Termination of employment via a mutual agreement

Termination of the employment contract via a mutual agreement of the employee and the employer is a very comfortable means of putting an end to employment, but it’s got one basic shortcoming – you need consent of both parties to get it in place. This is not always possible or easy to achieve, but why not try it first? A mutual agreement of that kind – as all contracts – may be negotiated.

The mutual agreement may terminate any employment contract, without limitations. It gives the parties much freedom in determining terms and conditions for separation:

  • the date of termination may be appointed freely, without any limitations on the period between the date of signing the agreement and the effective date of termination;
  • the moment of termination may be defined not only as a date-month-year date (which is most common), but also by indicating a future event, which the parties intend to trigger termination;
  • the agreement on termination may be concluded under a condition precedent;
  • the parties may agree on additional employee benefits, such as extra severance payments or outplacement programmes.

Termination of employment via the mutual agreement may be effected not only through a written instrument, but also through conduct of the parties, which implies the intent and consent to separation.

Termination of employment via a mutual agreement is recommendable mainly to employers because there are no direct statutory employee claims attached to it (as in relation termination at notice or without notice). Depending on the circumstances, the employee does have an option to challenge the validity or effectiveness of the mutual agreement if it is faulty or deficient in legal terms (e.g. if the employee demonstrates that he or she acted in error under a threat on signing the agreement), but proceedings of that kind are more difficult for the employee.

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