Usually, termination of an employment contract is agreed when the employer is considering terminating or terminating the employment contract. The advantage of an agreement is that any issues relating to the termination of employment can be resolved amicably, without the need for possible litigation. Indeed, as an alternative to termination, the employment contract may be terminated by mutual agreement between the employee and the employer. The conclusion of such an agreement is always voluntary for both parties. There are no legal provisions on the form of termination agreements, but it is always advisable to put the agreement in writing. In this case, the employment relationship ends with a termination agreement that is binding on both parties.
It is important for both parties to read the termination agreement carefully and go through it with the help of a lawyer before signing. It is important for the employee to understand the meaning of the terms and the implications of the agreement, including the effects on his or her unemployment benefits.
The case law thus requires that the employee must have a reasonable time to familiarise himself with the terms of the contract. Before signing, it is advisable to consult a lawyer.
Severance pay in a termination agreement
The most important part of the termination agreement is the severance pay. The amount and timing of the severance payment should be set out as clearly and unambiguously as possible in the contract. It is important that the amount of the severance payment is negotiated and set at the right level. The amount of severance pay depends on factors such as the duration of the employment relationship and the age of the employee. The agreement will set out the amount, the ”severance pay”, which the employee will receive as compensation for signing and accepting the agreement.
A termination agreement typically also stipulates that the parties will not have any claims against each other in relation to the employment relationship or its termination after the conclusion of the agreement. For example, once the agreement has been signed, the employee can no longer challenge the grounds for termination of employment.
Termination of employment by contract and compulsory employment
The date of termination of employment must be specified in the contract. The employment relationship ends after the notice period. It is also possible to agree to end the employment relationship immediately or at a later date. However, the parties may agree that the employee has no obligation to work during the period of notice.
Even if the worker is exempted from his/her obligation to work, he/she is still entitled to his/her normal salary and accrual of annual leave for the duration of the employment relationship. Salary also includes any benefits in kind or cash compensation.
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Breakdown of the instalments in the termination agreement
It is advisable to specify in the termination agreement all the instalments that the employer will pay to the employee. These include severance pay, pay on notice, overtime pay, performance bonuses and stock options. It is also advisable to specify in the contract the number of days of leave to be taken and the amount of leave pay to be paid.
Termination agreement, non-competition and other conditions
If the parties have agreed on a non-competition clause, the termination agreement does not automatically terminate the non-competition clause. The termination agreement should include an agreement to revoke the non-competition agreement. Other issues to consider may include the employee's right to take up other work immediately, the return of the employer's property, the possible transfer of the mobile phone number to the employee's name, and avoiding the extension of separate obligations and contractual or other penalties.
Termination of employment contract and certificate of employment
The contract may explicitly stipulate that the employee will receive a certificate of employment on the day the employment relationship ends.
Dispute resolution clause
In the case of dispute resolution, it is not advisable for the employee to agree to arbitration because of the costs involved. Dispute resolution should preferably be agreed in the ordinary courts.
”My employer offered me the opportunity to terminate my employment with a contract. I contacted Amos Law Office and after less than a week, the matter was settled with severance pay and other terms to my satisfaction. I was able to rest for a while and look for a new job.” Maarit 53 years old.
Article written by Attorney Tuula Rainto, Amos Law Firm. You can always call him free of charge on 010 299 5090. Article updated 04.06.2024
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[avatar user=”amoslaki” size=”352″ align=”left” link=”https://amoslaki.fi/ajanvarauskalenteri/” target=”_blank” ]Attorney Tuula Rainto, Amos Attorneys at Law. You can always call her free of charge, tel.010 299 5090[/avatar]