23.01.2026 | Articles, SAVALnews
Our employment -related legal service regularly provides guidance on questions relating to termination agreements. The proposal to draw up a termination agreement may come as a shock to one employee, but as a relief to another. Someone else might wonder whether it is possible to propose termination of employment by mutual agreement. And where can you get help if you are confused about the terms of the agreement?
A termination agreement is known by various names, including: severance package, severance agreement, leaving package and leaving agreement. Golden handshake is another term that is also sometimes still used. However, they all mean the same thing – termination of employment by mutual agreement between the employee and the employer. A termination agreement is, therefore, not a unilateral termination, dismissal or resignation by either party. Entering into the agreement is always voluntary for both parties.
Usually, the proposal for a termination agreement comes from the employer. An employee can also raise the issue, but in this case their bargaining position may be weaker. In the context of change negotiations, staff representatives may propose severance packages to the employer in connection with or instead of redundancies. However, the final agreement will always be negotiated between the employee and the employer.
If your employer offers a termination agreement, make sure not to rush into anything. Ask them for enough time to familiarise yourself with the agreement. These agreements have significant implications for employees’ unemployment security and other rights. For this reason, it is worth studying them carefully.
There are no legal provisions on the form or terms required for these agreements, so the content is freely agreed between the parties. However, it is important for the employee’s rights that the terms of the agreement are unambiguous and that all the key aspects of the termination of the employment are covered by the agreement.
A termination agreement usually stipulates that the employment relationship ends after the normal notice period. This is most often also in the employee’s best interest. It is also commonly agreed that the obligation to work will end well before the final day of employment.
Almost invariably, termination agreements agree that the parties shall no longer have any claims against each other. Once the employee has waived any claims, they cannot normally claim anything from the employer that is not mentioned in the termination agreement. At this point, it is no longer possible to examine whether the grounds for termination possibly stated by the employer were lawful.
It is therefore particularly important that the agreement details all the employee’s claims regarding and amounts due from the employer, from holiday remuneration to balance of working hours and references. The more precisely the terms are agreed, the less likely it is that problems will arise later.
One of the most important terms in a termination agreement is the term on severance pay. But how can one know how much it should be?
The amount of severance pay usually depends on factors such as the duration of the employment, the employer’s financial situation and an assessment of whether the employer has grounds for dismissal for ending the employee’s employment. There is no single correct amount for severance pay, but it must at least carry the employee through the mandatory waiting period for benefits resultingfrom the agreement. Otherwise, the employee is likely to be inconvenienced by signing the agreement.
Ultimately, it is a matter of assessing whether entering into the agreement is worthwhile – if not, the proposed agreement can also be rejected.
A termination agreement can significantly affect unemployment benefits. At the very least, the long mandatory waiting period resulting from the agreement and the periodisation of the severance pay should be taken into account:
In general, a termination agreement will trigger a 45-day mandatory waiting period.
Compensation related to termination of employment, such as severance pay, is periodised. For example, a severance payment equivalent to four months’ salary will result in a periodisation period of around four months.
The mandatory waiting period and the periodisation period start from the date of termination of employment and run concurrently. During the mandatory waiting period or periodisation period, the employee is not entitled to daily unemployment allowance.
Other things to consider regarding unemployment insurance include:
Any holiday compensation paid to the employee is also periodised. The periodisation of holiday compensation does not run concurrently with the periodisation of the mandatory waiting period or other compensation and is instead in addition to them.
Before the payment of the daily allowance begins, there is a qualifying period. This period is equivalent to seven full working days.
Even if the daily allowance cannot be paid immediately due to the mandatory waiting period and periodisation, it is still important to remember to register as an unemployed jobseeker.
Where can you get help if you have questions about a termination agreement?
You don’t need to try to tackle them alone – ASIA lawyers are available to provide feedback on termination agreements. As there are several factors to consider when negotiating a termination agreement, it is always recommended to submit a draft of the agreement to ASIA’s lawyers for review before signing. It is advisable to allow a few working days for the comments.
Our opening hours and contact information can be found in here.
Text by Karen Saarinen, employment lawyer at ASIA
The article has been published on ASIA member magazine 4/2025.
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