We all know that when a couple describes their break-up as “mutual” we are likely not getting the full picture. Can the same be said of employment relationships that end mutually?
Quitting vs. termination
An employee who quits their job — including retires — is not entitled to any sort of payout, other than their accrued and unused vacation pay and pay up until their last day. Conversely, almost any employee who is terminated without cause is entitled to some form of notice of termination and possibly severance pay and benefits continuation on top of the compensation noted above. Employees who quit or retire fully of their own volition give up their right to those termination entitlements. While employees and employers sometimes describe a separation as mutual, legally, there isn’t really anything in between quitting and termination.
Employees who may be looking for a “mutual separation” package need to tread lightly. An employee who approaches an employer looking for a package is likely not going to succeed in getting one. If an employee is hoping to move on, it’s much cheaper for the employer to let them leave of their own volition as opposed to terminating them.
Employers and employees may want to message a separation as mutual. This will typically benefit both parties as the employee may be able to employ more quickly, without having to face stigma that may come from being terminated. Employers’ post-employment obligations to an employee can be reduced when the employee re-employs, therefore it’s also in the employers’ best interest that the employee is marketable on the job market.
When an employee receives a package, typically the separation was not their idea, but messaging the separation as mutual can be mutually beneficial.
Sometimes employer and employee actions at the end of a relationship can be ambiguous. For example, is an employee giving notice of their intention to resign by discussing when they want to retire? If an employer confirms that with the employee and offers them a package in exchange for a release are they being terminated?
The law requires that an employee’s resignation be clear and unequivocal. In some circumstances, the employee may even be able to take their decision to retire back. Notice of termination must be specific, unequivocal and clearly communicated to the employee. Typically, it will involve an in-person meeting and a written termination letter. A message about quitting or termination that is not clear will not stand up in court.
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