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There’s no such thing as a termination agreement

We were recently contacted by Mr Richtr, who lost his job in the reorganisation of the department where he worked. He claimed that he had signed a so-called “termination by agreement” under pressure. However, he did not receive any severance pay, which is normally due to employees when positions are abolished for organisational reasons. The employer sought to circumvent the legal procedure by agreement, whereby the employee should have been given notice and paid his severance pay.

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It was only after our analysis that he discovered that he was entitled to severance pay equal to three months of his earnings. The employer initially resisted, but then, under pressure from the lawsuit, paid the severance.

Any employee who quits for so-called organisational reasons is entitled to severance pay. This is a situation where the employer or part of the employer is being closed down or relocated, or where the work (position) performed by the employee is no longer redundant. In Mr Richter’s case, it was precisely a case of redundancy.

It is important to note that the right to severance pay arises whether the employment relationship is terminated unilaterally by the employer’s notice or by a termination agreement signed by both parties. There is then no such thing as termination by agreement.

The termination agreement does not have to state the reason for which it was concluded, and a claim for severance pay may nevertheless arise.

They called me into the conference room on Friday afternoon. They reminded me of the company’s deteriorating results and had me sign a termination agreement, which took an hour to finally sign, unfortunately without consulting an attorney,” Mr. Richtr recalls. “What wasinfuriating was that they kept a few patronage people on, the HR boss’s cousin and then a friend of his from the wet district.”

I have given notice from my job

When you quit your job, we can help you defend yourself against your employer’s actions and make sure you get everything you’re entitled to from them. This includes, for example, any wages or severance pay you are owed. We provide assistance throughout the country and at a predetermined price.

Tip: The probationary period is primarily used to ensure that both the employer and the employee are satisfied with the cooperation in the months and years to come. For this reason, the Labour Code allows both parties to terminate the employment relationship prematurely during the probationary period if they find at the outset that concluding an employment contract was not the best decision. But in which case can the employee defend himself against termination during the probationary period?

Mr. Richter’s agreement did not state that the reason for his termination was departmental reorganization and redundancy. Consequently, he was not awarded statutory redundancy pay.

However, Mr Richtr later contacted us. We explained to him that there was no such thing as termination by agreement. In fact, the employment relationship can be terminated either by a unilateral legal act, whereby the employee or the employer resigns for reasons provided for by law. The consent of the other party is in no way required at this point. For the termination to be valid, it is sufficient if the person giving the notice signs it – provided, of course, that he or she complies with the requirements of the Labour Code and delivers it to the other party. Another option is to conclude a bilateral agreement on termination of employment. But then again, it is not a termination notice. Both parties must agree on its content and both must sign it.

In Mr Richter’s case, it was indeed an agreement which he signed and nothing could be done about it at the time. However, we could have claimed the severance pay in question.

Redundancy is an objective fact, not an allegation. According to the Labour Code, if an employer terminates an employment contract for organisational reasons (e.g. a branch moves, a department is closed down), then the employee is entitled to two months’ pay for the notice period and also to severance pay (for one to three months, depending on the length of the employment relationship). During the notice period, the employee must work (or take leave).

Many people do not know that it is similar for an agreement if there are organisational reasons behind it. So here too, the employee is entitled to severance pay and is entitled to three to five months’ salary (two for the “notice period” and one to three as severance pay). However, this option was not mentioned in Mr Richter’s agreement.

It must be said that if organisational reasons are mentioned in the agreement, then the employee is entitled to severance pay regardless of whether it was expressly agreed in the agreement. If organisational reasons are not mentioned, but are a real motive for termination, then it is still possible to prove such a fact in court. However, the whole situation is much more complicated and may not lead to the desired results.

However, we were still able to prove that the entire department was reorganized. As a result, Mr Richtr received a severance payment of three average salaries (he had worked for the company for more than two years).

Thus, we recommend not to give up in similar cases and to contact an (Available) attorney in a timely manner.

Furthermore, what is the difference between a termination notice and an agreement?

We have already described the basic difference, i.e. whether it is a unilateral or bilateral act. However, the two approaches can also differ significantly in their consequences. This is because if you nod to your employer to sign an agreement, then you are seen as having left voluntarily. Thus, in certain situations, your unemployment benefits may be reduced.

Another difference may also arise if you fall ill during the termination process.If you have entered into an agreement, there is a clear termination date. This will not change even if you fall seriously ill and lie down for six months. However, if you fall ill for a long time during the notice period, this can also delay the end of your employment. The decisive factor is whether the sick leave continues on the last day of the notice period.

Tip: Is your employer about to give you notice? Make sure you are not entitled to severance pay. When does the entitlement arise, how is severance pay calculated and what happens to the levies afterwards? We’ve looked at this in detail in our article.

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I have given notice from my job

When you quit your job, we can help you defend yourself against your employer’s actions and make sure you get everything you’re entitled to from them. This includes, for example, any wages or severance pay you are owed. We provide assistance throughout the country and at a predetermined price.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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