An employer may offer to terminate your employment by what is called “mutual agreement.” There is usually some purported reason, understood by you, as to why the employer is offering such an offer. Often the reason does not quite qualify for “for cause” termination. Sometimes, however, both parties simply want to end the relationship because it is not “working out.” Mutual agreement termination is not reported to a licensing authority or NPDP. It is much better than simply being fired pursuant to an employment contract’s terms where no continuing pay or benefits are offered.
The employer will initiate the offer for a mutual separation and then offer the employee a Separation Agreement. (Sometimes called a Waiver and Release). This document contains the employer’s detailed settlement offer. In addition to a confidentiality clause, it includes severance pay, benefits and a release of all rights to seek relief under all federal and state laws. You will be given three weeks to review it and agree to its terms. The document will also provide that even if you agree to the terms you have an additional week to revoke it. Once signed few employees revoke the agreement.
What if you review the document and disagree with its terms? You have three choices. You can refuse to sign it; you can sign it as offered; you can attempt to negotiate the offered terms. What you must remember is that the employer has the leverage advantage. If you refuse to sign, will forfeit favorable terms in the agreement, whether negotiated or not; and the employer may decide to terminate you “for cause.” If you sign the employer will be legally bound to the agreement’s terms as offered or negotiated. In most cases if the employer is so inclined, not unusual, it will be advantageous to negotiate terms.
In a mutual agreement termination, the employer will often be willing to negotiate and/or add certain terms to a separation agreement. They will never amend or remove clauses related to confidentiality and waiver of rights. The most common changes or additions that an employer may agree to include are the date of termination, severance pay, restrictive covenant, confidentiality, and jurisdiction. To negotiate such issues requires time and three weeks is not much; sometimes the employer will give the employee more than three weeks if the negotiations are reasonable, civil and done “in good faith.” However, time is of the essence and must be commenced as soon as the separation agreement is provided in writing.
If you are faced with a mutual agreement termination, you might review our blog on the basics of negotiation. Also, we are available to negotiate separation agreements and litigate or mediate disputed terminations.