Termination by mutual consent

Termination by mutual consent

Occasionally both employee and employer recognise that continuation of the employment is unrealistic or untenable and they mutually agree to terminate the employment relationship. Often this occurs after or is precipitated by a conversation about performance or behaviour and poor prospects of a successful future working relationship. Accordingly, it raises risks the employee subsequently argues they were dismissed or forced to resign (constructive dismissal).

Where such a termination is genuinely a matter of mutual consent, the relationship will end amicably with neither party having any claim against the other.

Where such termination is prompted by the employee you should be careful to ensure that it is not a heat of the moment decision they quickly come to regret and seek to reverse. A cooling off period of a few days is generally a sound way to test whether the employee’s interest in termination by consent is genuine and stable.

Where the parting of the ways is prompted by BigApple, even though it may eventually be accepted by the employee, consideration for the employee relinquishing any claim on the job is commonly agreed to in the form of an exit agreement. These arrangements carry significant risk for BigApple. Unless appropriately documented, including a waiver of any future claims against BigApple, the risk exists that an employee will claim that they were ‘constructively’ dismissed i.e. given no option but to agree to a resignation.

Seek specialist advice from HR before entering into such an arrangement.