Termination by mutual consent is one of the most common and flexible ways to end employment relations between an employee and an employer. In practice, this ground is used when both parties reach a mutual decision to end cooperation without conflict, coercion, and without the need to comply with the mandatory notice period as provided in certain other cases.
For the employee, this is an opportunity to properly conclude work while preserving their professional reputation, and for the employer, it is a legal mechanism for terminating the employment contract without unnecessary procedural complications. At the same time, it is important to correctly design the documents to avoid disputes in the future and ensure the legal cleanliness of the process.
What is termination by mutual consent
Termination by mutual consent means that the employment contract is terminated not at the initiative of either the employee or the employer, but on the basis of their mutual agreement. The key point here is the voluntary decision. Neither party should be under pressure or coercion; otherwise, such termination may be challenged in court.
In practice, it looks like this: one of the parties initiates the termination of employment relations, and the other agrees. The termination date can be any agreed day, even the same day when the agreement is reached. This feature distinguishes termination by mutual consent from termination by personal wish, where a two-week notice period is generally required.
It is important to understand that after the order for termination is issued and the corresponding entry is made in the employment documents, it is no longer possible to withdraw such an agreement without the consent of the other party. Therefore, before signing the application or order, employees should weigh all circumstances and be sure of their decision.
Legal grounds and legislation
The legal basis for termination by mutual consent is paragraph 1 of part one of article 36 of the Labor Code of Ukraine. This provision explicitly states that the employment contract is terminated by mutual agreement. This article is crucial for formalizing such types of termination.
In addition to the Labor Code, important are sub-legal regulations that govern the procedure for managing personnel documentation, issuing orders, and making entries in labor books or electronic registers. In particular, the employer is obliged to issue properly executed documents to the employee on the day of termination and to make full settlement, including payment of wages, compensation for unused annual leave days, and other legally required payments.
If the employee believes that the termination occurred under pressure or without their real consent, they have the right to appeal to the court with a claim for reinstatement. In such cases, the court assesses the circumstances, the evidence of the voluntary nature of the agreement, and compliance with the procedure.
Procedure for terminating employment
The procedure for termination by mutual consent consists of several sequential stages. The first step is to reach an oral or written agreement between the employee and the employer regarding the termination of employment relations and determining a specific termination date.
The next step is to submit an application by the employee or prepare a written agreement between the parties. In most cases, it is the employee who submits the application, requesting to terminate their employment by mutual consent, specifying the date. The employer, in turn, issues an order for termination based on this application.
On the day of termination, the personnel service or the responsible person makes the corresponding entry in the employment record book (if it is kept in paper form) or in the electronic register. The wording must clearly comply with the legislation, specifying the grounds and the article of the Labor Code.
Also, on the day of termination, all due amounts are paid to the employee. Violating the payment deadlines may become grounds for calculating compensation for delayed payments.
Application for termination by mutual consent
The application is the main document that confirms the employee's will. It is drawn up in writing addressed to the head of the enterprise, institution, or organization. The application must clearly state the request for termination by mutual consent and specify the desired date for ending employment relations.
Mandatory requisites of the application include: company name, surname and initials of the head, employee details (position, structural unit, surname, name, and patronymic), text of the request, date of drafting, and personal signature.
The wording must be unambiguous. For example, it is unnecessary to write 'I ask to be dismissed' without specifying the basis. It is essential to state 'by mutual consent.' This is important for the correct drafting of the order and making an entry in the labor documents.
Sample application for termination by mutual consent
The application for termination by mutual consent appears quite simple (the sample application for termination by mutual consent will be standard for most cases).
To the Director of LLC '_____'
Full Name of the Director
From Sales Department Manager
Full Name of the Employee
Application
I ask to terminate my position as Sales Department Manager by mutual consent based on paragraph 1 of part one of article 36 of the Labor Code of Ukraine on March 15, 2025.
Date
Signature
Such a sample can be adapted according to the specific position, enterprise, and agreed termination date. The main thing is to maintain a clear reference to the legal basis and avoid ambiguous formulations.
Order for termination
After receiving the application, the employer issues an order for termination. The order specifies the employee's complete data, their position, date of termination, and the grounds – paragraph 1 of part one of article 36 of the Labor Code of Ukraine. The order is drafted in accordance with the established rules of business correspondence and is registered in the order journal.
The employee must be notified about the order under signature. If they refuse to sign the document, an appropriate act is drawn up. On the day of termination, a copy of the order is issued to the employee (at their request), a final settlement is conducted, and an entry is made in the labor documents.
Correct drafting of the order is crucial, as this document confirms the fact of termination of employment relations and can be used in case of a labor dispute.
Payments and compensations upon termination
During termination by mutual consent, the employer is obliged to conduct a full financial settlement with the employee on the day of terminating employment relations. This means the person should receive all due payments without delay. Such payments include wages for time worked, including the last working day, as well as other salary-related accruals – bonuses, allowances, and surcharges, if they have been established and are payable in accordance with the company's internal policies.
Special attention should be paid to compensation for unused annual leave days. According to labor legislation, in the case of termination, the employee is paid monetary compensation for all unused days of both basic and additional vacations. The calculation is made based on the average salary determined according to the established procedure. If the employee has a significant balance of unused days, the compensation amount can be substantial.
In some cases, the parties may also agree on severance pay. The law does not explicitly obligate the employer to pay severance upon termination by mutual consent; however, such a condition can be fixed in a written agreement or provided for in a collective agreement. For example, the employer may offer a certain amount as an incentive for a peaceful settlement of the termination issue.
If on the day of termination, the employer failed to make full settlement, the employee has the right to demand payment of average wages for the entire delay period until the actual settlement day. Hence, it is important for the enterprise to adhere to established deadlines, and for the employee to check the correctness of all calculations before signing the documents.
Advantages and disadvantages of this method of termination
Termination by mutual consent has several advantages for both the employee and the employer. First of all, it provides flexibility in determining the date of terminating employment relations. The parties can agree on any convenient day, allowing the employee to transition to a new job or resolve personal matters faster without the mandatory two-week notice period.
Another advantage is the absence of formal conflict. Unlike termination initiated by the employer, where disputes may arise about the legality of the grounds, or termination by personal wish under complicated conditions, the mutual agreement implies mutual consent. This positively affects the professional reputation of the employee and the atmosphere in the team.
For the employer, this method is also convenient as it allows for the quick conclusion of cooperation without the need to prove disciplinary violations or reduce staff. In many cases, this minimizes the risks of court disputes, as the decision is made voluntarily.
At the same time, there are certain disadvantages. For example, after reaching an agreement, the employee can no longer unilaterally withdraw their application if the employer does not agree. This means the decision must be well-considered. Moreover, the law does not guarantee obligatory severance pay, as it is provided in certain other cases of termination. Therefore, the employee should discuss all financial matters in advance.
Another nuance is the possibility of abuse. Sometimes employees may be pressured to write an application for mutual consent instead of termination initiated by the employer. In such cases, it is crucial to remember that the agreement must be voluntary, and the employee has the right to refuse signing documents if they do not agree with the terms.
Features for different categories of employees
The procedure for termination by mutual consent is generally universal; however, for certain categories of employees, there are specific features. For example, regarding pregnant women or those on parental leave, legislation establishes enhanced guarantees. However, if the employee herself initiates and voluntarily agrees to terminate employment relations, termination by mutual consent is possible, provided there is no coercion.
For underage employees, additional guarantees also apply. In the event of termination of the employment contract by mutual consent, approval from the relevant authorities or adherence to special procedures stipulated by legislation regulating the labor of persons under 18 years may be required.
Attention is also needed for employees who are on sick leave or maternity leave. Unlike termination initiated by the employer, which has restrictions during temporary incapacity, termination by mutual consent can occur during this period if there is a voluntary agreement. However, it is important to correctly determine the termination date and conduct calculations considering payments for sick leave.
For civil servants, officials of local self-government, or budget sector employees, additional regulations may apply that govern the cessation of service. In such cases, the procedure must comply not only with the general norms of labor legislation but also with specific laws.
Thus, although termination by mutual consent is a relatively simple mechanism, for certain categories of employees, it is necessary to consider specific guarantees and restrictions to ensure the process is lawful and does not become grounds for further disputes.