What is a termination agreement?
Sometimes, the termination of employment or the terms to be followed in connection with termination are agreed upon by the employer and the employee through a separate agreement. Termination agreements are often a viable option for both parties, even if the legal grounds for termination are met and there is no need for an agreement on the matter.
Various agreements can be made in both personal and economic-production-related termination situations. The underlying reasons affect the procedures for making the agreement, the timing of the agreement, and the content of the agreement.
What are the benefits of a termination agreement?
Agreement offers various benefits to both the employer and the employee. By agreeing, the relationship between the parties, potential disagreements, and the procedures and conditions to be followed in connection with termination can be resolved amicably. This avoids possible lengthy and uncertain disputes and public court proceedings.
When can a termination agreement be made?
As long as the employment relationship is still in force, it is possible to conclude an agreement. If there is a disagreement about the termination of the employment relationship and the matter is settled after the employment relationship has already ended, it is no longer a contract of termination but a settlement agreement. Situations and needs vary and the agreement will be negotiated and drafted on a case-by-case basis, taking into account the specificities of each situation and the circumstances of the parties.
What can be agreed upon in a termination agreement?
The conditions to be considered include the date of termination of employment, the obligation to work, severance pay and its amount, non-competition, communication or confidentiality. In addition, the different effects on the employee’s unemployment or pension benefits should be taken into account.
Employment law is predominantly mandatory in order to protect workers. A contract drawn up inadequately, incorrectly or in breach of the law may produce a result contrary to the parties’ intentions or be null and void, unfair or have no effect. Particularly in the case of public bodies, the acceptability of severance pay or a ‘golden handshake’ may also need to be assessed, and the implications for unemployment benefits must be understood when concluding a termination agreement. An agreement drawn up without due care and attention may lead to a dispute over its interpretation or application.
Negotiating and drafting a termination agreement require strong specialized expertise. We assist our clients in legal assessments, negotiation of agreements, and drafting of contracts concerning the termination of employment.
