Consensual termination of employment relationship – News in the court practice?

Law on Employment (“Law”) exhaustively prescribes the reasons for termination of employment relationship. In this sense, the consensual termination of the employment relationship is specifically prescribed. However, the Law did not explain in detail which acts are relevant in cases of consensual termination of employment relationship, so this issue is subject of court interpretation.

In this sense, the Law expressly prescribed the following acts for the validity of the consensual termination of the employment relationship:

1. Agreement in writing between the employer and the employee;
2. Notice in writing of the consequences that may ensue in the procedure for acquiring unemployment benefits.

While the written notice on consequences on the unemployment benefits is a clear and defined document, the existence of a written agreement can be questioned as to whether it is an agreement or the written proposal with written acceptance for termination of the employment relationship.

Since the legal provision is not entirely precise, the Supreme Court of Cassation rendered a Decision on revision in 2015, case file No. Rev2 1572/2014, in which it stated that the agreement on the termination of the employment relationship should be a single act signed by the employee and the employer, which is the most common case in practice.

On the other hand, the Court stated that the written form of the termination of employment relationship has also been fulfilled if there is the written proposal signed by one party of the employment relationship, as well as the written acceptance signed by another party of the employment relationship. In such case, the termination of the employment relationship is also valid, according to the opinion of the Supreme Court of Cassation.

Almost a decade later, in 2023, a similar question arose again before the Supreme Court of Cassation. This time, the Court rendered a Decision case file No. Rev2 4686/2022, in which it stated the position that the procedure for the consensual termination of the employment relationship begins with the proposal from one of the parties to terminate the employment relationship, including a deadline for the response from the other party. The other party should accept a proposal for consensual termination of the employment relationship, after which an additional agreement on the termination of the employment relationship is concluded in writing.

In this sense, the Court expressly stated that in case of consensual termination of the employment relationship, the following acts appear as relevant:

1. Proposal from the employer or the employee on termination of employment,
2. Agreement in writing between the employer and the employee
3. Notice in writing of the consequences that may ensue in the procedure for acquiring unemployment benefits.

In this regard, the Court explained that the proposal of one of the parties in the employment relationship is necessary to determine the real will between the employer and the employee on the termination of the employment relationship. In other words, the Court tends to protect the employee from the imposition of a consensual termination of the employment relationship, considering that the existence of a proposal for the termination of the employment relationship eliminates the lack of will primarily on the side of the employee.

First, any contract including an agreement on the termination of the employment relationship, cannot be concluded under the influence of delusion, coercion, or threat, but such an agreement already has a prescribed sanction - nullity. Namely, an agreement that was concluded without real will of the parties would be annulled according to the provisions of the law on obligations, and on the other hand, if the agreement between employer and the employee is concluded, it is assumed there is consensus reached, so the question of rightness arises from new court decisions in which the principle of consent of the will is not enough to validate conclusion of agreement on termination of employment relationship.

Having all stated, it is not clear whether the employer's or employee’s proposal for consensual termination of the employment relationship could be given in verbal communication, considering that the Law does not even recognize this act in labor regulations, and what is the difference then between such verbal proposal and previous practice.

Advokatska kancelarija Milošević

Vrhovni kasacioni sud Beograd

Attorney at Law Vladimir Milošević

Supreme Court of Cassation

Law on Employment

termination of employment relationship

consensual termination of employment relationship