Terminating an employment contract by mutual consent of the parties
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The termination of an employment contract by mutual consent between the parties involves terminating the employment contract at the joint initiative of the employer and employee.
The termination can occur during:
- the entire duration of the employment contract;
- the notice period: if the employment contract has been terminated with notice by one of the parties.
Termination by mutual consent is also the result of a work dispensation requested in writing by a resigning employee and accepted by the employer.
Termination of the employment contract by mutual consent is treated as a voluntary loss of employment. It therefore does not entitle the employee to unemployment benefits.
Who is concerned
Any employee can agree with their employer on the termination of their employment contract by mutual consent, regardless of the nature of the contract:
- the type of employment contract: fixed-term/permanent contract; or
- the sector of activity: public or private sector.
How to proceed
Form and content of termination by mutual consent
In order to be valid, termination by mutual consent must be:
- drawn up in writing and in duplicate;
- signed by the employer and the employee.
As a general rule, the parties sign a termination agreement by mutual consent which:
- indicates the identity of both parties;
- states their common wish to terminate the employment contract;
- specifies the date on which the termination will take effect.
Rights and obligations of the employee
The employee cannot claim:
- severance pay: even if they have worked for their employer for more than 5 years, unless it is otherwise agreed between the parties;
- unemployment benefits: termination by mutual consent between the parties is considered to be equivalent to the voluntary loss of employment.
However, the employee is entitled to :
- the 13th month on a pro rata basis and to any other benefit of the contract which constitutes an element of salary;
- a compensatory indemnity for:
- days of leave not taken at the time of termination of the employment contract;
- the balance of the hours of leave remaining in their time savings account.
The parties are always free to make reciprocal concessions and to waive some of these benefits.
The employer may also, if they so wish, pay the employee a voluntary severance pay for termination by mutual consent of the parties. In such cases:
- the parties sign a termination agreement by mutual consent of the parties;
- the employee may in principle benefit from tax exemption for the severance pay received.
