Ending an employment contract: documents and claims to review before settling

An employment relationship ends, and the disagreement begins. The employee believes entitlements are outstanding; the employer believes everything owed has been paid. In most cases the disagreement is not about the rule but about the documents: what type of contract was it, when did it start, how did it end, and what was actually paid?

This article sets out what to review before signing a release or filing a claim — for employees and employers alike — with the Labour Law and its regulation as the reference, and with the reminder that amendments and their transitional rules must be checked against the official source before any worked example.

The type of contract and its date

The first thing to establish: is the contract for a fixed term or an indefinite one? When did it actually begin? Was it renewed, and how many times?

These are not formalities. The rules on termination and what follows from it differ with the type of contract. A recurring situation is a written fixed-term contract where work continued after its expiry with no written renewal, which then produces a dispute about how that period is characterised.

The actual start date may also differ from the date written in the contract. The documents that settle it: the first payroll record, social insurance data, the access card, the first work email, and the letter confirming the start of work.

The reason for ending, and how it is evidenced

This is where most disputes concentrate, because the financial consequence changes with the characterisation: resignation, termination by the employer, expiry of a term, or termination for a reason attributable to the employee’s conduct.

Each characterisation needs support. A resignation needs a dated written letter from the employee, and its acceptance or something showing the employer knew of it. Termination by the employer needs a termination letter stating the reason and the date, and whatever notice preceded it where notice was required. Termination for a reason attributable to the employee needs proof of the incident itself and of the prescribed procedure — investigation, notification and record — not a bare assertion. Expiry of the term needs the contract text and its date, and something showing it was not renewed.

A hypothetical: an employee stops attending after a verbal argument with his manager. The employer treats him as having resigned; the employee considers himself dismissed. Neither has written anything. Everything in the file — messages, attendance records, witness accounts — now determines the characterisation, and a single written letter would have avoided all of it.

Listing the claims

Before any step, the claims are listed item by item with the basis for each:

• Basic wage and allowances due and unpaid.
• Payment in lieu of untaken annual leave.
• End-of-service award according to how the relationship ended.
• Payment in lieu of notice where it is due.
• Overtime, where it is documented.
• A return ticket and related entitlements depending on the employee’s status.
• Any entitlement provided for in the contract or the employer’s internal regulations and not paid.

The employer may have counter-items: company property not returned, an advance not repaid, a training commitment provided for in the contract. Listing both sides gives the true picture, rather than a claim for a gross figure met with a counterclaim.

Which wage is the calculation based on?

Much of the numerical disagreement comes from one question: which wage are the entitlements calculated on? The basic wage alone, or the wage inclusive of allowances — and which allowances?

The reference for that is the text of the Law, what was agreed in the contract, and the employer’s internal work regulations. Before any calculation it helps to take the last payroll record and break it down into its components, then decide what enters the calculation and what does not, rather than working from a gross figure.

The release, before it is signed

A release is a serious document for both sides, and it is read before signature rather than after. The first thing to look at is what exactly it covers: a release for specified, itemised entitlements, or a general discharge of everything arising out of the relationship. Then whether it records a characterisation of the ending, since a passing phrase such as “following his resignation” can settle a disputed point. Then whether the amounts are itemised, because a release for a single gross figure with no breakdown is hard to review later. Then the circumstances of signature, since signing under pressure, or making payment of what is owed conditional on signing a general discharge, is read in its context.

Both sides have an interest in a detailed, clear release: the employee knows what he received and for what, and the employer obtains a release that is not easily attacked.

Settlement before litigation

The amicable route before litigation is a first stage a labour claim passes through, not a formality, and it works best where the dispute is about the amount rather than the entitlement.

What to prepare before a settlement meeting: a table of the claims and the basis for each, a copy of the contract and the payroll records, and a clear view of the limit the party will accept. Entering a settlement without calculated figures turns it into haggling rather than settlement.

What matters to the employer before starting

What usually weakens an employer’s position in an employment dispute is not bad faith; it is the absence of a record. A step taken verbally — a warning, an investigation, approval of leave — cannot be proved a year later.

Three habits protect a business for far less than they cost. The first is recording at the time: every warning, caution or investigation is written and a copy delivered against proof of receipt, at the time rather than after the dispute. The second is keeping the job title aligned with the job, because a gap between the title in the contract and the work actually done opens disputes about allowances and responsibilities. The third is reviewing the internal regulations, since approved and clear work regulations settle a great many questions without anyone having to improvise during a dispute.

What matters to the employee before starting

On the other side, two things weaken an employee’s position: delay, and reliance on memory.

A claim for rights arising from a contract of employment is not open indefinitely, and someone who waits a long time hoping for an amicable outcome may find the claim is no longer admissible. The length of the period and when it starts are to be checked against the provisions in force, because jurisdiction over labour disputes moved from the dispute-settlement bodies to the labour courts, and the provisions on time limits in this area need verifying at source before any estimate is relied on. The working rule: do not leave an amicable route open without a written cut-off date fixed on day one.

And figures recalled from memory — “my salary was about such and such” — are no basis for a claim; they are taken from payroll records and transfers.

It is also worth an employee keeping a copy of their contract, their payroll records and their leave balance before leaving; obtaining them after the relationship ends is harder.

Three distinctions that are often blurred

Notice and warning. Notice of termination is a step that precedes the end of the relationship in defined cases; a warning is a disciplinary step relating to the employee’s conduct. Confusing them in correspondence undermines the characterisation of the ending.

Annual leave and other leave. The balance accounted for at the end is untaken annual leave; not every type of leave is treated the same way. So ask for an itemised balance rather than a single figure.

Expiry and termination. A contract ending with its term is not the same as one terminated during its currency. The wording used in the ending letter determines what follows from it, which is why it is not written in haste or in general terms.

Documents for an end-of-contract file

• The employment contract and any annex or renewal.
• The employer’s internal work regulations, if any.
• Proof of the start date and the last working day.
• Payroll records and transfer statements covering a sufficient period.
• The leave balance and what was approved.
• Warning or investigation letters, if any.
• The resignation or termination letter.
• Correspondence between the parties before and after the ending.
• The draft release that has been offered.

In short

Employment disputes are generally decided on the documents: the type of contract and its date, the reason for ending and its proof, and what was actually paid, itemised. Anyone who organises those elements before talking about figures saves a great deal of time — their own and the other side’s.

Any worked example or period in this area needs checking against the Labour Law, its regulation, the amendments in force and their transitional rules before it is relied on.