Don’t sign termination agreement too quickly — it can pay off financially, as a recent case study shows. An employee was offered one month’s salary as severance, but refused, filed a claim, and ultimately secured six months’ salary. This is no isolated case: many employees sign too quickly and leave money on the table. In this article, you’ll learn why it’s worth reviewing a termination agreement thoroughly before signing and how to strengthen your negotiating position.
Don’t Sign Termination Agreement: Why Speed Costs Money
When an employer presents a termination agreement, there’s usually an initial offer on the table — often a severance package deliberately set low. Many employees sign out of fear of a lengthy legal dispute or because they don’t understand the agreement. But this haste can be costly. A termination agreement is a mutual termination of the employment relationship. By signing, you typically waive all further claims — including a potential unfair dismissal claim. However, the first offer is rarely the maximum. Employers often build in a buffer to leave room for negotiation. Anyone who signs immediately leaves that leverage unused.
Another point: the termination agreement usually includes a severance payment far below what you could receive in case of an invalid dismissal or a settlement before the labor court. If you reject the offer, you keep your options open. You can wait for the dismissal, file an unfair dismissal claim to build pressure, or actively negotiate a higher severance. Both are possible as long as you haven’t signed.
The Case Study: From One Month’s Salary to Six
In a recent case study discussed among legal professionals, an employee was presented with a termination agreement offering one month’s salary as severance. The employee declined, sought legal counsel, and subsequently filed an unfair dismissal claim. During the proceedings, the parties settled on six months’ salary — six times the original offer. This case study powerfully illustrates the difference knowing and exercising your rights can make, rather than signing immediately.
Of course, this is no guarantee of such an outcome. Every case is different. But the case study illustrates a principle: the first offer is often just a starting point for negotiations. Rejecting it and threatening or filing an unfair dismissal claim signals to the employer that you’re willing to fight for your rights. That increases the employer’s willingness to improve their offer.
How Employers Calculate Severance Offers — and Where Negotiation Leverage Exists
Employers often use rules of thumb to calculate severance offers. A common formula is half a month’s salary per year of service. However, this formula is not a statutory entitlement — it merely serves as a guideline. The actual amount depends on many factors: length of service, age, maintenance obligations, social selection criteria, the company’s financial situation, and last but not least, the negotiating skill of both parties. Employers frequently make a lower offer to test whether the employee will give in. If you don’t sign the termination agreement but negotiate instead, you can often secure more.
Negotiation leverage arises especially when the employer has an interest in a quick, amicable resolution. This is often the case when a dismissal would be legally vulnerable, when the employee enjoys special dismissal protection, or when the company wants to pay severance to avoid protracted proceedings. The length of proceedings also matters: the longer the employment relationship, the higher the potential severance if you go to court. An unfair dismissal claim can pressure the employer because they face back pay liability — the wages they’d have to continue paying if the dismissal is invalid. These costs can exceed a higher severance payment.
Your Rights After Dismissal: The 3-Week Deadline for Unfair Dismissal Claims
If you reject the offer and receive a dismissal instead, you have a crucial right: you can file an unfair dismissal claim with the labor court within three weeks of receiving the dismissal notice. This deadline is statutory and must be met without fail. Missing it typically means losing any claim to continued employment or severance. The dismissal then takes effect as valid, even if it was substantively unfounded. That’s exactly why seeking legal advice early is advisable. A specialist employment lawyer can assess whether the dismissal is valid and whether a claim is worthwhile. For more details on filing and procedure, see our guide to unfair dismissal claims.
The 3-week deadline applies even while you’re still negotiating a termination agreement. As long as you haven’t signed, you can monitor the deadline in parallel. Once the employer serves a dismissal notice, the clock starts ticking. That’s why it’s important not to hesitate — either negotiate or file a claim. Letting the deadline expire means losing your strongest negotiating position.
When a Termination Agreement Can Still Make Sense
A termination agreement isn’t always the worse choice. In certain situations, it can make perfect sense. For instance, if you already have a new job lined up and want certainty quickly. Or if you want to avoid a longer benefit sanction period for unemployment benefits — because in a mutual termination, the employment agency can impose a sanction if you caused your own unemployment. Also, if you want to avoid a drawn-out dispute and the offered severance is acceptable to you, a termination agreement can be a pragmatic solution. What matters is scrutinizing the terms: severance amount, garden leave, reference letter, remaining vacation, overtime compensation, and any non-compete clauses. Ideally, have a specialist employment lawyer review the agreement.
Nevertheless: rejecting the offer often puts you in a stronger position if you feel the severance is too low. You can still negotiate — and if the employer doesn’t improve, you can wait for the dismissal and sue. The termination agreement isn’t the only path. Use your rights before giving up.
Securing Professional Support: Specialist Employment Lawyer and Litigation Funding
Professional advice is crucial when facing a termination agreement or dismissal. An independent specialist employment lawyer can assess the prospects of an unfair dismissal claim, negotiate the severance amount, and review the termination agreement. They know the case law and can gauge what’s realistic. However, many employees shy away from the cost of legal proceedings. This is where litigation funding can help: RechtStark assesses whether coverage of legal costs is possible when prospects of success are good. As a litigation funder, we cover the costs of the proceedings — in case of success, we receive a share of the secured severance. This lets you minimize your risk while still fighting for your rights. For more information on severance and the legal framework, see our overview of severance pay.
What matters is seeking advice early — ideally before signing a termination agreement or receiving a dismissal. The earlier you act, the better your chances of securing a higher severance. A specialist lawyer can also assess whether a termination agreement makes sense at all or whether litigation is the better route. The combination of legal counsel and litigation funding gives you the confidence to take on even a powerful employer.
Conclusion: Review First, Sign Later — Your Next Steps
The case study makes it clear: not signing a termination agreement is often the better strategy — instead of settling for one month’s salary, six months’ salary was achieved simply because the employee didn’t sign immediately. Your next step should be: take your time, have the agreement reviewed, and get professional advice. Negotiate actively and don’t hesitate to file an unfair dismissal claim if the offer is inadequate. Remember: the first offer is rarely the best. Those who know and exercise their rights hold much stronger cards. Don’t delay — the 3-week deadline is running. Act now.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.