An employment relationship can be terminated in many ways, both at the initiative of the employer and the employee. The Labor Code specifies the situations in which an employment contract may be terminated, namely:
- by agreement of the parties,
- by declaration of one of the parties while observing the notice period (termination of the employment contract by notice),
- by declaration of one of the parties without observing the notice period (termination of the employment contract without notice),
- with the expiry of the period for which it was concluded.
One of the most advantageous ways to end an employment relationship is by mutual agreement between the parties, i.e., the employer and employee. This method of ending the legal relationship assumes that the parties are in agreement and their interests are aligned, which is desirable and conflict-free. Any type of employment contract can be terminated by mutual agreement at any time. There are also no obstacles to terminating an employment contract with an employee entitled to special protection in this way. It is permissible to conclude an agreement terminating the contract at the time of its signing, or at a later date.
Who can take the initiative to conclude an agreement?
Either party to an employment relationship may initiate an agreement; this constitutes an offer under civil law. Interestingly, it may be time-limited, meaning it ceases to be binding after the date specified by the party offering the agreement.
In what form can an agreement be concluded?
It should be emphasized that it is permissible to conclude an agreement through implied acts. However, for evidentiary and record-keeping purposes, written form is preferable. From the perspective of both the employer and the employee, this will significantly better protect their interests.
What is the scope of the parties' agreement?
The most important element of an agreement is the agreement of the parties, namely, that the bond between them is to cease, as well as the date by which this will occur. Termination of an employment contract by mutual consent means that the parties agree on all the circumstances surrounding the termination of the employment relationship. However, the question arises as to what constitutes the limit in this type of termination. The limit is clearly defined by the principle of freedom of contract, with limitations arising from mandatory provisions of law, particularly labor law provisions that serve to protect employees.
Agreement of the parties and termination of the contract without notice due to the employee's fault
Termination of the contract by mutual consent is more advantageous for the employee than termination of the contract without notice due to the employee's fault, if only because of the content of the employment certificate that the employee will submit to the next employer.
It should be emphasized that if an employer has grounds to terminate a contract without notice due to the employee's fault, and proposes termination by mutual consent, the employer's action cannot be perceived as an unlawful threat. In such a situation, the employer neither exceeds their authority nor violates employee rights. Due to the fear of losing their permanent employment, the employee cannot invoke the fact that they acted under an unlawful threat.
Is it possible to avoid the legal consequences of the parties' agreement?
A significant issue is the impossibility of revoking a declaration in the event of an agreement terminating an employment contract, as is the case with unilateral termination by the employer, with or without notice. The Labor Code does not provide for an appeal against an agreement, let alone seeking reinstatement in such a case, and therefore deeming the agreement ineffective.
However, it is possible to avoid the legal consequences of a declaration of intent, such as an agreement between the parties, when it is flawed. This situation occurs when the person making the declaration of intent, and therefore, in our case, the agreement between the parties, makes it under the influence of a false perception of reality. What might such a false perception consist of? Of course, it could be an error, a deception, or a threat. An example of an error under which an agreement could be concluded is the unawareness of the pregnancy of the employee whose contract is to be terminated.
Another example of a defect in a declaration of intent, this time in the form of a threat, may be blackmailing an employee and deliberate action to force him or her to agree to terminate the employment relationship based on an agreement between the parties, especially when the grounds for unilateral termination of this relationship by the employer are highly questionable.
In the above situations, in order to avoid the effects of the declaration of intent, it is necessary to prove the existence of such a defect, which may be difficult, in particular in terms of proving the circumstances of concluding such an agreement.
Moreover, in a situation where there is a dispute between the parties as to whether the obligation was terminated by mutual consent, in a situation where one of the parties evades the effects of its declaration of will, it is possible to claim for the establishment of the existence of an employment relationship.
Agreement of the parties on termination of the contract and agreement on shortening the notice period
A distinction must be made between terminating a contract by mutual consent and agreeing on an earlier termination date after one party has given notice. The parties are free to determine by how much this period will be shortened, and they have the discretion to do so. For example, they may decide that instead of a three-month notice period, the contract will terminate after one or two months, or the parties may set a notice date that is convenient for them. Because this agreement is entered into at the parties' initiative, compensation for the shortened period is not possible.
Therefore, the agreement on shortening the notice period helps to dispel doubts related to the validity of any claims by a former employee for compensation for the time by which the notice period was shortened.
Given the above considerations, it should be emphasized that terminating an employment contract by mutual consent is the most advantageous way to end the employment relationship from both the employee's and the employer's perspective. Both parties can reach a consensus regarding the termination date and the manner of termination. However, it is important to remember to put such an agreement in writing for future evidentiary purposes.
Should you have any doubts or questions relating to the above issues or broadly understood labour law, please do not hesitate to contact our Law Firm.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of October 5, 2023
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