2. Termination of employment

2.1 Statutory requirements

The Labour Protection Act provides that an employer may terminate the employment of an employee whose employment term is not specified, by giving advance notice and making a severance payment in accordance with the Act.

However, this power to terminate employment must be considered in conjunction with the Labour Courts Act, pursuant to which the Labour Court may order a remedy if it considers that the termination of employment was ’unfair’. There is no exhaustive definition of what ’unfair’ means – some examples of circumstances that courts have considered unfair include:

• termination without cause;
• termination without any fault of the employee;
• termination as disciplinary action, in circumstances where the penalty imposed is not in accordance with the employer’s work rules;
• termination where the employer cannot produce witnesses or evidence to prove default by the employee; or
• discriminatory termination.

2.2 Notice periods

When an employment contract for a fixed period has expired, the employment will end without the need to give notice.

Where the employment contract does not specify the period of employment, either party may terminate the contract by giving to the other written notice before the next wage payment, with the effect that employment is then terminated when the next wage payment is due, provided that no more than 3 months’ notice need be given.

Payment may be made in lieu of notice.

No notice is required where employment is terminated for a permitted cause as prescribed under either the Labour Protection Act or the Civil and Commercial Code, which includes:

• dishonest performance of duties or committing an intentional criminal offence against the employer;
• intentionally causing harm to the employer;
• gross negligence causing serious harm to the employer;
• violating work rules or orders of the employer for which a written warning has previously been issued to the employee (note that a warning is valid for 2 years, and that serious violations might not require a warning);
• neglecting the employee’s duties/absence from employment for three consecutive working days without justifiable cause; and
• being sentenced to imprisonment under a final court judgment, except for the offences arising out of negligent acts or for petty offences.

In these circumstances, the employer will not be obliged to make a severance payment nor a payment of accrued annual leave.

2.3 Restrictions on the ability to terminate employment

An employer may not dismiss a female employee for the reason of pregnancy, and also may not dismiss an employee for trade union membership or trade union activities.

2.4 Remedies

The Labour Court has power to order the reinstatement of the employee at the same wage rate that previously applied. If the Court decides that the parties cannot work together, then the Court will assess and compensate the employee’s losses taking into account his/her age, length of service, hardship at the time of dismissal, the reasons for the dismissal, and the severance compensation that the employee is entitled to receive.

2.5 Severance payments

Except where employment is terminated for a permitted statutory cause as listed in 2.2 above, the employee will be entitled to a severance payment upon termination, based on the following scale:

No severance pay is due where the employment is for a fixed duration and employment expires at the end of the contract period, provided that:

the employment was for work in a specific project which is not in the normal course of the employer’s business or trade, and which had a definite beginning and end; or

the employment was for seasonal work for which employment was effected during the period of such seasons, provided the work was completed within a period not exceeding 2 years, and the parties made a written agreement as such upon commencement of employment.

2.6 Specific requirements applicable to redundancy

If dismissal occurs due to a redundancy arising out of a change in machinery or technology, then 60 days’ advance notice of dismissal must be given to the employee and to the Labour Inspection Office. If such notice is not given, then 60 days’ special compensation is payable to the employee, based on the usual wage rate or piecework rate.

In addition, if dismissal occurs due to a change in machinery or technology, dismissed employees with over 6 years service are entitled to additional ’special compensation’ of 15 days’ pay for each year of service, up to a maximum payment of 360 days’ pay, once again based on the usual wage rate or piecework rate.