Insights: Employee Separation Agreements

There are several ways in which an employment relationship may come to an end. An employment relationship can end by means of:

• resignation;
• retirement;
• dismissal;
• redundancy or
• upon the expiry of a fixed-term contract.

“Employee separation agreements”

“Employee separation agreements” are also known as mutual termination agreements, termination agreements, release of claims for employment and severance agreements.

The agreement is essentially a document which provides that the employer and the employee have reached an amicable end to the working relationship and which outlines the terms of the termination.

Although there is no statutory requirement for parties to settle their dispute by way of a settlement agreement, it is common for employers to offer by way of a settlement agreement an amount which is larger than the employee’s statutory and contractual entitlement on termination, conditional on the employee waiving all claims they have against them.

Employee separation agreements generally offer a measure of certainty, with many employers preferring a defined payment rather than unpredictable future damages and legal costs. At the same time employees and employers will be keen to preserve their reputations, which can be achieved in a settlement agreement.

Usual provisions of a separation agreement

The agreement will provide the provisions under which both parties agree to end the employment relationship. These provisions will supersede other agreements, including the employment contract. Usual provisions include:

An employee separation agreement can also include post-employment obligations, which protect the employers business. These can include:

• an obligation on the employee to return employer owned items;
• a non-compete provision;
• a confidentiality/non-disclosure provision.

How can we help?

We can advise and assist in negotiating and drafting separation / mutual termination agreements.

We can also provide advice on all aspects of Cyprus employment law matters, including termination of employment, protection of maternity, discrimination at work, health and safety,  policy manuals and employment dispute resolution (mediation and litigation at the Industrial Disputes Court).

Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.