Anyone who wants to challenge a termination agreement faces an uphill battle – as shown by a recent ruling from the Iserlohn Labor Court dated July 8, 2026 (Ref. 1 Ca 1046/25). A severely disabled employee who had already received a severance payment of 250,000 euros in 2019 demanded continued employment, back pay for employer default, and damages years later. The court dismissed the claim in full. The case illustrates just how binding a signed termination agreement is and what pitfalls employees should be aware of before putting pen to paper.
The Case: What Happened to the Plaintiff at the Iserlohn Labor Court
The plaintiff had been employed by a municipal administration since 2008, most recently classified in pay group 9a TVöD-VKA. He is severely disabled with a degree of disability of 50. In January 2019, he signed a termination agreement that was to end the employment relationship on August 31, 2019. A gross severance payment of 250,000 euros was agreed, payable upon departure. Additionally, an increase of 3,700 euros for each full month of early departure was promised. As early as April 2019, the parties agreed on an early termination date of April 30, 2019 – against a corresponding supplementary payment.
The city paid the severance, but a dispute arose later. The employer attempted to reclaim the paid amounts but failed before the Hamm Higher Labor Court (ruling of February 15, 2022, Ref. 6 Sa 903/21). In criminal proceedings, the plaintiff was convicted of aiding and abetting the embezzlement by the then-head of the personnel department and sentenced to a fine; the court also ordered the confiscation of 250,000 euros. The Federal Court of Justice dismissed the appeal. In 2025, the plaintiff then filed suit for actual employment, back pay for employer default for May and June 2025, and a declaratory judgment on the employer’s liability for damages – with the aim of unwinding the termination agreement. The Iserlohn Labor Court dismissed the action.
Challenge Termination Agreement: Why Unwinding Is So Difficult
A termination agreement is a civil-law contract that ends the employment relationship by mutual consent. Unlike a dismissal, it cannot simply be challenged. Case law sets high hurdles: a challenge is only possible in cases of defects in consent, such as fraudulent misrepresentation, unlawful duress, or a material mistake. The employee must prove that they were under pressure at the time of signing or that the employer deliberately deceived them.
In the present case, there was no evidence of such deception. The plaintiff had received the severance and signed the contract voluntarily. The fact that he was later dissatisfied with the consequences – for instance due to the criminal conviction – does not affect the validity of the agreement. The confiscation of the severance in the criminal proceedings does not render the termination agreement retroactively void either. Employees who want to challenge a termination agreement must therefore be aware: without clear evidence of deception or duress, the contract remains in force.
The Employer’s Failed Reimbursement Claim: What the Hamm Higher Labor Court Decided
Remarkably, the employer also failed with its reimbursement claim. The city had tried to reclaim the paid severance after the plaintiff’s criminal conviction. The Hamm Higher Labor Court dismissed this claim as well – the judgment is final. This establishes: the termination agreement was valid, and the severance was due to the plaintiff.
This decision shows that a termination agreement is binding for both sides. The employer cannot demand repayment after the fact unless the contract contains a corresponding reimbursement clause – which was not the case here. For employees, this means: once signed, the severance is secure, but the employment relationship is also terminated. Anyone who later sues for continued employment has little prospect of success.
Severe Disability and Termination Agreement: What Protection Actually Applies
The plaintiff was severely disabled. Many employees believe this status protects them against any termination. Yet the special protection against dismissal under Book IX of the Social Code applies only to dismissals issued by the employer. A termination agreement is not a dismissal – it is signed by both parties. The approval of the Integration Office is therefore not required.
This means: a severely disabled employee can also conclude a termination agreement without the Integration Office being involved. The protection only takes effect when the employer wants to dismiss. Anyone who finds themselves in a difficult situation and receives an offer from the employer to terminate by agreement should therefore not feel falsely secure. The severe disability alone does not protect against the consequences of a termination agreement.
Back Pay for Employer Default and Continued Employment: Why the Claim Was Dismissed
The plaintiff demanded back pay for employer default for May and June 2025 as well as his actual employment. These claims, however, presuppose that the employment relationship still exists. Through the termination agreement of April 2019, the employment relationship had ended as of April 30, 2019. A claim for back pay for employer default exists only if the employer fails to employ the employee despite an existing employment relationship. Since the employment relationship no longer existed, the court rejected these claims.
The declaratory action regarding a liability for damages also failed. The plaintiff sought to argue that he had suffered damage by concluding the termination agreement. But because the agreement was valid and the severance had been paid, there was no compensable damage. The ruling makes clear: after the employment relationship ends, there is no “second chance” – the one-time termination is final.
What Employees Should Check Before Signing
The Iserlohn case serves as a cautionary example. Before you sign a termination agreement, you should carefully review several points:
- Severance amount: Compare the offer with the statutory rule of thumb (0.5 gross monthly salaries per year of employment). A severance of 250,000 euros may seem high, but check whether it adequately compensates your loss. Further information on the calculation can be found in our guide to severance pay after dismissal. The severance amount can also vary in cases of conduct-related dismissal – more on this in our article Conduct-Related Dismissal and Severance Pay.
- Legal advice: Have the contract reviewed by a specialist lawyer for labor law before you sign. This costs money but can prevent expensive mistakes. A lawyer spots hidden clauses or invalid lump-sum settlement clauses.
- Pressure and deception: Never sign under time pressure or in an emotional crisis. If the employer threatens dismissal, check whether it would actually be effective – often it is not.
- Tax consequences: A severance payment is subject to the one-fifth rule, which varies depending on the amount. Inform yourself about the tax implications in advance to avoid nasty surprises.
- Blocking period for unemployment benefits: A termination agreement usually triggers a blocking period of up to 12 weeks. Clarify whether you can bridge this period.
Take your time and get support. A hastily signed termination agreement can cost you dearly – as the plaintiff’s case shows, who litigated for years despite a high severance payment.
Conclusion: When Consulting a Specialist Lawyer Pays Off
The Iserlohn Labor Court’s ruling is a clear rejection of all attempts to challenge a termination agreement after the fact. Anyone who has signed must bear the consequences – unless exceptional circumstances such as provable deception or duress exist. Even then, the path through the courts is long and uncertain.
For employees facing the decision of whether to sign a termination agreement, professional advice is therefore essential. A specialist lawyer for labor law can assess the prospects of a protection-against-dismissal action and negotiate the severance. Our guide Preparing to Negotiate Severance Pay shows how to prepare for such a meeting. If you have already signed and want to challenge the contract, you should also seek legal advice as quickly as possible – deadlines are short and the hurdles high. RechtStark as a litigation funder can examine the financing of such proceedings if you lack the means yourself. But when in doubt: prevention is better than fighting afterwards.
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.