What an Aufhebungsvertrag is — and what it is not
An Aufhebungsvertrag (also called Aufhebungsvereinbarung or Auflösungsvertrag) is a contract in which employer and employee agree to end the employment relationship on a chosen date. The decisive feature is that it is mutual: nobody dismisses anybody, both sides sign a joint decision. That is exactly why the entire German dismissal protection system — the Dismissal Protection Act, the requirement of a valid reason, review by the labour court — simply does not apply. There is no dismissal to challenge.
Other safeguards disappear for the same reason. The works council (Betriebsrat) does not have to be heard. Special protection for pregnant employees or severely disabled persons does not bite — the official approval required for a dismissal is not needed for a mutual agreement. The end date can be set freely, even ignoring the notice period. Each of these points can be an advantage or a risk, depending on which side of the table you sit on and what exactly the document says.
Dismissal or agreement — the essential differences
| Kündigung (dismissal) | Aufhebungsvertrag (agreement) |
|---|---|
| unilateral declaration | contract of both parties |
| court review, claim within 3 weeks | no review of the merits |
| statutory notice periods | end date freely negotiable |
| works council must be heard | works council bypassed |
| official approval where specially protected | no approvals needed |
| benefits usually without suspension | risk of a 12-week suspension |
The table explains why employers like these agreements so much: they buy certainty. The risk of losing an unfair dismissal case, of a defective delivery or of a works council that was not heard vanishes overnight. That certainty has a price — and the price is called severance. How long the notice periods are that an employer would otherwise have to observe is covered in our article on notice periods in Germany.
Written form — and no right to change your mind
Ending an employment relationship by contract requires written form, and electronic form is expressly excluded (sec. 623 BGB). Only paper with handwritten signatures of both sides is valid — a document signed by e-mail, scan or e-signature has no effect. The flip side is less comfortable: once signed, the agreement generally cannot be revoked. The withdrawal rights known from consumer contracts do not exist here, and regret — even the very next day — changes nothing. One rule therefore matters more than all others: do not sign on the spot. No provision obliges you to decide immediately, and asking for a few days to review the draft is entirely normal.
Severance: what you can negotiate
Contrary to popular belief, German law grants no general entitlement to severance pay. Severance under a termination agreement is purely a matter of negotiation — the employer pays for avoiding litigation risk. The market reference point is the formula of sec. 1a of the Dismissal Protection Act: half a gross monthly salary for each year of service, with periods over six months rounded up to a full year. That is a starting point, not a ceiling. The weaker the employer’s position in a hypothetical court case — long service, doubtful reasons, special protection, formal mistakes — the more can be achieved. In practice, severance ranges from 0.25 to well over 1.0 monthly salary per year of service.
No social security contributions are due on severance, but it is fully subject to income tax in the year of payment. The progression is softened by the so-called Fünftelregelung — how it works and what remains net is calculated step by step in our article on severance pay tax in Germany.
The benefit suspension: twelve weeks without unemployment benefit — and a smaller total pot
The most frequent and most expensive mistake concerns unemployment benefit. Whoever signs a termination agreement has, in the eyes of sec. 159(1) sentence 2 no. 1 of the Social Code III, ended the employment relationship themselves — just as if they had resigned. Without good cause (wichtiger Grund) this triggers a suspension: for twelve weeks the Agentur für Arbeit pays no benefit, and the total benefit entitlement is cut by at least one quarter (sec. 148(1) no. 4 Social Code III). With a twelve-month entitlement, three months of benefit are lost — irretrievably.
The suspension can be avoided. The Federal Social Court has held that an employee has good cause if the employer had firmly announced a dismissal for operational reasons (betriebsbedingte Kündigung) effective on the same date, the agreed end date is not earlier than the notice period allows, and the severance stays within the limits of sec. 1a of the Dismissal Protection Act, i.e. up to 0.5 monthly salaries per year of service — in that case the agency does not even examine whether the announced dismissal would have been lawful (BSG, judgment of 2 May 2012, B 11 AL 6/11 R). With a higher severance the agency does examine the hypothetical dismissal, and where the reasons lie in the employee’s conduct there is normally no good cause. The practical lesson: a well-drafted agreement contains a preamble stating that it is concluded to avoid an otherwise unavoidable dismissal for operational reasons — and it respects the notice period.
The second trap: a shortened end date (sec. 158 Social Code III)
Independently of the suspension, a second mechanism applies. If the agreement shortens the notice period and provides for severance, the benefit entitlement rests (ruht) — at the latest until the day on which the employment would have ended had the proper notice period been observed (sec. 158 Social Code III). The agency treats part of the severance as pay for the shortened period and pays nothing in the meantime. Both sanctions can add up. The end date in the agreement should therefore, as a rule, match at least the date that would apply under an ordinary dismissal — an earlier exit costs twice.
Unfair negotiation: when a signed agreement can be overturned
A signed agreement is not always the end of the story. The Federal Labour Court set aside an agreement signed by a sick employee whom the employer’s representative had surprised in her flat — a violation of the principle of fair negotiation (Gebot fairen Verhandelns) renders the agreement ineffective (BAG, judgment of 7 February 2019, 6 AZR 75/18). This concerns situations in which the employer exploits a recognisable weakness: illness, surprise, the pressure of the moment. A separate route is rescission of a declaration obtained by deceit or unlawful threat (sec. 123 BGB) — for instance where the employer threatens a summary dismissal that no reasonable employer would even consider in the situation. These are, however, exceptions requiring proof, not the rule. A related scenario, in which the employer gives in to pressure from the workforce, is covered in our article on Druckkündigung.
Deadlines with the Agentur für Arbeit
After signing, the same duties run as after a dismissal: register as a jobseeker at the latest three months before the agreed end of employment, and if less time remains — within three days of signing (sec. 38 Social Code III). Being late costs an additional one-week suspension. Register immediately, whether or not you already have a new job in sight — the registration decides nothing and protects your benefit.
Termination agreement on the table — what to check before signing
Do not sign on the spot — ask for a few days. Compare the end date with the notice period that would apply to a dismissal. Check the preamble: separation to avoid an operational dismissal, not because of conduct. Calculate the severance — 0.5 salaries per year is the starting point, not the maximum. Release from work (Freistellung): with or without crediting holidays and overtime? A reference letter with an agreed grade, ideally with the right to draft it. Bonuses and annual payments — make sure the end date does not cut you off just before they fall due. A settlement clause (Abgeltungsklausel) extinguishes all claims — settle overtime and arrears first. Register with the Agentur für Arbeit within three days. When in doubt, show the draft to a lawyer before signing — afterwards there is almost no room left to move.
Frequently asked questions
What is an Aufhebungsvertrag in English?
A mutual termination agreement: employer and employee end the employment by consent on an agreed date, usually against severance pay. It is not a dismissal and is not reviewed by the labour court.
Is a termination agreement signed by e-mail or e-signature valid?
No. Sec. 623 BGB requires written form and excludes electronic form — paper with handwritten signatures of both sides is needed.
Can I revoke a signed Aufhebungsvertrag?
Generally no — there is no withdrawal right. Exceptionally the agreement can be overturned for unfair negotiation (BAG 6 AZR 75/18) or rescinded for deceit or unlawful threat (sec. 123 BGB).
How much severance is usual?
There is no statutory entitlement. The reference point is 0.5 gross monthly salaries per year of service (sec. 1a Dismissal Protection Act), and the outcome depends on the employer’s litigation risk.
Will I receive unemployment benefit after a termination agreement?
Yes, but usually only after a twelve-week suspension (Sperrzeit, sec. 159 Social Code III), and the total entitlement is cut by at least one quarter. On top of that, with a shortened end date the benefit rests under sec. 158 Social Code III.
When does no suspension apply?
When the employer had firmly announced an operational dismissal for the same date, the notice period is respected and the severance does not exceed 0.5 salaries per year of service (BSG B 11 AL 6/11 R).
Do I have to sign immediately?
No. Pressure to sign on the spot is a warning sign. Ask for time to consider and have the draft reviewed — that is standard, not an affront.
This overview is based on sec. 123 and sec. 623 BGB, sec. 1a of the Dismissal Protection Act and sec. 38, 148, 158 and 159 of the Social Code III, as well as the judgments of the BSG of 2 May 2012, B 11 AL 6/11 R, and of the BAG of 7 February 2019, 6 AZR 75/18. Legal position: July 2026. This article is for information purposes and does not replace legal advice in an individual case.