Document background
The Settlement Agreement Between Employee And Employer is a crucial document in German employment law, used when both parties agree to terminate their employment relationship by mutual consent. It serves as an alternative to unilateral termination and is commonly used in situations involving redundancies, performance issues, or general restructuring. The agreement must comply with German labor law requirements, including the Civil Code (BGB), Protection Against Dismissal Act (KSchG), and relevant tax regulations. It typically includes provisions for severance payments, final salary arrangements, treatment of benefits, confidentiality obligations, and mutual releases. Special attention must be paid to German-specific requirements such as works council involvement where applicable and the mandatory fair and clear language requirements under German law. The document provides legal certainty by preventing future employment-related claims while ensuring all statutory entitlements are properly addressed.
