TERMINATION OF THE EMPLOYMENT CONTRACT BY MUTUAL AGREEMENT

An employee and an employer may take the joint initiative to terminate their employment relationship. They have the possibility to do so by terminating the employment contract by mutual agreement.

This termination of contract applies to both permanent and fixed-term contracts and can take place during the entire duration of the employment contract as well as during the notice period when the employment contract has been terminated with notice by one of the parties.

A work dispensation requested in writing by a resigning employee (and accepted by the employer) is also considered to be termination by mutual agreement.

Termination by mutual agreement is therefore an agreed termination of the employment contract which allows both parties to derogate from the provisions of labour law.

In order to do so, both parties must agree on the terms of the termination, and termination by mutual agreement must comply with a certain protocol.

The formalities

The employee and the employer must record the termination by mutual agreement in writing. The document must be drawn up in duplicate and signed by both parties, on pain of nullity.

There is no mandatory annotation set out by the Labour Code to be included in the termination of an employment contract by mutual agreement. However, it is advisable to draw up the notice of termination in such a way as to include certain details such as the identity of the parties and the mutual intention to terminate the employment contract, and to specify the employment contract to be terminated and the date on which the termination takes effect.

The financial impact

Termination of the employment contract by mutual agreement does not give rise to a severance payment to the benefit of the employee (except in the case of agreement between the parties). Moreover, the employee cannot claim unemployment benefits, since termination by mutual agreement of the parties is equivalent to resignation.

On the other hand, the employee is entitled to all the benefits provided for in their employment contract up to the effective date of termination.