In addition to lawful content, particular attention should be paid to the customs and practices that are used to enter into the agreement. One company’s practice was that a representative of the company issued each employee that was struggling with performance problems a termination agreement in the meeting in which their performance problems were first discussed. The topic of the discussion usually came as a complete surprise to the employee and they could not prepare for it in advance. In the same meeting, a manager or a human resources manager asked each employee to sign a termination agreement. When I asked the company why employees were not given a few days to consider the proposal, the company’s human resources manager answered: “otherwise they won’t sign it.” This confirmed the employee’s claim that he did not exercise his free will in entering the agreement. In legal terms, such an agreement may be void in whole or in part and therefore not binding.
A termination of employment agreement is an agreement. According to legal principles, parties must be able to exercise their free will in entering an agreement. In addition, it is generally required that both parties have a specific purpose or intention to make the agreement and that this process has not been burdened by any grounds of invalidity mentioned in the Contracts Act.
The employer must not mislead employees when proposing a termination agreement. The employer cannot, for example, claim that they have grounds for dismissal unless such grounds actually exist. An employee may not either be pressured or deceived in any way into signing the agreement. The economic impact of the agreement (e.g., daily allowance waiting period) shall be explained to the employee and the employee shall have time to investigate its effects on his/her future. Thus, the employee must be given sufficient time, preferably at least a few days, to read a draft of the agreement. Otherwise, there is a risk that the agreement is not valid, despite containing signatures.
Don’t make an invalid termination agreement, because it is in the employer’s interest that the agreement is valid.
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