Why a severance agreement instead of a dismissal?
A severance agreement
• Offers the chance to part on amicable terms
• Is often used to avoid a legal dispute
• Requires both sides to balance their interests and handle the separation fairly
Legal aspects
The severance agreement should be designed so that the job center cannot block unemployment benefits. In particular the severance agreement should adhere to the contractual notice period; otherwise a block can be imposed. The severance payment should be defined exclusively for the loss of the job.
Tax law is an important aspect to consider when drafting a severance agreement. It is worth finding a neutral tax lawyer to arrange a balanced representation of interests and a fair, amicable separation. We will be happy to
help you find such a lawyer for your needs.
Components of a severance agreement
• The formal cancellation of an employment contract with a date of termination, possible early release from duties, return of work materials, documents, company car etc.
• Severance pay: 50% to 100% of one twelfth of current annual salary incl. premiums, bonus etc. per year of service
• Company pension plan
• Acceptance of outplacement coaching fees
• A letter of reference (truthful and favorable) as condition of severance agreement.
This information does not constitute legal advice and is without guarantee