which the employer can assign to the employee
  • Where? – Definition of the place where the employee would work
  • When? – Determination of the working time of the worker
  • How long? – Information on the periods of notice and, possibly, on the expiration of the employment contract.

The employment contract is also subject to statutory, business and, where applicable, tariff regulations.

Have your employment contract examined by a lawyer; if you are an employer, make sure to let an attorney design your employment contracts for you! Existing employment contracts should also be regularly reviewed and updated or harmonized.

Warning letter under labour law

In sport, the referee shows yellow and red cards to alert the players of their misconduct. “If you do not follow the rules, you are out! “ A similar system has been created also in the legal world, and that is represented by the “warnings”. A warning letter is similar to a yellow card.

A warning is therefore to point out wrong behaviours or bad performances and eventual warn of dismissal.What many do not know, is that warnings are often incorrectly formulated and for this reason legally vulnerable!If you receive a warning, immediately call an attorney! What is to be observed in the case of a warning?

Is the reason for warning missing?

A warning is only a warning when it is explicitly said what is happened, what is wrong with the employee´s behaviour etc. A mere description of the situation is inadequate and insufficient. For instance, in case of a smoking ban: if the employer writes that the employee smokes in his office, this is not yet considered a warning for misconduct. Only when it is expressly stated in the warning that the employee violates the rules, it can be considered a warning.

Only bad behaviours warnings

A dismissal may have behavioural, personal or business-related reasons, but can only be cautiously justified. The admonition may then only express a decree of order which is conditional on conduct. A special reason is required for extraordinary termination. This regulation is valid within the Employment Protection Legislation.

Only authorized persons are allowed to dismiss other employees

Both employers and employees can issue letters of warning. On the employer’s side, only authorized and qualified persons, including specialist and service supervisors, can issue warnings.

Warning topic =Reason for termination?

A letter of termination can be issued only after two letters of warning. The reason for dismissal has to be connected with the reason of warning. For instance, if an employee has been warned for alcohol consumption at work/alcoholism, this latter cannot be dismissed for „unpunctuality“.

Communication of dismissal

The employer must explicitly announce the termination of the contract. If he does not do so, the warning is not legally valid and thus the termination is void. Formulation example: “If you violate an obligation from the employment contract again, we shall take further measures which may lead to a termination of the employment relationship.” 

The warning has to be understandable:

It is important that the person making the announcement/writing the warning makes it clear to the person concerned that this latter´s behaviour needs to change. For example: if the employees are foreigners, the person in charge to give the information has to make sure to reach to the employees even if there are communication/language-difficulties.

There are no limits to the number of warnings that could be sent /received. The nature of the company, the nature and extent of the breach of duty, the position of the person concerned within the company or the consequences of the misconduct will influence the decision.

Form and Content of the Warning

The person in charge of writing and issuing the warning has to describe the behaviour and list exactly which rules have been broken by the person receiving the warning. He must clearly express what is wrong with the behaviour of the person warned.The warning can be given verbally. For reasons of evidence, however, a written warning is always recommendable.It is important to enclose evidence of the misconduct. If these are missing, the warning is doubtful.

 Removal of a warning from the personnel records

The admonished person is entitled to remove the warning from his personal file in the following cases:• If the warning has lost its effect- The person concerned has been transferred to another work area- The warning is so old that lost its effectiveness• No further misconducts occurred• It is a false or unlawful warningIf the employer is not willing to remove the warning, the person concerned may file a legal action to remedy the expulsion from his personnel records.Statistically, you have really good chances with a lawsuit to remove a warning from your personnel records.

Contact an attorney as soon as possible! We are here for you!

 

Protection against dismissal under German labour law

The regulations on protection against dismissal should give stability and security to the employment relationship. If all conditions for termination have been complied with in all points, the termination is considered effective.

Lawsuit against unfair dismissal

The employee may file complaint against unfair dismissal at the German Labour Court (Arbeitsgericht in German).

If the employee asserts that a termination is socially unjustified or is legally ineffective for other reasons, he has the chance to file a lawsuit within three weeks after the receipt of the written notice of dismissal.

In the event of dismissal for variation of the contract, legal action shall be taken in order to ascertain that the change in terms of employment is socially unjustified or legally ineffective for other reasons.

If the employee has lodged an objection with the works council, he shall enclose the statement of the works council to the lawsuit documentation.

Insofar, as the termination requires the approval of an authority, the appeal-period for bringing the matter to the Labour Court is not initiated until the decision of the authority has been notified to the employee.

Dismissal for variation of contract 

If the employer terminates the contract and offers the employee a variation of their employment relationship, the employee has the option to accept this offer and understand that the dismissal is actually not socially unjustified. This reservation must be declared by the employer to the employee within the period of notice, at the latest within three weeks after receipt of the notice of dismissal.

Termination – opposition proceeding

If the employee considers the dismissal to be socially unjustified, he may lodge an objection at the works council within one week after his dismissal. If the works council considers the appeal to be justified, he has to try to reach an agreement with the employer. It shall communicate its opinion on the objection in writing to the employee and the employer upon request.

Termination of employment

Terminating an employment contract can be regulated by an ordinary or an extraordinary termination.

If the employer or the employee wants to withdraw from the employment contract before the period of notice, the following possibilities have to be taken into consideration:

  • Annulment
  • Exemption from work
  • Termination without notice

Please make sure to contact a lawyer in order to be perfectly aware of your choices, to be prepared for the consequences and to know exactly the advantages and disadvantages of your decision.