The "Employee's Choice" Reference in a Settlement Is Enforceable (Federal Labour Court, Order of 7 May 2026 – 8 AZB 25/25)

Where the parties to unfair dismissal proceedings agree in a settlement that the employee may choose the wording of his or her reference, this clause is enforceable according to the Federal Labour Court (Bundesarbeitsgericht, BAG). The agreement in the specific dispute read, in essence: "The employer shall issue a benevolent, qualified reference with a good assessment of performance and conduct as well as a closing formula expressing thanks, regret and good wishes. The employee has the right to submit a draft from which the employer may deviate only for good cause."

If the employer refuses to sign this draft without a compelling reason, it faces a coercive fine (Zwangsgeld) under § 888 of the German Code of Civil Procedure (ZPO). The enforceable title is sufficiently specific in legal terms, even though the exact wording had not yet been determined when the settlement was concluded.

However, the BAG draws clear limits through the statutory requirement of truthfulness in references (Zeugniswahrheit). If the employee's draft contains demonstrably false statements (as here regarding the description of a managing director's duties), this constitutes "good cause" justifying a deviation. If the employer demonstrates well-founded doubts as to the truth in the enforcement proceedings, the court may not impose a coercive fine; the substantive accuracy must instead be litigated in new proceedings on the merits.

Be careful with such standard clauses in termination settlements. Since these agreements can be enforceable, you should always expressly include in the text the right to correct the content in the event of breaches of the duty of truthfulness. Alternatively, fix the essential performance and task characteristics directly in the text of the settlement.