Dismissal by agreement is always the most profitable option for a subordinate and his boss, who could not find a common language in the implementation of their labor activity, and want to complete their joint labor activity by mutual agreement. In this case, the employer must fully pay the employee, as well as make additional payments to him, if this is provided for by the agreement on termination of employment or other regulatory acts of the organization.
Mutual agreement
The mutual relations between a subordinate and his boss can be completed by mutual agreement only if both parties wish it. In the event that one of the parties does not agree to conclude such an agreement, its drafting will be impossible, otherwise it will even be illegal.
Dismissal of a person on this basis also provides for appropriate payments. By agreement of the parties at the dismissal, which was agreed between the two parties, the employer pays to his subordinate:
- last earned money for the entire time of work;
- compensation for vacation if the employee was not on vacation;
- severance pay, if it is prescribed in the labor or collective agreement and is mandatory.
Additional payout
The mutual agreement on the dismissal of the employee is very good because, along with all payments due to the employee, the employer can provide in such an agreement an additional payment upon dismissal by mutual agreement.
Article 178 of the Labor Code provides for severance pay not only for those who are dismissed from the organization for reduction or in connection with liquidation, but also in cases where such monetary compensation is provided for in a labor or collective agreement. The dismissal by agreement of the parties with the payment of compensation, which is established by the employer independently or can be agreed even with the employee, so that the latter does not have any financial claims against the former employer is directly related to this basis.
Execution of an agreement
The Labor Code does not contain a specific pattern of agreement on the mutual termination of employment. Therefore, this agreement can be written in completely different ways, the main thing is that it be executed in writing and in duplicate, as well as in compliance with all necessary conditions. A sample of such an agreement can be found below.
Agreement on termination of the contract of labor relations No. ____ of ___ year
Tensnib LLC represented by the Director General _______ acting on the basis of the Power of Attorney, hereinafter referred to as the "Employer" and _______, hereinafter referred to as the "Employee", entered into this Agreement as follows:
1. Terminate the employment contract No. ___ of the year, on the basis of paragraph 1 of part 1 of article 77 of the Labor Code of the Russian Federation.
2. Last business day ______.
3. The employer undertakes:
- to pay a salary for the entire time of work and a monetary reward for a vacation that has not been used;
- make a compensatory allowance in the amount of 15,000 rubles;
- make payment of all money to the employee on the last day of his work, as well as transfer the labor with a note of dismissal by mutual agreement.
4. By this agreement, the parties confirm the fact of the absence of mutual claims, which is certified by its signing.
5. The mutual agreement is made in duplicate, which each of the parties receives.
6. Signatures of the parties.
The main thing that an employee needs to know about the completion of an employment relationship in this case is that dismissal by agreement of the parties with payment of compensation is an agreement in which all the points are determined by the parties independently, including the amount of payment of compensation itself, which is not obligatory.
Positive moments upon dismissal by agreement
Everywhere there are pros and cons, but in a situation related to the termination of employment by mutual agreement, there are a lot of positive aspects.
For the employee, the advantages are as follows:
- seniority will be considered continuous for a whole month from the date of dismissal;
- when registering with the employment authorities, the allowance will be a little larger than when dismissing an employee on his own initiative;
- in the event of a conflict with the employer, it is possible to disperse peacefully without mutual reproaches and disagreements.
There are also benefits for the employer:
- coordination with the trade union or the state labor inspectorate is not required if the employee is a minor, and it is also possible to determine the deadline for dismissal of a subordinate independently;
- the amount of payments upon dismissal by agreement of the parties is determined by the employer independently, with the exception of the mandatory amounts due to the employee;
- the most convenient way when it is necessary to break off labor relations with an unnecessary employee and avoid unpleasant consequences.
Payment terms
Even in the event that the employment relationship ceases in connection with the signing of an agreement on mutual agreement of the two parties and is signed by the subordinate and the employer, the latter should not forget that all the funds allocated to the employee must be paid in the amount specified by law deadlines.
Article 140 of the Labor Code provides for the payment of all money due to an employee on the last day of his labor activity with a given employer. Accordingly, this same rule applies to the calculation of payments for dismissal by agreement of the parties, which means that on the last day of the employee’s labor activity specified in such an agreement, the employer must pay all the money earned by the latter.
In the event that the employee was not on vacation, he is entitled to a cash payment for the vacation that he did not use.
Required Payments
In the event of the termination of the employment relationship, as agreed between the parties, the employer must pay the subordinate:
- salary for all time worked by the employee;
- compensation for vacation that was not used;
- severance pay, but only if it is regulated by a labor or collective agreement, which states that compensation payments upon dismissal by agreement of the parties are necessary and must be performed by the employer.
Benefit Amount
Citizens dismissed from the organization by agreement of the parties may be paid the corresponding severance pay, but only if it is prescribed in the employee’s employment contract or in the collective agreement of the entire organization. In this case, the amount of severance pay can be completely different and not depend on the amounts of other mandatory payments due to the employee upon his dismissal.
Additional payments to the employee upon dismissal by agreement of the parties is basically the initiative of the employer, and it is done so that the employee retains a good impression of the former boss and does not speak badly about him.
The amount of severance pay may be:
- fixed;
- in the amount of salary;
- composed of average wages.
In this case, not even the amount itself will matter, but the fact of the payment of benefits upon dismissal by agreement of the parties, which in the future will allow the employer not to lose his reputation and remain honest in the face of new employees.
Allowance tax
The taxation of severance pay is not provided by law only if its amount does not exceed the amount of three times the monthly earnings of the employee, otherwise the tax must be paid by the employer. Therefore, if the additional payment upon dismissal by agreement of the parties is much larger than the monthly earnings for three months, then personal income tax is payable.
Algorithm of actions upon dismissal by mutual agreement
Correct and consistent dismissal of an employee by agreement of the parties is primarily a saving of time for the employee and the employer who do not want to continue to work together. Therefore, you need to do everything accurately, correctly and quickly.
First you need to draw up the agreement itself on the completion of labor relations between the parties, with the introduction of all the necessary conditions that will suit each side. An important issue here is what kind of payments upon dismissal by agreement of the parties will be paid to the employee upon termination of the employment relationship with him. To complete this procedure more quickly, this question needs to be addressed first.
An agreement on dismissal by agreement of the parties can also be reached during an oral conversation, by writing a statement to the employer in the name of the employer indicating the date of dismissal, after which the boss will put his signature on it and give it to the personnel department for execution. After that, an order will be written, and an entry in the labor record will be made.
When issuing an order, the reason for dismissing an employee should be only the mutual agreement of the two parties; it will be unlawful to prescribe other grounds in the order. That is why the employee must carefully read it before signing the order and then sign it.
All due payments upon dismissal by agreement of the parties are prescribed only in the agreement itself, in the order their mention is not allowed. The workbook should contain a record of the following plan: “Dismissed by agreement of two parties, according to clause 1 of part 1 of article 77 of the Labor Code of the Russian Federation”, indicating the order number and the date of filling out the labor, which is confirmed by the signature of a personnel specialist and the organization’s seal.
Only after observing all the described formalities can this procedure of dismissal be considered fully completed.
Appeal of agreements
Once, by mutual agreement of the parties, the employment contract has been completed, and all disputes between the employee and his former boss have been resolved, there are often situations when, after a short time, many of the former employees begin to think that their dismissal was unlawful, and this is despite the fact that they themselves gave their consent to this.
Many of these citizens are dissatisfied with the fact that payments by agreement of the parties upon dismissal on mutually beneficial conditions for the two parties were not as large as we would like, and in various ways they are trying to put pressure on the former employer to pay more than has already been received. Based on this, appeals to the court begin.
Case Study
The employee invited the employer to complete their labor relationship because he was not happy with the salary, and he had already found a different job, especially since the interpersonal relationship had not been working with the boss for a long time, to which the employer agreed with him. The employer made an agreement, which stated on what conditions will be dismissed by agreement of the parties, what payments are made in this case to the employee, the latter agreed with everything and signed this agreement. As a result, it turned out that his employment contract stipulated that upon dismissal by agreement of the parties he should be paid compensation in the amount of 15,000 rubles and no more, and the former boss paid only 11,000, with which the former employee agreed.
At the hearing, the dismissed employee stated that he was forced to sign this agreement or threatened to dismiss “under the article,” because the boss had long outlined another person in his place, and stubbornly argued that the dismissal was illegal. He also asked the court to reinstate him at work and to recover additional money from the employer to compensate him for moral damage.
The court, having examined the materials of the case and the agreement itself, after hearing the testimonies of witnesses, came to the conclusion that there were no violations of labor law in the actions of the employer, all payments by agreement of the parties upon dismissal of the said employee were made to him, including the payment of benefits laid on the contract concluded with the former head. Therefore, at the hearing, the claims to the indicated citizen were completely denied.
The court also indicated the fact that all payments by agreement of the parties when dismissing employees on mutually beneficial conditions are made by the employer on the basis of a law that provides for the mandatory payment of salaries and compensation for vacation and does not take into account the strict payment of benefits in this case.