Document background
The Labor Settlement Agreement (Aufhebungsvertrag) is a fundamental document in German employment law used when both employer and employee agree to terminate their employment relationship by mutual consent. It serves as an alternative to unilateral termination and is commonly used in scenarios involving restructuring, redundancies, or when parties wish to avoid potential legal disputes. The agreement must comply with strict German legal requirements, including written form requirements under the Civil Code (BGB) and consideration of various labor laws such as the Protection Against Dismissal Act. It typically addresses key aspects such as termination date, severance payments, final salary arrangements, benefit treatments, and confidentiality obligations. The document is particularly relevant in situations where a clean break is desired, or when the standard notice period may not suit either party's needs. Special attention must be paid to social security implications and tax considerations, as these can significantly impact both parties.
