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Settlement Agreement as an Alternative to Termination

Settlement agreement as a quick alternative: elements, advantages, risks, and tips for negotiating without the subdistrict court.

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Settlement Agreement: A Smart Alternative to Termination

A settlement agreement (VSO) terminates the employment contract without court involvement. Parties negotiate the end date, compensation, and a neutrality declaration themselves.

Essential Elements

  • Transition compensation or more.
  • Neutrality clause: no unemployment benefit (WW) block.
  • Non-compete clause waiver.
  • Employer indemnification.

Advantages

Fast (no legal proceedings), confidential, tailored. Avoids the risk of refusal to terminate. Entitlement to unemployment benefits after one month of WW payments.

Risks and Tips

Employee: negotiate a higher salary. Employer: have the agreement approved by a legal professional. If coercion is involved: not legally valid. Use the AWVN model settlement agreement. Notarisation is not required, but a written agreement is.

When to Choose?

In case of impending termination or retirement age. A popular exit strategy: 80% of dismissals are handled via a settlement agreement. Always seek professional advice to ensure balance. (201 words)

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