Zhongcheng Qingtai | HR Legal Corner: How to Draft the Agreement on Dissolution of Labor Contract by Consensus?
Published:
2021-01-18
If the employer and the employee terminate the labor relationship, the most critical step for the employer is to sign a termination agreement, otherwise, the employer has the risk of illegally terminating the labor contract and paying compensation. In this paper, the content and legal risks of the Agreement on Dissolution of Labor Contract by Consensus are prompted and analyzed for HR reference.
1. clarify the meaning of "termination of labor contract"
The time and meaning of the termination of the labor contract through negotiation should be accurate, and words such as "proposed termination" and "imminent termination" should not be used, otherwise the meaning of "termination" will be questioned and the validity of the termination agreement will be directly affected; it should be clearly expressed that "the labor contract between the two parties shall be terminated through consultation and agreement".
2. Clear Proposed Party for Consensual Dissolution
In the dissolution by consensus, some are terminated by negotiation due to the proposal of the employer, and some are also terminated by negotiation due to the proposal of the laborer. The difference of the proposed person determines whether the employer needs to pay economic compensation for the termination of the labor contract, so it is necessary to specify the proposed party in the agreement. In some cases, if the party proposing the agreement is not consistent with the actual party, the employer needs to fully consider the advantages and disadvantages of a party to the agreement.
3. clearly agree on the specific time for the termination of the labor contract.
In the case of the termination of the labor contract by consensus, there are two situations in the termination time: one is the termination of the labor contract when the two parties sign the termination agreement; the other is the termination of the labor contract between the two parties at a certain point in time after the termination agreement is signed. In general, the cancellation agreement should specify the specific date of cancellation, such as X years, X months, X days. If the termination agreement is the case of immediate termination, it can be agreed that "the labor contract shall be terminated after the signature and seal of both parties".
4. clear termination of the labor contract, economic compensation and other payments.
If the labor contract is terminated by consensus through negotiation, in addition to economic compensation, compensation for other items may also be included, such as compensation for unpaid annual leave, overtime pay not paid in full, social security, provident fund, etc. When signing the agreement, it is suggested that a package of payment plus non-controversial terms can be included, and the payment time, payment method and specific account to be remitted shall be agreed upon clearly if it is not the employee's own account.
5. clear wage payment deadline, social insurance, housing provident fund payment deadline month
In view of the fact that the two parties have agreed to terminate the labor contract, the two parties usually agree on the last working day, but the last date of wage payment may be different from the last working day. It is recommended that the agreement be clear and specific to the day. The month in which social security and provident fund will be paid should also be clearly agreed. If both parties agree that the employer will still have to pay social security or provident fund for a period of time after the termination, both parties shall clearly agree on the unit bearing part and individual bearing part of social security and provident fund respectively, who shall bear and how to pay.
The 6. makes an agreement on annual leave, bonus, commission bonus and other matters.
These are usually matters that are often disputed when the labor contract is terminated, and if the annual leave is not arranged in advance, the amount of compensation will be agreed here. The issue of commission bonus is relatively complex and may involve the unpaid part of the bonus, then the two parties agree on the rules for the payment of the bonus.
7. no dispute or waiver
It is suggested that it should be clearly stipulated in the agreement that "after the signing of this agreement, there will be no other disputes between the two parties except for the performance of the matters stipulated in this agreement, and the failure to mention the matters shall be deemed as the laborer's waiver of the right to claim". However, even if there is such an all-inclusive clause, employees will still remember some things that have not been settled and found clearly after signing. Therefore, it is suggested that specific projects that are not controversial can be listed here as far as possible.
Time and method of 8. handover
After an employee leaves office, the importance of handover is usually reflected. If the handover is not in place, it will cause a lot of trouble to the subsequent successor. Therefore, the handover time limit, designated handover person, handover content and handover method must be stated in the Agreement. Generally, the employing unit has a handover system and process, which can be agreed to be handled according to the handover process. If there are special matters requiring handover, the specific handover method, requirements and handover time shall be clearly agreed.
9. non-competition restriction obligation starts
If the two parties have signed a non-competition agreement, whether the non-competition restriction will be initiated after the termination of the labor contract, as well as the specific requirements of the non-competition restriction, the reporting obligation of the non-competition restriction, and the payment of compensation for the non-competition restriction shall be explained again. Even if the non-competition agreement is clear, it is best to highlight it here. If necessary, a separate document may also be signed. If the two parties have not signed a non-competition agreement before, they can also negotiate and agree on non-competition matters at this time.
10. Confidentiality Obligations and Non-infringement of Interests
Confidentiality here, on the one hand, is the reiteration of the confidentiality responsibility of obtaining commercial secret information during the performance of the contract, on the other hand, it is about the termination of this negotiation and the content of the Agreement as a confidential matter, requiring the workers to keep confidential. At the same time, in the agreement, employees are usually required not to conduct acts that damage the reputation and interests of the employer.
In addition to the above, if the parties have an agreement on other special matters, a lawyer is required to make a specific analysis of the specific issues.
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