Employment contracts may be terminated by mutual agreement of
the parties. The legal basis of mutual termination agreements is
rooted in "freedom of contract" as a constitutional
right. An employer and employee terminate an existing employment
contract through a "mutual termination agreement".
Alternate ways to terminate employment contracts include where
notification is exchanged between an employer and employee
according to statutorily defined periods, and immediate termination
on just grounds, on the death of an employee and at the end of the
agreed period of employment contracts with a definite term of
duration. After 2003, mutual termination agreements became
widespread in practice as a means to avoid the legal and financial
risks attached to invalid termination due to the "job
security" provisions under the Labor Law No. 4857.
