Settlement agreement: what about the suspension of unemployment benefit?

A settlement agreement sounds like a quick, amicable solution — but it can become costly if the employment agency imposes a suspension period. What to watch out for beforehand.

Your employer presents you with a settlement agreement (Aufhebungsvertrag) — often combined with severance pay and the promise that everything will be settled “amicably and quickly”. What is frequently missing: the warning that the employment agency can impose a suspension of unemployment benefit of up to twelve weeks, because you yourself played a part in ending the employment relationship. That can leave you without income during this period — which is why a settlement agreement should never be signed hastily.

How I can help you

• I review the settlement agreement for pitfalls before you sign.
• I assess the specific risk of a benefit suspension in your case.
• I renegotiate wording and terms that reduce that risk.
• I check whether an unfair dismissal claim would be the better alternative to a settlement agreement.
• I give you a realistic assessment of the severance amount in relation to the benefit suspension risk.

Why a suspension is a risk

Under section 159 of the Social Code Book III (SGB III), conduct contrary to the insurance scheme exists where you end your own employment relationship, or give cause for it to be ended through your own conduct, and thereby cause your unemployment at least negligently. A settlement agreement is, from the employment agency’s point of view, exactly that: you actively consent to the termination instead of contesting a dismissal. The standard suspension period is then twelve weeks; it can be shortened, for example if the employment relationship would have ended soon anyway, or if the full suspension period would represent a particular hardship. A good cause for consenting to the settlement agreement — such as an otherwise imminent, legally sound dismissal for operational reasons on the same terms — can remove the suspension altogether; in case of doubt, you must set this out and prove it yourself.

What this means for your decision

A settlement agreement is therefore not automatically the wrong choice — the severance pay on offer is often higher where the employer wants a quick, low-friction departure. But the sums must add up: does the severance pay genuinely exceed what you lose through the suspension of unemployment benefit? And can the suspension risk actually be reduced through the right wording in the agreement? That can only be assessed on a case-by-case basis — and should be clarified before signing, not afterwards. More on the whole subject on the Employment Law page.

How I proceed for you

I review the settlement agreement you have been given promptly, assess the suspension risk, and negotiate with the employer where necessary — before you sign. We clarify the costs at our first meeting; legal expenses insurance frequently covers the advice, and I handle the request for cover on your behalf.

Don’t sign anything before we’ve looked at it together — once signed, a settlement agreement can hardly be reversed.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-06-28.

Request an initial consultationWhat will it cost me?08091 617 7777