Kündigung vs. Aufhebungsvertrag – what is the difference?

Kündigung (dismissal / termination notice)
Aufhebungsvertrag (mutual termination agreement)

1. Definition

• Kündigung:
  Termination of the employment relationship by one party only – either the employer or the employee.

• Aufhebungsvertrag:
  Termination of the employment relationship by mutual agreement, i.e. both employer and employee jointly agree to end the contract.

2. How it is carried out

• Kündigung:
  One party serves a written notice of termination, observing the legal and contractual requirements.

• Aufhebungsvertrag:
  Both parties sign a written agreement in which they mutually consent to end the employment relationship.

3. Notice period (Kündigungsfrist)

• Kündigung:
  The statutory or contractually agreed notice periods must usually be respected (often at least 4 weeks, and longer depending on the length of service).

• Aufhebungsvertrag:
  There is no mandatory statutory notice period; the parties are free to agree on any end date, including very short notice or even immediate termination.

4. Protection against dismissal

• Kündigung:
  Employees enjoy strong legal protection, especially after 6 months of service in companies covered by the Dismissal Protection Act (KSchG). Termination generally requires a socially justified reason and may not be arbitrary.

• Aufhebungsvertrag:
  There is no automatic dismissal protection, because the termination is based on mutual consent. By signing the agreement, the employee voluntarily waives parts of this protection.

5. Right to challenge

• Kündigung:
  The employee can file a dismissal protection claim (Kündigungsschutzklage) with the labour court within 3 weeks after receiving the notice, if they consider it unlawful.

• Aufhebungsvertrag:
  Once signed, it is very difficult to revoke. Legal challenges are only possible in exceptional cases, such as fraud, unlawful coercion or lack of legal capacity.

6. Unemployment benefits (Arbeitslosengeld I)

• Kündigung:
  In the case of a “normal” dismissal without serious misconduct by the employee, there is usually no waiting penalty (Sperrzeit) imposed by the Employment Agency.

• Aufhebungsvertrag:
  In many cases, the Employment Agency will impose a blocking period (Sperrzeit, typically 3 months), because the employee has actively participated in ending the employment relationship.

7. Additional clauses

• Kündigung:
  Severance payments or additional financial arrangements are not very common in a simple notice of termination.

• Aufhebungsvertrag:
  The parties can agree on individual terms, for example:

  • severance pay (Abfindung),

  • wording and type of the employment reference (Arbeitszeugnis),

  • settlement of remaining vacation days,

  • and other financial or organisational issues.

In summary:

• Kündigung:
  One-sided termination with legal protection, fixed notice periods, and the option to challenge the dismissal in court.

• Aufhebungsvertrag:
  Mutual termination with high flexibility, but also with the risk of losing certain protective rights and benefits, such as immediate access to unemployment benefits.

The editorial team of this website strives to provide accurate information based on thorough research and several sources. However, errors may occur, or some details may be incomplete. Please treat this text as an initial orientation only and always consult the relevant authorities, advisory services or labour law specialists for binding legal advice.