Termination of Employment: Mutual Agreement, Notice, or Immediate Termination?

How can an employment relationship be terminated?

The basic methods of terminating an employment relationship include:

• mutual agreement to terminate the employment relationship —the employee and employer agree on the termination and its effective date,
• notice of termination —a unilateral legal act that typically involves a notice period,
• immediate termination of employment —only in exceptional situations specified by law,
• termination of employment during the probationary period —usually without the need to state a reason.

Are you dealing with the termination of an employment relationship and unsure whether a mutual agreement, notice of termination, or immediate termination is valid? Send your document to our attorneys for review and, if necessary, to help you prepare the correct solution based on your specific situation.

Methods of Terminating an Employment Relationship

The Labor Code distinguishes between several ways in which an employment relationship may end. The most common are a mutual agreement to terminate the employment relationship or a notice of termination; in exceptional cases, immediate termination of the employment relationship may occur. During an agreed-upon probationary period, an employment relationship may also be terminated under special rules.

In addition, a fixed-term employment relationship generally ends upon the expiration of the agreed-upon term. In some other cases, it may end, for example, upon the death of the employee.

Restrictions and Rules Governing the Termination of Employment

Each method of terminating an employment relationship has its own rules. Most of these restrictions apply primarily to the employer, who cannot terminate an employee’s employment without a valid legal reason. Nor can an employee simply leave from one day to the next; they are bound by the notice period.

Agreement to Terminate Employment

One of the most common methods of terminating an employment relationship is a mutual agreement to terminate the employment relationship, which allows both the employee and the employer to end their working relationship by mutual consent. Neither party can unilaterally force the other to sign the agreement. The agreement must be in writing, and the employment relationship ends on the date agreed upon by the parties.

The main advantage is flexibility —the employment relationship can end, for example, on the very day the agreement is signed or on any later date, so there is no need to wait for the notice period to expire. This procedure is often used in situations where the parties wish to avoid complications associated with the notice period or disputes over the grounds for termination.

Beware of a common misconception: the term “termination by agreement” is not legally correct. Termination is a unilateral act, whereas an agreement requires the consent of both the employee and the employer. Therefore, the employment relationship is either terminated by agreement, or one party issues a notice of termination.

From legal practice: A common problem is that an employee signs an “agreement” believing it is merely an acknowledgment of receipt of the notice of termination. In reality, by signing, they agree to the termination of the employment relationship under the terms specified in the document. Therefore, we recommend always verifying first whether the document actually contains a notice of termination or an agreement to terminate the employment relationship.

Termination of Employment During the Probationary Period

Termination of employment during the probationary period is one of the simplest ways to end a job. Both the employee and the employer may terminate the employment relationship during the probationary period for any reason or without giving a reason.

However, the termination must be in writing; otherwise, it is not valid. The employment relationship ends on the date the notice of termination is delivered to the other party, unless a later date is specified in the notice.

Restrictions apply to employers when an employee is on sick leave —during the first 14 calendar days of temporary sick leave or quarantine, the employer may not terminate the employment relationship during the probationary period.

Following the “flexi-amendment” to the Labor Code, the probationary period agreed upon on or after June 1, 2025, may last a maximum of 4 months; for managerial employees, it may last up to 8 months.

Immediate Termination of Employment

From the employee’s perspective, such a situation may arise if the employer has failed to pay the employee’s wages, salary, wage or salary compensation, or any portion thereof , even 15 days after the due date. The second reason is a serious threat to the employee’s health and the inability to perform suitable work.

Although the employment relationship ends immediately in these cases, the employee is entitled to receive compensation from the employer equal to the average monthly earnings for the duration of the normal notice period.

There are also two grounds on the employer’s part: first, if the employee has been convicted of an intentional criminal offense (the Labor Code specifies this situation in greater detail); or if the employee has violated their obligations arising from legal regulations pertaining to their work in a particularly gross manner. In the latter situation, the law places significant emphasis on the characteristic of “particularly gross.” Thus, a serious or less serious breach of duties is not sufficient. According to the case law of the Supreme Court, an “exceptionally gross” breach of work duties generally constitutes an unexcused absence lasting five or more days. However, this is not an automatic rule. The court always considers the circumstances of the specific case as well, such as the consequences of the absence for the employer, the degree of fault, or the employee’s past attitude toward work. Other examples of such situations include theft of the employer’s property, embezzlement of the employer’s funds, or intentional damage to the employer’s equipment.

Even if the grounds for immediate termination of employment by the employer are met, a mutual agreement to terminate the employment relationship may be proposed as an alternative, which in practice often prevents disputes and legal battles.

From attorneys’ experience: Immediate termination of employment is an exceptional measure, and a breach of employment duties alone does not automatically constitute a legal basis for it. The Supreme Court has repeatedly emphasized that the situation must be so serious that it would be unfair to require the employer to continue the employment relationship even for the duration of the notice period.

Termination for Minor Breaches of Employment Duties

In practice, situations often arise in which an employee does not go to the extremes mentioned above, but a breach of work duties still occurs. If this situation reaches a certain level of severity, the employer may proceed with termination. According to the Labor Code, grounds for termination include a serious breach of work duties or, in some cases, a pattern of minor breaches of work duties.

Note the change effective in 2025: for grounds for termination related, for example, to unsatisfactory work performance or breaches of work duties, the statutory notice period will be at least one month starting June 1, 2025. As a rule, this period begins on the day the notice of termination is delivered to the other party.

As for persistent minor infractions, in practice these may include, depending on the circumstances, for example, an employee’s repeated tardiness, smoking in the workplace, violations of established rules, and so on. When assessing the severity of a breach of employment duties, one must take into account, among other things, the employee’s position (e.g., an inspector at a nuclear power plant should exercise much greater care), the degree of fault, the amount of any resulting damage, and so on.

If the breach of duties is less serious but systematic, then the“three strikes and you’reout” rule applies. There must therefore be at least three infractions, which may be of various types. However, there should be a relatively close temporal connection between them, which is assessed on a case-by-case basis. For example, in January, an employee arrives late to work at a retail store twice, and in February, it is discovered that the employee is making personal phone calls during work hours and is not serving customers.

For termination to be valid for these less serious violations, the employee must first demonstrably receive a written warning regarding the possibility of termination of employment (a so-called “reprimand”). The employer must address the employee’s misconduct within the six months prior to termination and describe the specific violation in the formal warning. Termination may only follow if the employee again violates their duties, even after having been formally warned.

Longer time limits will apply starting June 1, 2025. The employer must issue a notice of termination for breach of employment duties or immediately terminate the employment relationship within 3 months of the date on which the employer became aware of the reason, but no later than 15 months from the date the reason arose. For grounds arising before June 1, 2025, the previous deadlines of 2 months and 1 year will still apply.

Last but not least, an employment relationship may be terminated two months from the date the employer became aware of the grounds for termination and no later than one year from the date such grounds arose.

In order for an employer to reprimand an employee for unsatisfactory work performance—let alone terminate the employment relationship on that basis— the employer must not be the cause of the problem. For example, the employer may have failed to provide the necessary machinery, failed to train the employee, or set a task that was objectively impossible to fulfill.

If a court subsequently reviews a termination filed in this manner, the employer’s own subjective assessment of the employee’s work performance is not determinative for the court. It may well be that the court will take a different view of the matter than the employer, that it will consider other circumstances (including those the employer failed to consider or chose not to consider) and rule in favor of the employee, finding that the employee’s performance was not unsatisfactory and that there is no valid ground for termination.

If the employer and employee wish to avoid complications, they may, instead of a unilateral termination, enter into a mutual termination agreement in which they clearly define the terms of the termination and avoid the risk that either party might violate their legal obligations.

Termination for Unsatisfactory Work Performance

Another ground for termination is unsatisfactory work performance, or if the employee fails to meet the requirements established by law for performing the agreed-upon work.

However, it is primarily the employer who defines what constitutes unsatisfactory performance. The employer may establish specific performance standards for this purpose. Although it is primarily up to the employer, the employer should be aware that work performance can also be assessed as unsatisfactory from an objective standpoint. In other words, the employer’s reasons must hold up to judicial review. At the same time, however, the employee must be given prior notice to remedy the situation and warned that the employer is not satisfied with their work. All of this must have occurred within the past twelve months.

Summary

Termination of employment can take several forms: the employee and employer may reach a mutual agreement; one party may give notice; and, in situations defined by law, employment may be terminated immediately or during the probationary period. Each method has different conditions and legal consequences. Furthermore, as of June 1, 2025, new rules apply regarding the calculation of certain notice periods, as well as longer notice periods or immediate termination due to a breach of employment obligations. If you are unsure about the validity of a specific document, it is important to first determine whether it is actually a notice of termination or an agreement to terminate the employment relationship.