What is mutual termination of the employment contract
Mutual termination of the employment contract is one of the most common ways of terminating the employment relationship in practice. Unlike the termination of the employment contract, where one party unilaterally decides to terminate the employment relationship, in the case of mutual termination, both parties must agree.
In other words, mutual termination of the employment relationship occurs when the employer and the employee conclude an agreement that regulates the date of termination of employment and any other rights and obligations.
This institute is regulated by the Labor Law of the Republic of Serbia, which stipulates that the agreement must be concluded in writing.
In practice, mutual termination of the employment contract is often used when:
- the employee wants to change jobs
- the employer wants to avoid the dismissal procedure
- the parties want to end the employment relationship amicably
- there is a dispute that the parties wish to resolve by agreement
This is why mutual termination of employment is often considered the fastest and simplest way to end employment.
Content
- When mutual termination of employment is used
- Does the employee have to accept a mutual termination?
- What rights does the employee have in case of mutual termination
- Is there a right to compensation from the bureau?
- What must be contained in the termination agreement
- Practical examples from practice
- The most common mistakes of employees and employers
- FAQ – most frequently asked questions
- Conclusion
1. When mutual termination of employment is used
Consensual termination of the employment contract can be used in different situations.
Job change
One of the most common situations is when an employee receives a new business offer and wants to start working for a new employer in a short period of time.
Instead of waiting for the notice period, the employee can agree on a mutual termination of the employment relationship with the employer.
Avoiding a complicated cancellation procedure
Employers sometimes want to avoid the complicated procedure of terminating an employment contract, especially when there is a risk of litigation.
In such situations, mutual termination may be the safest solution for both parties.
Resolution of the disputed situation
In practice, it often happens that mutual termination is part of a broader agreement between the employee and the employer that resolves a specific dispute.
In this way, the parties can avoid lengthy court proceedings.
2. Does the employee have to accept a mutual termination?
One of the most common questions that employees ask is whether they are obliged to accept the mutual termination of the employment contract.
The answer is clear.
The employee is not obliged to sign a mutual termination.
By the very nature of an agreement, it exists only if there is consent from both parties.
This means that the employer cannot:
- get the employee to sign the agreement
- unilaterally make a decision on mutual termination
- oblige the employee to sign the agreement
If the employee does not want to sign the agreement, the employer can initiate the procedure of termination of the employment contract, but then he must comply with all legal requirements.
3. What rights does the employee have in case of mutual termination
In case of mutual termination of the employment contract, the employee retains certain rights.
This primarily includes:
- earnings until the day of termination of employment
- compensation for unused vacation
- possible severance pay if agreed
- other rights determined by the agreement
It is important to emphasize that the mutual termination of the employment relationship does not necessarily mean that the employee loses all rights.
However, there is one important consequence that employees often don’t think about.
4. Is the employee entitled to compensation from the bureau?
In the case of mutual termination of the employment contract, the question often arises as to whether the employee is entitled to unemployment benefits.
In most cases the answer is no.
The reason is that the mutual termination of the employment relationship is considered the termination of the employment relationship with the consent of the employee.
Therefore, the National Employment Service does not usually recognize the right to unemployment benefits.
It is for this reason that the employee should carefully consider the consequences of signing the agreement.
5. What must be contained in the termination agreement
In order for the mutual termination of the employment contract to be legally valid, the agreement must contain certain elements.
It most commonly includes:
- information about the employer and the employee
- legal basis for termination of employment
- date of termination of employment
- regulation of wages and other claims
- method of payment of any fees
- written notice to the employee about the consequences of the mutual termination of the employment relationship with regard to the exercise of unemployment rights
- signature of both parties
In practice, it is very important that the agreement be clear and precisely formulated.
Unclearly drafted agreements often become the subject of litigation.
6. A practical example from practice
Let’s imagine the following situation.
Example 1.
An employee has been working in the company for several years, but receives an offer for a new job in another company. The new employer expects the employee to start working in two weeks.
In that case, the employee has two options:
- to submit a notice of termination of the employment contract with the notice period prescribed by the existing employment contract
- to propose a mutual termination of the employment contract
If the employer agrees to the agreement, the parties can agree on an amicable termination of the employment relationship within a period that suits both parties.
Such solutions are very common in practice and enable a flexible termination of the employment relationship.
Example 2.
The employer wants to cancel the employment contract of the employee, but there is no legal basis for the termination. In that case, the employer and the employee can agree to conclude a mutual termination of the employment contract in which the employee’s employment relationship will end, and the employer will pay a certain amount of severance pay in the form of e.g. 3 gross earnings.
7. The most common mistakes of employees and employers
In legal practice, certain mistakes are often encountered when it comes to mutual termination of employment contracts.
Signing an agreement without understanding the consequences
Employees sometimes sign an agreement without knowing that they are losing their right to unemployment benefits.
A vaguely worded agreement
If the agreement does not regulate all issues, later disputes between the employee and the employer may arise.
Signing an agreement under pressure
In certain situations, employees claim that they signed the agreement under pressure from the employer or a blank dismissal, which can lead to court proceedings.
Therefore, it is often advisable to have the agreement reviewed by an employment law attorney before you sign it.
8. FAQ – Frequently asked questions
Can an employer force an employee to sign a mutual termination?
No. Consensual termination of the employment contract exists only if there is consent from both parties.
Does the agreement have to be in writing?
Yes. The Labor Law stipulates that the mutual termination of the employment relationship must be concluded in writing.
Does the employee have the right to a bureau if he signs a mutual termination?
In most cases, he is not entitled to unemployment benefits.
Can the agreement be contested?
In certain situations it can, especially if it was signed under duress or threat.
9. Conclusion
An agreed termination of an employment contract can be a simple and effective way of ending the employment relationship, but only if both parties clearly understand their obligations and rights.
Before signing the agreement, it is important to consider:
- whether the agreement regulates all matters
- what are the consequences for the employee
- whether the employee retains certain rights
A well-drafted agreement can prevent future disputes and allow for a peaceful end to the employment relationship.
For all additional information and legal support, the Dvornić law office is at your disposal.
Note: This blog is for informational purposes only and does not constitute legal advice. For specific questions and legal support, please contact the Dvornić law office.
