Employment law
Negotiated Termination: Parting by Mutual Agreement, Without the Agreement Turning Against You
In the manager's office, the accountant puts her letter on the desk: after eight years, she wants to open her own practice. If she resigns, she leaves with no payment. If the company dismisses her, it needs a reason it does not have. Since 2017, the Labour Code has offered a third way: parting by mutual agreement, through a signed agreement. That agreement must still be genuinely free, or it is worthless.
1. What exactly are we talking about?
Adama Coulibaly runs Ségou Transports et Logistique, a company with sixty employees. Mariam Traoré has been its chief accountant for eight years, classified as supervisory staff, with an average monthly pay of XOF 400,000. She wants to leave; the company does not object.
Ségou Transports et Logistique and the people named in this article are fictitious: their names serve only as examples.
A negotiated termination is the end of an open-ended contract decided by mutual agreement between employer and worker. The Code presents it as an “alternative to resignation and dismissal” (Labour Code, article L.50 bis). Either party may propose it, and it takes the form of a termination agreement, meaning a written document signed by both parties that sets the terms of departure.
It protects a dual interest: the worker leaves with a payment at least equal to that of a dismissal, and the employer parts ways without having to justify a reason or follow the dismissal procedure.
How it differs from the other two ways of ending a contract
| Resignation | Dismissal | Negotiated termination | |
|---|---|---|---|
| Who decides | The worker alone | The employer alone | Both, by mutual agreement |
| Reason | None to justify | Legitimate reason required | None to justify |
| Notice | Yes | Yes | No: date set in the agreement |
| Payment | None before ten years of service | Statutory payment from one year | At least the statutory severance payment |
The most common mistake
Seeing it as a simplified dismissal that the employer can impose to avoid the procedure. It is the opposite: without the worker's free consent, there is no negotiated termination. An employee who refuses cannot be forced into it, and the refusal cannot be penalised.
Resignation is decided alone. Dismissal must be justified. Negotiated termination is negotiated.
2. Who can use it, and when
Negotiated termination is reserved for employees on an open-ended contract. A fixed-term contract follows its own rules: it can end before its term only in the cases provided for in the contract or for gross misconduct, as assessed by the court (Labour Code, article L.39).
The initiative is free. Mariam may propose it to leave and set up her practice; Adama Coulibaly may propose it to an employee whose post no longer fits the company's organisation. In both cases, the other party remains free to refuse.
The case of the protected employee
The Code says nothing about a staff delegate who signs a negotiated termination. Yet dismissing a delegate requires the labour inspector's prior authorisation (article L.277), and the 2024 order requires, for voluntary departures of a delegate in an economic dismissal, compliance with the procedure specific to protected employees. To be safe, refer the matter to the labour inspector before signing with a delegate, a candidate or a former delegate within six months.
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3. Consent: what holds the agreement together
The worker's acceptance must not result from pressure by the employer. During the interview, the worker may be assisted by a staff delegate or another employee of the company. The Code sets neither the number of interviews nor their form, but the reference to the interview implies that at least one discussion takes place before signing.
If consent is vitiated, the negotiated termination is null and void. Vitiated consent means agreement given by mistake, obtained by deceit or extracted under duress: the agreement exists on paper, but it was not freely given.
The ultimatum that voids everything
The riskiest scenario is well known: an employee is called in over a failing and offered the choice between “signing the negotiated termination” and “being dismissed for gross misconduct”. Presented that way, the signature is obtained under threat. That is exactly the pressure the Code forbids.
The most common mistake
Having the agreement signed on the very day of the first discussion, without giving the employee time to think or to be assisted. Nothing in the Code imposes a waiting period, but an agreement extracted in an hour is the easiest to challenge.
An agreement signed under threat is not an agreement. It is a dismissal without procedure.
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4. The termination agreement: what it must contain
The agreement sets the terms on which the employment contract ends. The Code requires two elements: the effective date, and the amount of the departure payment. Everything else is negotiable, but is better put in writing.
- The identity of the parties, the hiring date, the employee's job and category.
- A statement that the termination is agreed by mutual consent, at the initiative of one party or the other.
- The date on which the contract ends.
- The amount of the departure payment, at least equal to the statutory severance payment.
- The treatment of accrued untaken leave, the final month's pay and any bonuses.
- The handover of the certificate of employment and the return of company equipment.
- Where applicable, a note that the employee was assisted during the interview.
A copy of the agreement is sent to the local labour inspectorate for information. This is not a request for authorisation: the inspectorate does not have to approve the agreement for it to take effect. But it is the inspectorate that will arbitrate in the event of a dispute.
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5. How much to pay: the minimum payment
The departure payment may in no case be lower than the statutory severance payment. That payment is calculated on the average monthly pay over the last twelve months: 20% per year for the first five years, 25% per year from the sixth to the tenth, 30% beyond, taking fractions of a year into account (Labour Code, article L.53). A collective agreement or an establishment agreement may provide more favourable rates.
Example. Mariam Traoré has eight years of service, with an average monthly pay of XOF 400,000.
- First five years: 5 × 20% = 100%
- Sixth to eighth year: 3 × 25% = 75%
- Total: 100% + 75% = 175% of the average monthly pay
- Statutory severance payment: 400,000 × 175% = XOF 700,000
- Minimum negotiated termination payment: XOF 700,000
For the calculation in detail, see our article on the severance payment. Added to this is the payment in lieu of accrued untaken leave, due on any termination and paid immediately (Labour Code, article L.162). On how it is calculated, see our article on paid leave.
The employee with less than a year's service
The statutory severance payment is due only after one year of continuous service. For an employee with less than a year, the statutory minimum is therefore zero. Nothing prevents a payment being agreed, but the Code imposes none.
Tax treatment
The General Tax Code exempts severance or departure payments from wage tax, up to the amounts set by the Labour Code (article 3). The part exceeding the statutory severance payment falls outside that limit: treat it as taxable, unless the tax authorities take a different view.
Example. Adama Coulibaly and Mariam Traoré agree a departure payment of XOF 1,000,000.
- Agreed payment: XOF 1,000,000, above the XOF 700,000 minimum
- Part within the statutory payment limit, exempt: XOF 700,000
- Excess part, to be taxed: 1,000,000 − 700,000 = XOF 300,000
The floor is the severance payment. The rest is negotiated.
6. After signing: end of the contract and exit documents
The negotiated termination takes effect on the date set in the agreement, without either party having to give notice. Until that date, the contract runs normally: the employee works, the employer pays.
On final departure, the employer hands over the certificate of employment, failing which damages are due (Labour Code, article L.61). The employer settles the pay due, the departure payment and the payment in lieu of leave.
The waiver clause that offers no protection
Many agreements contain a sentence by which the employee “waives any claim”. It does not have the intended effect: the words “in full and final settlement”, or any equivalent statement by which the worker waives, after termination, all or part of the rights under the contract, cannot be relied on against him (Labour Code, article L.111). A claim for back pay or overtime can therefore still be made.
The most common mistake
Believing that signing the agreement settles all accounts for good. It ends the contract, not the rights arising from its performance. The only real protection is to pay everything correctly before signing.
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7. What a failed negotiated termination costs
A termination obtained under pressure is null and void. The contract is then deemed never to have been validly ended. The Code entrusts disputes over negotiated termination to arbitration by the labour inspectorate.
In practice, the risk is that the departure is treated as a dismissal made without a written reason, without notice and without informing the labour inspector. That opens the way to payment in lieu of notice, a payment for procedural irregularity and, if the dismissal is found wrongful, damages. On the procedure that should have been followed, see our article on dismissal.
Example. Mariam Traoré shows that she signed under threat of dismissal for gross misconduct. If her departure is treated as an irregular dismissal, the company's exposure is as follows, excluding damages.
- Notice for supervisory staff not given: 2 months × 400,000 = XOF 800,000
- Payment for lack of written, reasoned notification, at most 1 month: XOF 400,000
- Maximum exposure on these two items: 800,000 + 400,000 = XOF 1,200,000, on top of the payment already made
A negotiated termination saves a procedure. Handled badly, it costs an irregular dismissal.
A closer look: what Malian negotiated termination is not
Many template agreements in circulation are copied from French law. They contain three elements that do not exist in Mali.
The first is approval. In France, a negotiated termination must be approved by the administration. In Mali, the agreement is simply sent to the labour inspectorate for information: it takes effect without approval.
The second is the fifteen-day withdrawal period. The Malian Code provides none. You may include one in the agreement, which strengthens the evidence of free consent, but it is not compulsory.
The third is the official form. No official template is required in Mali: the agreement is drafted freely, provided it sets at least the effective date and the payment.
Nor should negotiated termination be confused with the “amicable departure agreement” of article L.50. The latter concerns departures negotiated in the context of an economic dismissal: it sets aside the economic dismissal procedure, and the employer informs the labour inspector. Negotiated termination, by contrast, is an individual, stand-alone way of ending a contract, unconnected with any economic difficulty.
Key takeaways in 6 points
- Reserve negotiated termination for employees on open-ended contracts, and present it as a proposal the employee may refuse.
- Give the employee time to think and the option of being assisted by a delegate or a colleague.
- Never obtain the signature by threatening dismissal: vitiated consent makes the termination void.
- Set in the agreement the effective date and a payment at least equal to the statutory severance payment.
- Send a copy of the agreement to the labour inspectorate and refer to the inspector before any agreement with a protected employee.
- Pay everything due before signing, and hand over the certificate of employment on departure: the waiver clause does not protect you.