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 >
§ 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>


Warning letter under German labour law

Template This is only a template of a notice of warning and shall be modified and adapted to your situation and needs.



Notice of Warning


Dear Mr./Mrs./Ms. <Surname>,

We unfortunately have to communicate you that we are aware of the following:

<Description of the misconduct>

By doing so, you have violated an obligation under the employment contract, <name / clause>. Your misconduct leads us to this notice of warning.

We hereby expressly inform you that we are not prepared to accept further breaches of duty.In case of another misconduct or illegal behavior, we will be ready to take further measures. These may even mean a termination of the employment relationship. We have sent you a draft of this warning letter in advance in order to give you the possibility to react to our accusations. You have made the following statement:  <Statement> Your explanation, however, does not change the fact. The breach of duty continues to exist for the following reason/-s:   <Reasons> A copy of this letter will be added to your personal file.

Kind Regards,


The Employer <Signature>

Reasons for dismissal under German labour law

The reasons for a termination are divided in the following areas:

Grounds for dismissal: Extraordinary and immediate termination: Ordinary termination with period of notice
Notice of termination for reasons of conduct Special reasons are required With previous warnings
Dismissal on personal grounds With no warnings
Forced redundancies Operational circumstances are required

Notice of termination for reasons of conduct

Notices of termination for reasons of conduct are the result of employee’s misconduct. In the event of a breaching of the rules, the employer is first entitled to warn the employee. After repeated warnings, if the situation does not change, there are enough grounds for a dismissal.

As “misconduct” is intended:• Suspension from work taken without permission of the employer;• Failure to comply with operational smoking and alcohol bans;• Criticism to employers and superiors;• Unexcused absence;• Unpunctuality;• Calling sick and working elsewhere.

Did you know? An employee, who is proven to behave against the rules, must pay the estimated “detective” costs to him.

Dismissal on personal grounds

Dismissal on personal grounds depends on facts related with the person of the employee. These imply: • Lack of eligibility/qualification of the employee;• Lack of work permit;• Foreign military service of more than two months;• Serving of a custodial sentence;• Sickness/Illness of the employee:- Long-lasting disease- Frequent short-term diseases- Permanent incapacity for work- Performance reduction

Forced redundancies

Forced redundancies terminations are triggered by changes in the company:• In-house circumstances- Rationalization measures- Discontinuation or restriction of production• External conditions- Lack/shortage of orders- Decline in salesIf, despite the circumstances, the employer has the chance to take the employee to another place/area of the company, he may not terminate the contract.

When selecting the person to be dismissed, the employer must make a “social selection”(soziale Auswahl in German). The legislator requires that the termination is “socially justified”. Terminations that are contrary to the principle of good faith or are contrary to the law are ineffective. A forced redundancies termination is socially unjustified, if the employer in the selection of the employees to be dismissed: • is a senior (long period of employment),• is older• has maintenance obligations (severe disability or pregnancy).

Reasons for an extraordinary termination

There must be a special reason for an extraordinary termination. Here are some examples.

Reasons of extraordinary termination from the employer: 

  • Unjustified work-refusal
  • Xenophobic comments
  • Gross affront
  • Infectious, continuous or simulated illness
  • Sexual harassments or moral misconduct
  • Offences such expenses-account abuse or misappropriation of company funds
  • Willful bodily injury of colleagues, clients or superiors
  • Alcoholism
  • Taking unauthorized days off
  • False calculation of the working hours
  • Private phone-calls (after several warnings, quick phone-calls are allowed)
  • Surfing the net at workplace [See: Private Surfing at the workplace]
  • In case of suspicion of a serious job-related misconduct or a criminal offense which has a negative effect on the employment relationship.

Reasons of extraordinary termination from the employee: 

  • Arrears of wages (despite repeated warning)
  • Infringement of the contract, such as non-payment of agreed relocation costs
  • Reckless suspicion of the employer
  • Employment protection violations
  • If the employer is not able to provide the employee with a job with little physical activity despite illness

Immediate termination of an employment contract in Germany

Extraordinary and immediate terminations can conclude the employment relationship without observing particular deadline or periods of notice. Both employees and employers can terminate an employment relationship without previous notice. The prerequisite for an extraordinary termination of the contract is a particularly important reason for leaving.

When is the extraordinary and immediate termination of the employment contract legally effective?

  • The person that is interrupting the employment relations has to present a notice of termination within two weeks after the important fact (reason for leaving) has been recognized. The notification has to be provided in written form;
  • In addition, he/she must obtain a statement from the works council within three days;
  • The employer must request the consent of the Integration Office to terminate the employment relationship with a severely disabled person;
  • The employer must request the consent of the Public Health Department in order to terminate the employment relationship with a pregnant woman;
  • The employer must file an application with the Labour Court in order to terminate the employment relationship with a member of the works council
  • If the terminating party does not comply with the above-mentioned conditions, the extraordinary termination shall be forfeited.

An extraordinary termination is always the last step to take against an employee.

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.

Leave of absence under German labour law

“Consider yourself on leave until further notice!” An exemption/leave of absence may be decided colloquially.

This means that the employer releases the employee from labor conscriptions for an undetermined period of time.

Consequences of an exemption from work:

  • The employee can not comply with his work until a legal termination of the contract;
  • The employee must stay away from the workplace;
  • The employee may be entitled to compensation for damages.

Please consider that your entitlement to holidays and the overtime payment do not forfeit with the exemption from work.

The exemption may be the “elegant” substitute for an immediate termination. The employer can remove the employee from his / her position before the statutory period of notice.

The employee may object to the exemption:

  • The works council can object to the exemption after the order of a decent termination of the employer.
  • The employee can take legal action against the exemption before the Employment Court (Arbeitsgericht).

If you are interested in the formal and content related conditions of an exemption agreement, you can prevent possible disadvantages by requesting for more information in due time.


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.