Help with the increasingly common termination agreements from the Lakikaveri service

Topics

• Income security
• Labour law
• Legal assistance
• Member benefit
• Salary

Termination of employment can sometimes be surprising and disconcerting. That is why it is important for everyone to know in good time about the rights and obligations of both the employee and the employer in the employment relationship. YTK Worklife lawyer Taija Numminen explains what to look out for if an employer offers a termination agreement.

A termination agreement means that the employee and the employer terminate the employment relationship by mutual agreement. As part of the agreement, the employee is typically offered additional financial compensation, and this is often the reason why it is worth considering concluding an agreement.

“The extra compensation may seem tempting to the employee, but it is worth remembering that a termination agreement is usually treated in the same way as an employee’s own resignation for unemployment insurance purposes.”

A termination agreement affects your entitlement to unemployment benefit:

• In principle, a termination agreement entails a 45-day compensation-free period, i.e. a mandatory waiting period, during which no unemployment benefit is payable. The mandatory waiting period is 45 days from the date of termination of the employment contract.
• In addition, the compensation paid will be periodized. This means that the payment of unemployment benefit is deferred for the same period as the additional remuneration in the form of wages.
• A 55-year-old worker dismissed for economic and production reasons may be entitled to a transition security. However, there is no entitlement if the worker enters into a termination agreement.

Termination agreement – to take or not to take?

Numminen recommends that the employee should go through the termination agreement with an expert before signing anything.

“It is really important to understand what you are signing and what the terms of the agreement mean in practice – especially in terms of unemployment benefits.”

Through the Lakikaveri service, YTK Worklife members can get quick legal advice from a lawyer on a wide range of employment law issues and dilemmas, including termination agreements.

The initiative for a termination agreement often comes from the employer

A termination agreement can be offered at the end of the change negotiations as an alternative to dismissal for economic and productivity reasons. The motivation for offering a termination agreement can sometimes be purely a desire to support a worker who is out of work. Sometimes, however, it may be offered in situations where the employer is not entirely sure whether there are legal grounds for dismissing the employee.

With an agreement, the employer ensures that the termination of the employment relationship does not give rise to a dispute afterwards. Sometimes the offer of a contract may also be motivated by dissatisfaction with the employee’s work performance. The context of the contract will always influence the assessment of the reasonableness of the contract and the right level of additional compensation.

“The termination agreement is always voluntary, i.e. the employee is not obliged to sign it.”

When signing a termination agreement, remember:

1. The termination agreement must always be in writing.
2. Make sure you have enough time to familiarise yourself with the contract and consult your lawyer. You never have to sign a contract right away!
3. Agree that your employment will end after the notice period and that you will be paid your normal salary for the period of notice.
4. Agree on the date of termination of the work obligation if it is earlier than the date of termination of the employment relationship.
5. Agree on adequate additional financial compensation. Please note that the agreement will lead to a mandatory waiting period and to a deferment of compensation under unemployment benefit.
6. Make sure that the agreement provides for the payment of holiday compensation. It is important that the agreement records all claims to be paid. Therefore, for example, any working time balances, travel bills and bonuses should be explicitly recorded.
7. Avoid agreeing non-compete clauses and contractual penalties.
8. Note that the contract typically stipulates that neither party has any other claims on the other.
9. Agree that you will receive a certificate of employment that will help your employment.

Register as an unemployed jobseeker at the TE Office on your first day of unemployment at the latest!

Remember to keep your job application valid throughout, even if you do not receive unemployment benefit due to the periodicity. This will ensure your eligibility for unemployment benefits >>

More and more of our members have received help from the Lakikaveri service

Through the Lakikaveri service, we help thousands of our members every year with various employment challenges, most commonly in relation to termination of employment or payroll. More and more people are also getting help with interpreting the content of the termination agreement and advice on how to proceed.

This could be just the legal help you need if your employment relationship ends and a termination agreement comes your way!