According to § 79 of the Employment Contracts Act (hereinafter referred to as the TLS), both parties may terminate either a fixed-term or an indefinite employment contract at any time by mutual agreement. Based on the principle of contractual freedom, the TLS does not impose additional obstacles or conditions for terminating the employment contract if the parties have reached an agreement. It is essential that both parties consent to the termination and agree on the terms of termination (e.g., the termination date, payment of any compensation, etc.).

When is mutual agreement suitable for terminating an employment contract?
Termination by mutual agreement is appropriate when both the employer and the employee wish to end the employment contract by consent.

In what form should the agreement be made?
The law does not prescribe a mandatory written form for terminating an employment contract by mutual agreement. However, it is strongly recommended to document the termination in writing or in a reproducible form (e.g., via email) to avoid potential disputes. In case of a dispute, an oral agreement and its terms can be very difficult to prove.

What should be agreed upon?
It is crucial to agree on the employee's last working day, as the employer is obligated to pay the final settlement on the employee’s last day of work.
If both parties wish to exclude future claims or demands, such clauses should be explicitly stated in the agreement.

When is an employment contract not considered terminated by mutual agreement?
An employment contract cannot be terminated through implied consent, silence, or inaction. The employment relationship does not end by mutual agreement if the employee leaves the job without the employer demanding their return to work.

According to Supreme Court practice, the employer cannot terminate the employment contract on the grounds of mutual agreement if the employee has not submitted a request for termination by mutual agreement but has instead submitted a notice of extraordinary termination.

What should be considered when terminating an employment contract by mutual agreement?
If the contract is terminated by mutual agreement, the employee may withdraw their consent under the provisions of § 90 of the An Act on the General Part of the Civil Code (hereinafter referred to as TsÜS). According to TsÜS § 90, a transaction concluded under a significant error, fraud, threat, or violence may be annulled in accordance with the law.

This means that the employee may revoke their consent if it was given due to a mistake. Upon revoking consent, the employee may file a claim with the labor dispute committee to demand the continuation of the employment contract and payment of wages. Alternatively, after revoking consent, the employee may terminate the contract due to the employer's breach and claim compensation equivalent to three months’ average salary.

Additionally, the employee may request the labor dispute committee to declare the termination agreement invalid under TsÜS § 84 if the agreement conflicts with good morals. If invalidity is established, the employee may request the continuation of the employment contract and payment of wages, or alternatively, terminate the contract due to the employer’s breach and demand compensation equal to three months’ average salary.