Article published in ZHAW Impact (Decem­ber 2022)

Nowa­days, many employ­ment rela­ti­onships are no lon­ger ter­mi­na­ted by notice but by ter­mi­na­tion agree­ments, which brings many advan­ta­ges. But beware of pitfalls!

Moti­ves for con­clu­ding a ter­mi­na­tion agreement
Con­clu­ding a ter­mi­na­tion agree­ment has advan­ta­ges for both employer and employee. In par­ti­cu­lar, the ter­mi­na­tion agree­ment crea­tes legal cer­tainty. The par­ties know where they stand, whe­reas, in the case of ter­mi­na­tion, uncer­tain­ties remain. The ter­mi­na­tion agree­ment can be used to settle all out­stan­ding issues (e.g. leave of absence, sever­ance pay, bonu­ses, inter­nal and exter­nal com­mu­ni­ca­tion, com­pen­sa­tion for over­time and holi­days, return of pro­perty, etc.). Since the employ­ment rela­ti­onship is not ter­mi­na­ted by a notice of dis­mis­sal, the pro­tec­tion against dis­mis­sal for a cer­tain period (no exten­si­ons of the employ­ment rela­ti­onship due to ill­ness; Art. 336c CO) and the option to chall­enge the dis­mis­sal on grounds of unfair­ness do not apply, which is in the inte­rest of the employer. This wai­ver by the employee of the pro­tec­tion against dis­mis­sal in terms of time and sub­s­tance is usually off­set by a mone­tary pay­ment by the employer. In addi­tion to finan­cial aspects, fixed for­mu­la­ti­ons of the employer’s refe­rence and inter­nal and exter­nal com­mu­ni­ca­tion as well as a clause about pos­si­ble unem­ploy­ment are in the inte­rest of the employee (see prac­ti­cal tips).

Con­side­ra­tion period
It often tran­spi­res that the employer pres­ents the employee with a ter­mi­na­tion agree­ment, demands that this be signed imme­dia­tely, and threa­tens to ter­mi­nate the agree­ment if the employee fails to do so. This is not per­mis­si­ble and, accor­ding to the case law of the Fede­ral Supreme Court, even leads to the nul­lity of the ter­mi­na­tion agree­ment. The employee must be given a suf­fi­ci­ently long period to con­sider the ter­mi­na­tion agree­ment. Howe­ver, the length of this period has not been fully cla­ri­fied, though a reflec­tion period of five days seems reasonable.

The need for mutual concessions
By ente­ring into the ter­mi­na­tion agree­ment, the employee wai­ves pro­tec­tive pro­vi­si­ons that the law pro­vi­des for in his or her favour (in par­ti­cu­lar, wai­ting peri­ods, con­tin­ued pay­ment of wages in the event of ill­ness). Accor­ding to the Fede­ral Supreme Court, this wai­ver by the employee must be pro­perly off­set by con­side­ra­tion by the employer in the ter­mi­na­tion agree­ment. The ter­mi­na­tion agree­ment must appear appro­priate under the spe­ci­fic fac­tual and legal cir­cum­s­tances at the time of its conclusion.

To assess whe­ther a ter­mi­na­tion agree­ment is per­mis­si­ble, rules of thumb have been deve­lo­ped in prac­tice. For exam­ple, the employee must not be worse off than he or she would have been in the case of the employer’s ter­mi­na­tion (rule of thumb 1). The employee must then have a reasonable inte­rest in con­clu­ding the ter­mi­na­tion agree­ment (rule of thumb 2). This rule can (but does not have to) lead to a rela­ti­vi­sa­tion of rule of thumb 1, for exam­ple if the employee wis­hes to leave at short notice of his or her own free will.

Con­se­quen­ces of an inva­lid ter­mi­na­tion agreement
The Fede­ral Supreme Court has assu­med nul­lity in seve­ral decis­i­ons in the past. This means that the par­ties must be res­to­red to the posi­tion they were in if the ter­mi­na­tion agree­ment had not been con­cluded. The employ­ment rela­ti­onship would the­r­e­fore still be in the non-ter­mi­na­ted state. A legal con­se­quence of this nature would pro­ba­bly not be appro­priate in most cases. Part of the doc­trine, the­r­e­fore, takes the posi­tion that the employ­ment rela­ti­onship is to be regarded as ter­mi­na­ted even if it is inad­mis­si­ble. Howe­ver, the employee should retain the legal or coll­ec­tive employ­ment agree­ment rights that have been cir­cum­ven­ted (e.g. con­tin­ued pay­ment of wages in the event of illness).

Prac­ti­cal tips
The ter­mi­na­tion agree­ment can lead to adjus­t­ment days for unem­ploy­ment com­pen­sa­tion. The­r­e­fore, the ter­mi­na­tion agree­ment should con­tain appro­priate wor­ding, such as: “If no ter­mi­na­tion agree­ment had been con­cluded, the employer would have ter­mi­na­ted the employ­ment rela­ti­onship through no fault of employee X.” Fre­quently, ter­mi­na­tion agree­ments also refer to the employer’s duty to issue a “favoura­ble refe­rence” to the employee. Such clau­ses are wort­hl­ess, as this obli­ga­tion alre­ady exists by law. It is bet­ter to use spe­ci­fic for­mu­la­ti­ons, such as: “The employer under­ta­kes to issue and deli­ver to the employee an inte­rim refe­rence in accordance with the appen­dix within 10 days of the employee’s bin­ding signa­ture. The final refe­rence cor­re­sponds to the inte­rim refe­rence (adjus­ted in the tense), wher­eby the final para­graph should read as fol­lows: “Ms. X is lea­ving us as of 31 Decem­ber 2022 because we were no lon­ger able to offer her a sui­ta­ble posi­tion as part of a reor­ga­ni­sa­tion, which we very much reg­ret. We thank Ms. X for her very valuable and com­mit­ted work and wish her all the best and con­tin­ued suc­cess in the future.”

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