Turning Exits Into Smooth Transitions - The HR Guide to Mutual Separation

A mutual separation agreement is an agreement to end an employment relationship on mutually acceptable terms and conditions. These agreements offer a lawful way to end employment, but their validity depends on fairness, voluntariness, and proper process. Ideally initiated by the employer, negotiations should be conducted on a “without prejudice” basis, with both parties having independent legal advice and the employer avoiding coercion, such as announcing an exit or replacing the employee before signing, as condemned in Pauline Wangeci Warui v Safaricom Ltd [2020] eKLR. If agreed, the agreement must be clear, lawful, in writing, signed, and its terms strictly observed, since courts in Wade Anthony Miller v Keystone Project Management Pty Ltd have enforced agreements even where unsigned but mutually acted upon. While employees may still claim unfair termination, a properly executed mutual separation agreement provides strong protection against litigation by showing that the exit was genuinely consensual.

In Neser v Globology Ltd & 7 others [2025] eKLR, the Claimant, had served as CEO of the company since 2019 on a permanent and pensionable contract. He alleged that after rejecting a proposal for mutual separation in October 2023, the Respondents retaliated by initiating a malicious disciplinary process that culminated in his dismissal in April 2024. He argued that the disciplinary proceedings were procedurally flawed, discriminatory, and calculated to push him out after he raised grievances over denied leave, unpaid emoluments, and exclusion from the Employee Share Option Plan (ESOP).

The Respondents, however, contended that the dismissal was justified on grounds of gross misconduct and was not linked to the failed separation talks. They further argued that the Claimant was ineligible for ESOP benefits, that the motor vehicle he claimed was not part of his emoluments, and that damages for psychological distress were not available under the Employment Act. The Court rejected this defense, finding that the disciplinary process was a retaliatory tactic following the collapsed separation talks, and that the Claimant had indeed suffered unfair dismissal, discrimination, and psychological harm. Consequently, the Court awarded him damages for unfair termination, discrimination, psychological distress, unpaid emoluments, and declared that the vehicle formed part of his contractual entitlements.

For tailored guidance or support in navigating this transition, please contact us at advisory@mckayadvocates.com