Checklist for a termination agreement
What you should consider before signing
Termination agreement
What's important for you now
A termination agreement is an agreement between employer and employee in which the employment relationship is ended by mutual consent. Employers are often interested in an amicable solution to avoid a dismissal (due to operational or behavioral reasons) and are willing to offer concessions in return, such as a severance payment.
Many employees are pleased by the prospect of financial compensation that comes with a termination agreement. However, it's important to understand that severance pay isn't everything and that there are other aspects to consider. Before you sign, you should sleep on it for at least one night and clarify the following points:
Your checklist
Before signing, we recommend clarifying and, if necessary, renegotiating the following aspects:
Termination Date
Your employment contract can't be terminated with immediate effect, only in line with the agreed notice period. You continue to receive your salary for the remaining term, even if you are released from your duties earlier. The remaining term doesn't have to match your notice period, and you can also agree on a longer one.
Garden Leave
Employers often have no interest in keeping you on until the end of your notice period, either because a restructuring is eliminating your role anyway, or because they assume you're no longer fully motivated. You can agree that, from a certain date, you won't be required to work for the remainder of your contract. This gives you time and space to focus on your career transition, write applications, or take part in training. Garden leave can also help you release the stress that comes with your current work situation.
Severance Pay
First and foremost, a severance payment is a form of financial compensation. It can ease the transition between two jobs and help you bridge any financial gaps. Severance typically ranges from 0.5 to 1.0 months' salary per year of service, though higher amounts can be agreed. Any paid month beyond your notice period works like additional severance. Keep in mind, however, that social security contributions may differ.
Bonus Policy
If you receive variable compensation, this should be addressed in the agreement as well. A target achievement level (e.g., 100%) should be set for both the past year and the remaining period of your employment.
Employment Reference Letter
In many cases, the termination agreement includes a provision on your employment reference. A strong reference can make the difference between landing your dream job and missing out. It's therefore important to make sure the reference is worded fairly and favorably.
Unemployment Benefit
Another aspect you shouldn't overlook is the suspension period for unemployment benefits. If your employment ends through a termination agreement, your entitlement to unemployment benefits may be temporarily suspended. Before signing, it's advisable to understand the possible consequences and, where necessary, seek professional advice.
Occupational pension scheme
Here you should request an agreement regarding the vesting of previously accrued pension entitlements, if relevant.
Newplacement / Outplacement
Newplacement or outplacement (both terms are used synonymously) is a service that offers support to employees who have been laid off, helping them with their career transition. Get professional support during this time – even if you just want to take a break or are confident you'll quickly find a new job. Use your layoff as an opportunity to find the best next career step for you with Restart Career, prepare yourself perfectly, and then successfully relaunch your career. Your employer covers the costs – but only if you ask them about it. The newplacement budget is tax-free, meaning no income tax or benefit in kind is due. In addition to advice and coaching for career reorientation, this also includes further training that will make it easier for you to find a new job.
Get legal advice
There are many individual options for structuring a termination agreement. Therefore, don't rush into anything and seek legal advice from a specialist employment lawyer. Our cooperation partner, RPS Stahmer, offers you a one-hour initial consultation on employment law, which is free of charge if you later use Restart Career for your career reorientation.
How does outplacement work?
At Restart Career, we support affected employees in four phases over a period of up to 12 months.
Farewell & Reflection
Step back, process what you've been through, and reflect with intention. Which strengths have carried you? What worked, and what didn't? You'll gain clarity about your experiences and lay the groundwork for your next step.
Goal Setting
Drawing on your strengths and your current life situation, you'll shape a clear vision of your future. Which role fits you? What should your ideal work environment look like? You decide where your path leads, with a direction that feels both realistic and motivating.
Seize Opportunities
Take your next steps, whether toward a new job or self-employment. We'll help you sharpen your profile, tap into your network, and guide you through the application process, so you never miss a relevant opportunity.
Restart
The new beginning is here – and the first few months are crucial. You'll find your footing in your new role, overcome challenges, and build confidence. This is how your fresh start will be sustainably successful.
