A mutual separation agreement is an agreement between the employer and the worker, with the parties agreeing to terminate the employment relationship on the basis of an agreed amount of compensation, both having lost their right to new claims in the bargaining forums or the courts. In her closing statement of reasons, she stated that “the public and our courts have a strong interest in enforcing such agreements. The applicant is bound. If the parties end a full resolution dispute, no one should be released seriously and voluntarily by a company. This is particularly true when, as here, the agreement was reached in favour of the party trying to escape the consequences of its own behaviour. It has become common for employers and workers to enter into what is called a reciprocal termination contract, which would result in the termination of an employment relationship between the parties. The conclusion of a reciprocal termination agreement could be motivated by a number of reasons. In practice, one of the reasons why the parties quickly arrive at an amicable solution and a labour dispute may be proactive. Openings to a reciprocal termination agreement may be the work of either an employer or a worker and, as a general rule, prior to the initiation of a formal workplace investigation (whether it is a disciplinary incapacity or incapacity to work). The terms of these agreements are negotiated between the company and the employee.
As soon as the negotiations have been concluded and the agreement is signed, the agreement will enter into force. Part of the benefits of such an agreement for a company lies in negotiating an exit without the need for a disciplinary investigation, incapacity hearings and possible reduction procedures. This is especially true for senior managers. In this way, operations are not disrupted. For the employee, this means that he was not fired, but that he chose to separate relations with the company on “good terms”. Another great advantage of mutual separation is that to the extent that the agreement contains a full and definitive comparison clause in which the worker waives all rights he or she has or may have against the employer, the employer is protected from the fact that the worker takes steps to terminate the employment relationship. For the employee, it allows a graceful exit in a situation that would otherwise most likely darken his name. If the employer wishes to enter into a separation contract with an employee, it is recommended that a two-tier approach be adopted. On the one hand, the employer would initiate proceedings, as required by our LRA for misconduct (either by issuing a notification of participation in a disciplinary hearing or by the letter of a letter outlining the allegations). On the other hand, the employer would separately enter into separation negotiations with the employee.