Many people still wrongly equate the process of terminating an employment contract by mutual agreement with a standard "notice of termination". In employment law, these are two completely separate procedures. In terms of time and convenience, a settlement for termination is the quickest option for parting ways with a colleague. So, how do you correctly propose a "mutual agreement", and does it always have to involve an onerous notice period?
💡 Key takeaways
- The termination of a contract "by mutual agreement" is not a dismissal. It requires mutual consent. It means "reaching an amicable settlement" between the boss and the employee.
- A proposal for a settlement can be put forward by either party, but if there is no response or the response is rejected, the settlement does not come into effect and the agreement remains in force.
- Agreement between the parties is the fastest and most flexible option. Employment termination dates can be arranged entirely freely (e.g., the contract ends tomorrow or in six months, regardless of the standard deadlines in the Labour Code).
A decision to terminate by mutual agreement is an act of bilateral will (consensus). The boss merely extending a desire to reach a settlement agreement is only an invitation (a proposal). The employee can completely disregard and reject it.
Termination of employment by mutual agreement. Rules and deadlines
Employment relationship and employment contract
From a legal perspective, an employment relationship (within the meaning of Article 22 of the Labour Code) consists of The employee undertakes to perform work of a specific type for the employer and under their direction, and at a place and time designated by the employer, while the employer undertakes to employ the employee for remuneration.
In practice, establishing this relationship always involves signing Employment contracts (for a fixed term, indefinite, replacement or probationary period). The conclusion of a written form, indicating the start date of the cooperation, remuneration and working hours are here a necessary foundation for the employee's entry into the organisation.
Termination of an employment contract. Methods
Termination of employment It doesn't have to be based solely on the classic unilateral termination, which is associated with "redundancies". Labor law splits the possibilities for ending an employment relationship in several ways:
- By mutual agreement.
- Through a unilateral declaration (classic notice preserving the protection period).
- Through a so-called disciplinary dismissal.
- And in the natural course of events (a fixed-term contract expires).
Rules for terminating an agreement by mutual consent
Article 30 of the Labour Code provides for the most amicable form in law – mutual and amicable agreement on the terms of separationWe are talking about consensus here. Sending a document by one party on "Resolution by agreement of the parties" has absolutely no legally binding effect of release until the other party openly signs and agrees to it.
A lack of response or silence from the other party, be it a superior or a subordinate, is treated by the Labour Code as a firm refusal. An employer wishing to amicably conclude the employment relationship must wait for at least a small note from the employee to appear in writing: I agree (and signature and current date)Then the agreement will be formally concluded on the discussed terms.
Termination of an employment contract by mutual consent of the parties. Determining the deadline
This is where the hidden charm of the so-called lies. settlement by agreementWhile a traditional notice rigidly forces us into, for example, a 3-month protective period (always from the end of the month), an agreement allows both parties to decide on a period specified in the document. any separate termination of employment. This could be for "the next day," precisely "in exactly two weeks at midnight," or even for an absurdly long time – e.g., "in exactly a year and a half," which an employer wanting to secure the completion of a huge project might agree to.
In the absence of a specified date in writing, it is presumed that the termination and deregistration of the employee occurs immediately – on the same day, upon the signing of the settlement agreement (Resolution of the Supreme Court, ref. I PKN 844/00).