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Termination Settlement Agreement

An Abwicklungsvereinbarung settles the terms of an exit after the employer has already given notice. Unlike an Aufhebungsvertrag it does not itself end the employment; it presupposes the dismissal and governs severance, garden leave, the reference letter, and the full-and-final clause. The advantage once assumed for the unemployment-benefit blocking period is not reliable, because the Bundesagentur für Arbeit may treat it as participation in ending the employment.

At a glance

  • Presupposes a dismissal that has already been given and only governs how it is settled
  • Typical content: severance, garden leave, payment for untaken holiday, the reference letter, return of equipment, full-and-final clause
  • Usually combined with a waiver of the dismissal-protection claim
  • The termination flows from the notice, not from the agreement

How it differs from an Aufhebungsvertrag

In an Aufhebungsvertrag both sides agree to end the employment. In an Abwicklungsvereinbarung the ending is already fixed by the notice, and only the terms remain to be negotiated.

The practical difference is the negotiating position. After notice, the three-week filing deadline is running, which increases time pressure on both sides.

Blocking period for unemployment benefit

The Abwicklungsvereinbarung was long treated as a way to avoid the Sperrzeit, because the termination formally came from the employer. That should not be relied on. The Bundesagentur für Arbeit may treat waiving the dismissal-protection claim in exchange for severance as participation in ending the employment.

The assessment depends on the individual case, in particular whether the dismissal was clearly lawful. Employees should consult the Bundesagentur für Arbeit or take advice before signing.

FAQ

When does an Abwicklungsvereinbarung make sense?

Where notice has already been given and both sides want to avoid a dismissal-protection case. It gives the employer planning certainty and the employee a negotiated severance without litigation risk.

Is there a right to withdraw?

No, there is no statutory right of withdrawal. The same limits apply as for an Aufhebungsvertrag, in particular the requirement of fair negotiation.

Does the works council have to be involved?

For the dismissal itself yes, under § 102 BetrVG. The Abwicklungsvereinbarung as such is not subject to co-determination.

Last updated: August 2026

This article provides general information and is not a substitute for legal advice in individual cases.