The termination agreement

Published: April 22, 2022

The termination agreement

Conversation with a PhD chemist whose employer presented her with a termination agreement: “I went into the appraisal interview in good spirits because I thought that I can finally change departments. That’s what I asked.” She was completely unprepared, that the employer wanted to discuss more things: he wanted to get rid of her. He said that she would no longer be the first choice for the department and the entire company.

A termination agreement is not a golden handshake, not even a silver one.

A termination agreement reads well at first. Often you are immediately released from work and receive a few more monthly salaries without having to work for it. There are, however, pitfalls. “The lawyer, whom I immediately consulted, warned me. Accepting a termination agreement means that I will resign as an employee with no unemployment benefits in the first few months; the severance payment counts as a salary, so it is taxable. You have to pay for health insurance entirely yourself.

In most cases, it is better for an employee if he is terminated. However, it is not easy for an employer to get rid of an employee with a permanent contract. “Employees have to do what they should do, as well as they can” is a bon mot among labour lawyers. That is why employers usually offer a termination agreement, try to find an agreement for the termination if necessary and will apply more or less gentle pressure to sign if necessary.

Occasionally, employers sweeten a termination agreement with a job reference with top marks, but employers and employees alike should distance themselves from such shady arrangements. It is dangerous for employers to lie blatantly, the next employer of the terminated employee can suethem for essentially lying to them. For the recipient of the termination agreement it should be clear that a top reference will let the alarm bells ring in their readers’ minds, who will ask themselves: “Was she really that good, or was that part of a termination agreement?”

My discussion partner told me how it went in her case: “I was temporarily dismissed for three days so that I could talk to a lawyer. Sounds fair, right? On the one hand, yes, but I was also told unequivocally that I had no future in the company. I still want to achieve something and don’t sit out my work life. Besides, I don’t handle negative pressure well.” She resigned, got a severance payment, and managed to get a new job offer within a couple of months.

A termination agreement is not a golden handshake, not even a silver one. It’s the beginning of a complex process and a path that you do not go alone. The first point of contact is the works council, and a lawyer should manage your communication with the employer. For the psychological stress and your frustration it is best to consult friends and relatives, not colleagues and superiors.


This article was originally published in Nachrichten aus der Chemie (05-2017). See here the German original.

The newspaper Zeit has an excellent column about labour law (in German). 

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