Employment relations ends through diverse ways such as termination, resignation, retrenchment, mutual separation agreement, and death.
Mutual Separation Agreement or Termination by agreement is one of the lawful ways of ending employment relationship/contracts in Tanzania which is provided for under Rule 3 (2) (a) of GN 42 of 2007, and it states that “any termination of employment by agreement may be regarded as lawful termination”.
It is an established principle of law of contract that, just as parties are free to enter a contract, they are equally free to bring their contracts to an end by mutual agreement.
For Mutual Separation Agreements to be considered lawfully the following must be adhered to:
- Genuine mutual consent of the parties. The agreement must be entered voluntarily.
- Separation agreement should bar parties from seeking remedy to court or any institution regarding the employment contract.
- Terms and conditions must be fully understood and explained to the employee.
- The agreement must state that parties are mutually separated, and it is in full and final settlement of the party’s obligation.
If the initiative to enter into a mutual separation agreement arises from the employer, the court is of the view that, scrutiny should be made to confirm whether the employee freely consented to the termination. Hence, the court would not approve an agreement to terminate employment unless it is proved that the employee really did agree with full knowledge of the implications it had for him. Parties are bound by the agreed terms of the contract and courts have no powers to interfere with the same unless it was made under duress or inducement as stated above.
A mutual separation agreement, being like any other agreement will not be enforced if it is shown that it was vitiated. A vitiating factor is one which makes the contract invalid, rendering it to be challenged such factors include misrepresentation, mistake, duress, undue influence, and illegality.
It is important for mutual agreement to be agreed by both parties without the employer forcing an employee.
Lawfic Attorneys assists businesses in preparing mutual separation agreements, human resource policies and handling of disputes associated with employment and labour relations.
For any inquiries, please get in touch.
Seif Ngalinda (Partner) & Emanuel Chapuga (Associate)