With the rapid development of the economy, the appearance of many new sector jobs, as well as strict requirements from the employer or stunts to draw personnel from competitors, the termination of labor contract can occur at any time. Most enterprises also anticipate this issue, but not in any case one of the parties is eligible to unilaterally terminate the labor contract, and they are forced to choose the means of agreement to look for the consent of the other party and to avoid disputes for company or employee himself/herself.

This article will provide you a general overview about agreement on termination of labor contract and the importance of it in handling issues related to the termination of labor contract.

1. Cases of choosing Agreement on termination of labor contract

Agreement on termination of labor contract is the least controversial means of terminating the contract between the parties because it is based on the consensus of the employer and the employee. This form of termination usually arises in 3 situations:

• When one of the parties proposes to terminate the contract and the other party agrees.
• When one of the parties realizes that it is impossible to continue the labor relationship;however, there is no basis to make a decision to unilaterally terminate the labor contract or dismiss (on the part of the employer). In this case, the party which is in demand of terminating the labor contract often makes propose with some of material benefits to serve as a basis for negotiating to terminate the labor contract before the period.
• When the parties have dispute over labor, competent authority requires the company to take back the employee to work but the parties have no demand to continue the labor relationship. 

On the part of the employer, this means is often used by the employer because it avoids lawsuits and disputes due to the illegal termination of contract. However, when choosing this means, the employer shall notice that the employee has fully handed over assets, confidential information, has performed the destruction of document information in the presence of company representative, or in other words, the employee shall complete obligation before confirming in written agreement on termination of labor contract. Likewise, on the part of the employee , the employee shall also notice responsibilities which the employer shall complete before the employer signs in the written agreement.

2. Content of Agreement on termination of labor contract

After the parties have achieved the termination of the labor relationship by a written agreement, at the next step the company shall prepare a written agreement to record the will of the parties. Accordingly, agreement on termination of Labor Contract shall have following basic contents:

• The information of the employer, the employee , the Labor Contract and reason why the parties draft the written agreement on terminating of labor contract; 
• Time that labor contract will be terminated;
• Obligations (payment) that the company shall perform up to the time of terminating the labor contract according to the record of the agreement, such as: salary according to the labor contract, salary corresponding to a number of unused annual leave days; other financial supports;
• Amounts that the company will deduct before making payment, accordingly some amounts of money will be retained by the company to replace the employee to perform obligations for the competent authority such as: social insurance, unemployment insurance, personal income tax;
• The sum amount of money that the employee receives up to the effective time of the agreement, payment method is cash or transfer, the time of payment…;
• Types of assets of the company that the employee holding, client’s information, these information can be listed directly at agreement on termination of contract or make handover record and attach to the agreement;  
• Other commitments of the employee related to the right of representation, confidential information, anti-conflict of interests…;
• The provisions of liability waiver between the parties… 

As for some special positions, usually management titles, or positions holding important information, creator of contents or design of the company, then agreement on termination of labor contract will need to be supplemented some provisions related to anti-competition.

Above is basic information about agreement on termination of labor contract that we want to share with you. Making agreement on termination of labor contract is a complicated process, requiring carefulness and thorough preparation to avoid risks and arising disputes. We hope that the article has provided you useful information and helped you understand more about agreement on termination of labor contract.

Time of writing: 11/04/2023

The article contains general information which is of reference value, in case you want to receive legal opinion on issues you need clarification on, please contact our Lawyer at info@cdlaf.vn