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Terminating employment by mutual agreement: the risks in Russia and beyond

Global
08.12.21
12
Two recent successful challenges to dismissals by mutual agreement in Russia mean employers may need to exercise caution in how they use this popular method of terminating employment. The rules vary in other jurisdictions.

Introduction

Mutual consent has always been a popular ground for employee termination, as an option with minimum risks for both parties. Previously, according to judicial practice, it was extremely rare to succeed in challenging dismissals by mutual agreement. In most cases, only pregnant employees managed to do so. However, new court practice shows there are more exceptions. In this article, we will consider two recent court rulings that took a different approach, potentially leading to the creation of a negative precedent for employers.

Background

Mutual consent termination is one of the simplest and most convenient grounds for an employee termination in Russia, in terms of paperwork and legal requirements. The main requirement is that the termination agreement should be truly mutual. The employee cannot be forced to enter into the mutual consent termination agreement.

If an agreement on mutual consent termination is reached, the parties should conclude a written agreement, specifying the terms and conditions of termination. Specific provisions in this agreement are primarily at the parties’ discretion. The mutual termination agreement can be made on any date, is irrevocable and can only be changed upon mutual consent of the parties.

Key facts of the cases

In one case, the employer and the employee had signed a mutual termination agreement, with a dismissal date deferred for almost a year. After some time, the employee changed his mind and asked to withdraw the termination agreement. The employer disagreed and dismissed the employee on the previously agreed date.

In the other case, the employee had also signed a mutual termination agreement and subsequently asked to withdraw it. The employer stated that the employee’s refusal was not a basis for withdrawing the agreement. Then the employee claimed she signed the agreement under pressure from management. The employee was dismissed.

In both cases, the employees applied to court to challenge the dismissals.

The lower court decisions

In both cases, the first instance and appeal courts supported the employer’s position and dismissed the employee claims. The courts indicated that annulment of a termination agreement is only possible by mutual consent of the parties.

This conclusion was previously adhered to by most courts. The main argument in favour of this is that the agreement is mutual and cannot be changed, or withdrawn unilaterally, without both parties’ consent.

The cassation court ruling

The cassation court disagreed with the lower courts’ position. The court highlighted the formal approach taken by the lower courts and stated that the employee’s refusal to be dismissed by mutual agreement should be taken into account and examined.

According to the court, the signing of the termination agreement long before the actual date of dismissal, plus the employee’s later request to annul the agreement could indicate the absence of the employee’s will to sign it. The court also considered the argument that the employee was under pressure.

The cassation court overturned both lower court decisions and sent the cases back for retrial.

Implications for employers

In the event of mutual consent termination, currently employees quite often claim in court that they were forced to be dismissed by the employer. It is important to consider these employees’ claims as there is an increasing tendency for the courts to shift away from the formal approach.

Above all, if there are atypical terms in the mutual termination agreement, the risk that an employee could successfully challenge the dismissal increases. In one of the cases described here, the deferral of the date of dismissal by almost a year was such a term. The farther the date of dismissal from signature of the agreement, the more likely the employee’s personal circumstances will change and, as a result, the employee may change his or her mind about dismissal.

To minimise the risks, we recommend the following:

  • Do not postpone the date of dismissal for a long time.
  • Do not put any pressure on the employee.
  • Do not include conditions regarding circumstances that may affect the employee’s decision in the agreement.
  • Check if the employee left a note in the agreement expressing any dissent with the dismissal.
  • Consider any employee statements on putting pressure on them and other relevant circumstances.

 

Sources: Ruling of the First General Jurisdiction Court of Cassation dated 9 November 2020 in case No. 88-3332/2020; Ruling of the First General Jurisdiction Court of Cassation dated 21 December 2020 in case No. 88-28288/2020

The view from other places.

Croatia:
Denmark:
Greece:
Hong Kong:
Israel:
Mexico:
Netherlands:
Slovakia:
Turkey:
Ukraine:
United Kingdom:
Written by
ALRUD, a confident Russian leader in labour and employment law.
Authors
Irina Anyukhina
Partner - Russia
ALRUD
Elena Chershintseva
Associate - Russia
ALRUD
Ekaterina Bronitsyna
Associate - Russia
ALRUD