Termination agreement

Termination Agreement

The termination agreement is an agreement by which the employer and the employee decide by mutual consent to terminate the employment contract immediately. This means that a fixed-term contract can be terminated before it expires or an open-ended contract can be terminated without observing the notice period.

 Such an agreement is not without consequences for the employee. The employee loses the right to the salary for the period of leave as well as a possible period of protection against sickness and accident leave. Unemployment insurance may impose a waiting period before the employee receives benefits.

Will of the parties

The Federal Court, however, sets out two cumulative conditions for the validity of the termination agreement. The will of the parties to terminate the contract must be clearly established and the agreement must contain mutual concessions.

 The Federal Court has ruled that a termination agreement in which the employee waives the salary for the period of notice and the employer waives the work performance is void. The employer's concession is insufficient, as the employee does not have a replacement job.

 The concessions are deemed to be of equal importance if the severance pay is at least equivalent to the salary for the period of leave and takes into account the period of protection against untimely leave, particularly in the event of illness or accident.

 If the concessions are reciprocal and sufficient, the agreement to terminate the contract is deemed to be a discharge of all claims and accounts between the parties.

Non-competition clause

The non-competition clause ends when the employee resigns for a justified reason attributable to the employer. It also lapses if the employer dismisses the employee without giving justified reasons to terminate the employment contract.

 In the case of a termination agreement, the issue is more delicate because the employer and the employee agree to terminate the employment relationship. Depending on the circumstances, the non-competition clause will continue to have effect.


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1 Mar, 2010 byMarianne Favre Moreillon