💡 Key Takeaways
A termination agreement can trigger a suspension period of up to 12 weeks for unemployment benefits, as you are considered to have contributed to your own unemployment. This period is not paid out retroactively and reduces the total entitlement.
You can shorten or avoid the suspension period if there is an important reason (e.g., imminent dismissal, health reasons) or if the employment relationship is ended through a court settlement.
A termination agreement often leads to the Employment Agency imposing a suspension period on unemployment benefit (ALG) for the employee. Do you want to prevent this? We explain how you can receive unemployment benefit from the Employment Agency seamlessly after your termination agreement.
In principle, yes.
If you lose your job and do not have a new position, you should register with the Employment Agency as a jobseeker or unemployed. To be entitled to Unemployment Benefit I (ALG I) from the Employment Agency, you as an employee must have paid into unemployment insurance for at least 12 months within the last 30 months (i.e., you must have been in compulsory insurance employment).
However, the entitlement to unemployment benefit does not always exist without restrictions. It depends on how your employment contract is terminated. You should be particularly careful when terminating the employment relationship based on a termination agreement between employer and employee. The Employment Agency often imposes a so-called suspension period after a termination agreement. This means that you receive ALG I from the Employment Agency later and, viewed over the entire duration, less of it.
A suspension period is particularly considered if you can be accused of having contributed to your own unemployment as an employee (§ 159 Para. 1 SGB III). The Employment Agency generally assumes this to be the case when a termination agreement is concluded. This is because a termination agreement is a voluntary agreement between you and the employer to end your employment relationship. By signing, you have (co-)caused the loss of your job and thus your unemployment yourself. This would be different in the case of a dismissal by your employer.
The suspension period describes the timeframe during which you have no entitlement to unemployment benefit (ALG I). As a rule, it lasts 12 weeks from the end of the employment relationship. During this time, you receive no unemployment benefit from the Employment Agency. Overall, the duration of benefits is also shortened, as the suspension period does not result in an extension of the benefit period at the end.
Example: You are 30 years old. If you have paid into unemployment insurance for 24 months, you can claim ALG I for up to 12 months. If your employment relationship ends on July 31, 2022, you are entitled to unemployment benefit until July 31, 2023. However, if your employment contract ended due to a termination agreement, the Employment Agency will impose a suspension period of 12 weeks. You will only receive unemployment benefit from approximately November onwards, and only for nine months up to and including July.
If you are over 50 years old, your entire regular benefit period is even reduced by a quarter.
Example: You are over 55 years old. If you have paid in for 36 months, you receive unemployment benefit for up to 18 months. If your employment relationship ends on July 31, 2022, through a termination agreement, a suspension period of 12 weeks is imposed at the beginning. Additionally, you must expect that the benefit will be discontinued “at the end” 1.5 months before the 18 months expire.
3. Reduction of the suspension period
Under certain circumstances, your suspension period may be reduced. It does not hurt to explicitly point this out to the Employment Agency, as they occasionally overlook it.
A reduction can occur if your employment relationship would have ended in the near future anyway, for example, due to a dismissal already issued, your retirement, or a fixed-term clause in the employment contract.
- If your employment relationship would have ended in 6 weeks anyway, the suspension period is reduced to 3 weeks.
- If your employment contract would have ended in 12 weeks, the suspension period is reduced to 6 weeks.
A reduction is also possible if the regular suspension period of 12 weeks would constitute a particular hardship for you.
Example 1: You preempt the dismissal of a colleague by signing a termination agreement and waiving the position in favor of your colleague. This case is possible, for example, if your colleague was already scheduled for dismissal and you could hardly have been dismissed due to your special protection against dismissal, for example, as a pregnant woman or a severely disabled person.
Example 2: You sign a termination agreement because you had a new position in prospect, but it unexpectedly falls through.
Example 3: The Federal Employment Agency provided you with incorrect information regarding the suspension period, and you therefore assumed when signing the contract that you would not receive a suspension period.
Effects similar to a reduction occur if you agree to an irrevocable release from work in the termination agreement – even if you continue to be paid. Employers often suggest a release themselves because they want to avoid you appearing at the company until the end of your contract (due to trade secrets, personal disputes, etc.). In these cases, the suspension period begins to run on the first day of your release.
It may well be possible to completely bypass the suspension period after a termination agreement. Essentially, two solutions are considered:
Either there is an important reason, or you only end the employment relationship through a court settlement.
Important reason for a termination agreement
Firstly, an important reason exists if the termination agreement is the only option and no other course of action was reasonable. This is the case, for example, if
- you were confronted with psychological pressure, bullying, or sexual harassment as an employee in the workplace.
- the work expected of you violates legal provisions, e.g., occupational health and safety regulations in labor law.
- the job task is necessary for health reasons.
- the job task is necessary to ensure the care of your child.
- the insolvency of the company is imminent.
- your remuneration as an employee was significantly too low (guideline: more than 20% below the relevant collective wage or the local customary pay).
An important reason can also be that you would have been dismissed anyway and you are merely preempting your dismissal with the termination agreement. However, the dismissal must have been threatened with certainty; a mere rumor is not sufficient. Furthermore, the termination agreement should mention that you would have been dismissed without the signature.
In addition, a series of further requirements must be met:
- If the threatened dismissal were to occur, the employment relationship would have ended at the same time as or earlier than the termination agreement. The termination agreement must therefore not accelerate your exit compared to the dismissal.
- At least your notice period (usually according to § 622 BGB) must lie between the signing of the termination agreement and the end of the employment contract. This ensures that the theoretical notice period would have been observed.
- As an employee, you must not have been “undismissable” (e.g., due to pregnancy or membership in the works council).
- The hypothetical dismissal must be based on personal or operational reasons and not on your misconduct. The termination agreement should also mention that it is being concluded to avoid such a dismissal.
These requirements are comparatively easy to fulfill. These two requirements in labor law, one of which must be met, more frequently cause difficulties:
- The threatened dismissal would have been lawful and you avoid objective disadvantages through the termination agreement (e.g., you receive a severance payment in the termination agreement that you would not be entitled to in the event of a dismissal).
- Or you receive a severance payment of up to a maximum of 0.5 gross monthly salaries for each year of the employment relationship. In this case, it does not matter whether the threatened employer dismissal would be lawful.
The burden of proof for the important reason lies with you. In this case, you should therefore seek legal assistance for labor law. Because as soon as you sign the termination agreement, you lose your protection against dismissal and potentially parts of your unemployment benefit.
Court Settlement
A court settlement often achieves the same effects as the agreement of a termination agreement. However, the Federal Employment Agency generally does not impose a suspension period after such a settlement. But how does this court settlement come about?
- It is important that you do not sign the termination agreement.
- You wait until a dismissal has been issued and then file a lawsuit against it with the labor court within three weeks.
The goal in the conciliation hearing before the court is then to negotiate a court settlement. In return, you offer to withdraw your lawsuit. In exchange, you demand, for example, the payment of a severance package and a good employment reference from the employer.
You are also dependent on legal support for a court settlement. This is because it is not entirely without risk. You should assess whether your employer will really agree to the settlement. Because if the dismissal is lawful, you might otherwise have to leave the company at the end without a severance payment. With the support of an experienced labor law attorney, you minimize this risk and generally achieve more favorable settlement terms.
Furthermore, you and your employer must not give the Federal Employment Agency the impression that you have colluded to bypass the suspension period.
5. Conclusion
- In principle, the Federal Employment Agency imposes a suspension period for unemployment benefit after a termination agreement.
- This suspension period is usually 12 weeks and is not added back on at the end of the benefit period.
- Overall, the benefit period is usually reduced by at least a quarter.
- In exceptional cases, the suspension period may be shortened.
- There may be a possibility to completely bypass the suspension period. To do this, you must either demonstrate a so-called important reason or conclude a court settlement.
- Consider whether you would like to be supported by an experienced labor law attorney or whether you feel confident navigating labor law yourself.
6. FAQ
Yes, but the Employment Agency often imposes a suspension period of up to 12 weeks because you ended the employment relationship voluntarily.
Usually 12 weeks. However, it can be shortened if your employment contract would have ended soon anyway or if there are special reasons.
If you have an important reason, such as a threatened dismissal, health problems, or bullying, you can prevent the suspension period.
Yes. If your employment relationship ends through a court settlement, you usually receive no suspension period.