Perhaps you are an employer who wants to part ways with an employee without running into a statutory protection period against dismissal or a drawn-out dispute. Or perhaps you are an employee, and someone has handed you a document that is meant to end your employment “by mutual agreement.” Either way, a key question arises quickly: is such a termination agreement valid at all, and what may it cover? This article explains in plain terms when a consensual termination holds up, where the pitfalls lie and what both sides should keep in mind. It is addressed to small and medium-sized businesses and HR managers as well as to employees who receive such an offer. Swiss employment law is the frame of reference throughout.<\/p>\n\n\n\n
A termination agreement is a contract by which employer and employee end the employment relationship together. Unlike a dismissal, it does not involve one party unilaterally declaring the end of the relationship. Both sides agree on an end date and often on further points, such as garden leave (release from the duty to work), a severance payment or the employment reference.<\/p>\n\n\n\n
The law does not expressly regulate termination agreements. They rest on freedom of contract. What the parties may agree, they may in principle also cancel by mutual consent. This is exactly where the difficulty lies. Employment law protects employees through numerous mandatory provisions, meaning rules that the parties cannot set aside by contract. Employees cannot waive this protection at will.<\/p>\n\n\n\n
The terminology is not uniform. You may also see the terms dissolution agreement, termination contract or separation agreement. They all mean the same thing: the consensual ending of the employment relationship.<\/p>\n\n\n\n
A termination agreement can make sense for both sides. It creates legal certainty and avoids an open conflict. Where the working relationship has become strained, an orderly, consensual departure is often better than a contested dismissal.<\/p>\n\n\n\n
For the employer, the main attraction is that the protection periods do not apply to a genuine termination agreement. These are the periods under Art. 336c OR (Swiss Code of Obligations, which bars an employer from validly giving notice during certain periods, for example during illness, after an accident or during pregnancy). Parties who part ways by mutual consent can choose the end date freely.<\/p>\n\n\n\n
The employee, too, may gain from an agreement, for example a good reference, release from work on full pay, possibly a severance payment or more time to look for a new job. These benefits do not come free, however, and many people overlook that.<\/p>\n\n\n\n
Employment law contains many provisions that an employee cannot waive during the employment relationship and for a short period afterward. These include, for example, the right to salary during the protection periods, compensation for overtime and holiday entitlements.<\/p>\n\n\n\n
A termination agreement may not simply undermine this protection. If the employee gives up mandatory claims without receiving a genuine benefit in return, the agreement may be invalid in whole or in part. The case law therefore requires two things: a sufficient balance of interests and a free, carefully considered decision by the employee.<\/p>\n\n\n\n
What matters is that the employee receives something of equivalent value for what he or she gives up. The agreement must involve genuine mutual concessions, not just concessions on paper.<\/p>\n\n\n\n
The following items may qualify as genuine consideration.<\/p>\n\n\n\n
The second requirement concerns the circumstances in which the agreement is concluded. The employee must enter into it freely and with enough time to think it over.<\/p>\n\n\n\n
Ambush situations are therefore problematic. If an employee is suddenly handed a finished document in the middle of the working day and asked to sign it on the spot, the necessary time for reflection is often missing. An employer who also puts pressure on the employee, for instance by threatening summary dismissal (dismissal with immediate effect), risks having the agreement challenged later.<\/p>\n\n\n\n
It is advisable to give the employee a reasonable period for consideration and the opportunity to seek advice. An agreement negotiated calmly over several days is considerably more robust than one reached under time pressure.<\/p>\n\n\n\n
If a termination agreement does not withstand scrutiny, it can become expensive for the employer. Where the balance of interests is insufficient, the agreement may be reinterpreted as an ordinary termination or treated as entirely ineffective.<\/p>\n\n\n\n
Back payments may follow. These could include salary claims for the ordinary notice period, claims arising from a breached protection period, or unpaid holiday and overtime balances. What was meant to be a clean separation then ends in a legal dispute.<\/p>\n\n\n\n
Whether an agreement is valid depends heavily on the individual case. The courts assess each agreement according to its specific circumstances. No blanket guarantee is available.<\/p>\n\n\n\n
Anyone seeking a consensual termination should observe the following points.<\/p>\n\n\n\n
One point is often underestimated. An employee who signs a termination agreement risks suspension days with the unemployment insurance fund, meaning a period during which no benefits are paid. The insurer may argue that the employee is partly responsible for his or her own unemployment because he or she actively took part in ending the employment.<\/p>\n\n\n\n
For employees, this means it is worth clarifying before signing how the agreement affects the entitlement to unemployment benefits. A carefully drafted agreement can reduce this risk, but it cannot rule it out in every case.<\/p>\n\n\n\n
Do not treat the termination agreement as a mere formality. Treat it as a genuine subject of negotiation. Employers should make sure that the employee receives valuable consideration and sufficient time to reflect. Only then does the separation stand on firm legal ground. Employees should not sign anything under pressure, should take the time to think, and should clarify the consequences for unemployment insurance and pension provision.<\/p>\n\n\n\n
Because validity depends heavily on the individual case, we recommend having the draft reviewed by a specialist before it is signed. We would be glad to help you prepare or assess an agreement. This article provides general information on the legal position and does not replace advice on your specific situation.<\/p>\n","protected":false},"excerpt":{"rendered":"
A termination agreement replaces a dismissal only if it contains a genuine balance of interests and reflects the employee’s free decision. Here is what employers and employees must watch for so that the consensual separation holds.<\/p>\n","protected":false},"author":8,"featured_media":8918,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[385,3,9,8],"tags":[],"class_list":["post-8922","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-contracts-en-2","category-employment-law","category-private-clients","category-sme"],"acf":[],"yoast_head":"\n