Supreme Court warns SMEs of invalid termination agreements

The Supreme Court has issued a warning to small and medium-sized enterprises regarding errors in termination agreements that could lead to them being declared invalid. A recent ruling (532/2026) highlighted the risks of having employees sign settlement agreements on the same day they are dismissed.

In the analyzed case, an employee accepted 20,000 euros on the day of dismissal, despite the legal entitlement for unfair dismissal being approximately 60,000 euros. The employee later challenged the agreement. The court found that the company could not demonstrate that the employee had sufficient time to consider the terms or seek legal advice. Additionally, the agreement contained conflicting clauses regarding its finality.

Legal experts advise companies to avoid presenting termination letters and settlement agreements for signature in the same meeting. To ensure agreements are legally robust, employers should provide employees with at least one day to review the documents.