11 December 2024
At Now Actually, we understand that sometimes employment situations don’t work out as planned. Whether it’s due to performance issues, conduct concerns, or unresolvable workplace conflicts, there are times when a mutual agreement to part ways is the best solution for both employer and employee.
Employment can end in different ways, namely:
Let’s focus on the fourth option: mutual agreement.
A mutual separation agreement (MSA) is a consensual arrangement where both parties agree to end the employment relationship on mutually beneficial terms. This agreement is typically recorded in a legally binding document, often called a Deed of Separation or a Deed of Release.
A well-crafted agreement usually includes:
A properly drafted Separation Agreement will also ensure that:
Mutual separation agreements have several advantages, both for the employer and the employee. Let’s explore them below.
The key word is ‘mutual,’ and it’s perhaps the best benefit that these agreements have from a business owner’s perspective and an employee’s. Mutual separation agreements allow both parties to part ways respectfully.
In addition to that, an MSA gives the employee a chance to provide input about the terms of their departure. Depending on the situation, this can reduce the awkwardness and need to have difficult conversations around the separation. Employers can grant requests that are meaningful to the employee and might not have been available to them in a unilateral termination. Mutual separation agreements can be tailored to the specific situation, and this is one example of that flexibility.
Employers also benefit from MSAs through the lens of succession planning. Flexibility goes both ways, and employers can agree on a timeline with their soon-to-be former employee for transitioning responsibilities or training replacements.
From a legal standpoint, mutual separation agreements minimise legal risks for both employer and employee. Having this agreement is proactive. A business owner or employer can have a discussion with their employee about their employment ending before the actual termination happens. Working with an employee to talk about their separation compensation ahead of a decision on the employer or business owner’s part helps eliminate misunderstandings regarding entitlements.
In a mutual separation agreement, the employer usually offers compensation to the employee in exchange for signing a release after the separation takes effect. By signing this release, the employee agrees not to file any future claims related to their employment, while the employer reduces the risk of facing legal disputes such as wrongful dismissal or human rights complaints.
Termination of employment can be a difficult conversation to have. An MSA offers the real prospect of preserving personal relationships during and after settlement negotiations (Patrick Deale, Deale Attorneys).
Mutual Separation Agreements, due to their nature of coming to an agreement of being beneficial to both an employer and an employee, go a long way towards promoting goodwill between the two. Having an MSA in place eases the friction of a termination, and lets both employer and employee end the relationship amicably and without the negative feelings that usually come with the termination process.
At Now Actually, we specialise in negotiating Mutual Separation Agreements that work for both employers and employees. While these agreements aren’t suitable for every situation, they often provide a positive solution when employment relationships have become challenging.
Our experienced HR Partners can guide you through the process, ensuring that all parties’ interests are considered and that the agreement complies with relevant laws and regulations. We’re experts at finding compliant solutions that are also people-first.
Remember, the goal is to find a solution that allows both the employer and employee to move forward positively. If you’re facing a challenging employment situation, don’t hesitate to reach out to our team for support and guidance.
