Recently, due to the economic crisis, significant changes have occurred globally, especially in certain highly profitable industries such as the IT sector. The increase in the cost of living and business operations has led to one of the most attractive sectors of the economy coming under the spotlight. However, it's not because it's attractive but because it's the sector where a large number of Employees have been laid off as companies have started reducing their expenses to meet their essential obligations.
One of the most impactful news stories in the last two years was the massive layoffs at Twitter after Elon Musk took control of the company. These mass layoffs have reignited the discussion of whether such actions can be categorized as wrongful termination and a violation of workers' rights.
Certainly, the topic of termination of employment is a broad one, worthy of being the subject of a doctoral dissertation in its own right. However, in this blog, we will focus on several specific and common questions related to Employment Agreement terminations and workers' rights in the process of Employment Agreement termination.
GENERAL OVERVIEW OF TERMINATION OF THE EMPLOYMENT AGREEMENT
Termination of an Employment Agreement is one of the ways to end an Employment. There are two types of termination:
- Termination by the Employer, and
- Termination by the Employee.
Below, we will write a bit more about each of these ways of terminating employment.
TERMINATION OF EMPLOYMENT CONTRACT BY THE EMPLOYER
Termination of an employment contract by the employer is possible only for reasons specifically prescribed by law. All reasons for termination of employment are grouped into four categories, namely:
- Reasons related to the employee’s work performance and behavior (e.g., termination due to failure to achieve work results);
- Reasons related to the employee’s breach of work obligations through fault;
- Reasons related to the employee’s violation of work discipline (e.g., termination due to absence from work).
- Reasons for termination of employment related to the existence of a justified reason concerning the employer’s needs.
Each of these groups contains individual reasons for termination. Due to their large number, this blog will not focus on listing every possible reason for termination of employment; instead, we will address them through specific questions in the continuation of this text.
In addition to having reasons for termination, the Employer must follow a specific procedure when giving notice. Depending on the reason for termination, the procedure for giving notice varies, but common to all reasons for termination is the Employer's obligation to personally deliver the termination notice to the Employee, either at the workplace or the Employee's home address.
TERMINATION OF EMPLOYMENT CONTRACT BY THE EMPLOYEE
Unlike the employer, termination of an employment contract by the employee is possible for any reason, provided that the notice period is respected. The notice period cannot be shorter than 15 days, and a longer period may be stipulated by a general act or the employment contract, but it cannot exceed 30 days.
Therefore, there is no additional procedure that must be followed when giving notice, except for providing written notification of the termination — and, of course, submitting a formal statement of termination of the employment contract.
During the notice period, there are certain Employee obligations. Employee obligations during the notice period are the same as those during regular employment. Therefore, during the notice period, the Employee is required to perform their work duties as stipulated in the Employment Agreement. In case the Employee refuses to perform work tasks during the notice period, it may be a reason for the Employer to terminate the Employment Agreement or, if agreed upon, a basis for imposing contractual penalties.
COLLECTIVE TERMINATIONS AND TRADE UNION ACTIVITIES
Collective terminations have become a highly attractive topic in 2022 and 2023 due to the economic crisis triggered by issues in the banking and energy sectors.
When we talk about the term “collective terminations”, we refer to termination of employment contracts due to technological changes. Collective terminations and trade union activities are two inseparable concepts when the topic concerns termination of employment contracts caused by technological changes. When it becomes necessary to dismiss a larger number of employees due to certain technological, economic, or organizational changes at the employer, the employer is obliged to cooperate with the representative trade union and the National Employment Service in order to take measures aimed at employing the workers who will lose their jobs as a result of those changes, and, in certain cases, to adopt a program for resolving redundancies.
Trade Union of Employees activities in the context of collective terminations are demonstrated by providing feedback on the proposed Program for dealing with Employee redundancies. The Trade Union of Employees offers its opinion on the Program for handling Employee redundancies, which the Employer must draft within 15 days of presenting the proposal. The opinion of the Trade Union of Employees is not merely a formality, as the Employer, upon receiving the opinions of the Trade Union of Employees and the National Employment Service, has a deadline of eight days to respond to the Trade Union of Employees's opinion and the proposals from the National Employment Service.
All Employees who are terminated from their Employment Agreements due to technological reasons have the right to severance pay upon termination of their Employment Agreement, which we will discuss further in this blog.
EMPLOYEE RIGHTS IN CASE OF TERMINATION
Regardless of whether the termination is initiated by the employer or the employee, certain fundamental employee rights are guaranteed by the Labor Law. For example:
- The employee must receive a written notice of termination, and one of the employee’s rights is that this decision must include a clear explanation of the reasons for termination and instructions on legal remedies. Therefore, an oral termination has no legal effect.
- Before being dismissed, the employee has the right to receive a written warning and at least 8 days to respond to the allegations contained in the warning. This, however, does not apply to termination of fixed-term employment contracts.
- In case of termination due to lack of ability, insufficient performance, or redundancy, the employee is entitled to a notice period ranging from at least 8 to no more than 30 days, depending on the length of their insurance period.
- One of the employee’s rights in case of termination is to receive all outstanding payments (for example, when annual leave is concerned, the employee is entitled to compensation for unused leave, overtime pay, any unpaid wages, and any other outstanding entitlements).
- The right to calculation and payment of all contributions for pension and disability insurance, health insurance, and unemployment insurance up to the date of termination of employment.
- The right to severance pay if the termination occurs due to technological, economic, or organizational redundancy (more on this later).
- The right to register for and use unemployment benefits (this right is lost in cases of mutual termination or when the employee resigns).
- The right to legal protection in case of unlawful dismissal, within 60 days from receiving the termination decision (which includes the right to reinstatement, payment of all wages and contributions for the period of unlawful termination, and compensation if the employee does not wish to return to work).
- The right to protection from discrimination and retaliation (more on this below).
These are some of the basic employee rights in case of termination of an employment contract.
EMPLOYEE RIGHTS IN CASE OF MUTUAL TERMINATION
There are certain specific rules regarding employee rights in the case of mutual termination of an employment contract.
Namely, before this type of employment termination, the employer must inform the employee in writing that by signing a mutual termination agreement, the employee loses the right to unemployment benefits and severance pay, unless otherwise agreed.
Also, if the employee was coerced, threatened, or otherwise pressured when signing the mutual termination agreement, they retain the right to request annulment of the agreement through court proceedings.
EMPLOYEE RIGHTS IN CASE OF TERMINATION DUE TO REDUNDANCY
The basic employee rights in cases of termination due to redundancy include:
- The right to severance pay,
- The right of priority for re-employment if the employer reopens the same position within 3 months, and
- The right to unemployment benefits from the National Employment Agency, as the termination was not caused by the employee’s fault.
In the following section, we will discuss in more detail the issue of severance pay in cases of employment termination, as this is one of the most common questions our office receives from clients.
SEVERANCE PAY IN CASE OF TERMINATION OF EMPLOYMENT
Severance pay in case of termination of employment belongs to an employee whose employment ends due to termination of the employment contract as a result of technological changes. Severance pay serves as compensation for the employee who is dismissed due to technological changes. The employer is obliged to pay severance to an employee who is entitled to it before the termination of employment takes effect.
The method for determining the amount of severance pay is stipulated by the Employment Act. The amount of severance pay cannot be less than one-third of the Employee's salary who is entitled to severance pay, for each completed year of service in the Employment with the Employer from whom they are entitled to severance pay due to the termination of the Employment Agreement. Of course, more favorable conditions for determining the amount of severance pay can be specified in the Employer's internal regulations and the Employment Agreement.
It is important to mention that in the case of structural changes (mergers, acquisitions, spin-offs, and divisions), the years of service with the predecessor Employer are counted when calculating the amount of severance pay.
Also, a change in the ownership structure of capital (for example, the transition of a company from state to private ownership or vice versa) is not considered a change of employer. This means that an employee whose employment continues with an employer that has changed ownership under the Law on Privatization is not entitled to severance pay upon termination of the employment contract solely due to that change in ownership.
SICK LEAVE AND TERMINATION OF EMPLOYMENT
When it comes to sick leave and termination of employment, there are many uncertainties related to this situation. A common question is whether sick leave protects an employee from dismissal, and under what conditions an employer can issue a termination decision while the employee is on sick leave.
To begin with — no, sick leave is not an obstacle to termination of employment. It is important to note that sick leave itself cannot be a reason for dismissal, but the employer may issue a termination decision during sick leave.
Also, abuse of sick leave constitutes a separate and valid legal ground for termination of employment.
This means that if an employee uses sick leave contrary to its purpose (for example, working for another employer, engaging in activities incompatible with recovery, or falsely reporting illness), the employer may lawfully terminate their employment.
Finally, termination of a fixed-term employment contract is also possible during sick leave. In other words, sick leave does not extend the duration of a fixed-term employment contract, except in cases where the employee belongs to a protected category (more on this below). In such cases, the contract is extended until the expiration of the employee’s right to leave.
SITUATIONS IN WHICH THE TERMINATION IS PROHIBITED
As we mentioned, there are two types of terminations: termination by the Employer and termination by the Employee. We also mentioned that termination by the Employer is subject to certain restrictions. These restrictions are introduced because the Employer is considered the stronger party in the Employment Agreement, and throughout the history of Employment, it has been shown that this power imbalance can have very negative effects on Employees.
One of the restrictions imposed on the Employer regarding terminations is the prohibition of termination in certain situations. This is a limitation that prevents the Employer from terminating an Employee in specific situations or for specific reasons.
The prohibition of termination in certain situations is particularly relevant in cases where terminations affect vulnerable categories of Employees. The law stipulates that the Employer is prohibited from terminating the Employment Agreement of an Employee during pregnancy, maternity leave, childcare leave, and special childcare leave. This is an imperative provision, meaning it applies without exception. Therefore, even in the event of organizational or other structural changes within the company, the Employment cannot be terminated for an Employee during pregnancy, maternity leave, childcare leave, or special childcare leave.
The above-mentioned prohibition of termination is not the only one. The law also prohibits terminating or placing an Employee in a disadvantageous position due to their participation in union or other activities, membership in a union, or for acquiring and exercising the role of a workers' representative. The Employer cannot terminate the Employment Agreement of a workers' representative, even up to one year after the end of their function, if they act in accordance with the law and the Employment Agreement.
DISCRIMINATION IN TERMINATION OF EMPLOYMENT
In addition to the prohibitions on termination in certain situations, which were covered in the previous part of the blog, it is also important to emphasize that termination for any reason that constitutes discrimination is strictly prohibited. Discrimination is prohibited in all aspects of employment, including the termination of Employment Agreements. Discrimination in termination would involve terminating an Employee based on their gender, birth, language, race, skin color, age, pregnancy, health condition, disability, nationality, religion, marital status, family responsibilities, sexual orientation, political or other beliefs, social origin, property status, membership in political organizations, unions, or any other personal characteristic.
Furthermore, often, discrimination is understood to include violations of the principle of equal pay for equal work. If two Employees perform the same tasks, have the same qualifications and skills, and generate the same value for the Employer but are paid differently, such a decision is considered void, regardless of whether there are specific discriminatory reasons as mentioned earlier. Therefore, all Employees are guaranteed equal pay for the same work or work that generates the same value for the Employer.
In the event of discrimination in termination, the terminated Employee enjoys legal protection and can initiate proceedings for compensation and protection of their rights before the relevant authorities or the court. This is an essential mechanism for safeguarding workers' rights and preventing discrimination in Employment.
VIOLATION OF TERMINATION PROCESS AND VIOLATION OF WORKER'S RIGHTS
In case the Employer acts with the provisions regarding termination, as stipulated by law, such actions will be considered an abuse of termination and a violation of workers' rights. In the event of abuse or termination and violations of workers' rights, the Employee whose rights have been violated enjoys legal protection. In a legal proceeding, if successful, the Employee may be entitled to reinstatement to their position and/or the right to compensation for lost wages. Unfortunately, the abuse of termination and violations of workers' rights are not uncommon in domestic practice. In such cases, the Employer may incur significant financial expenses, including legal costs and compensation for lost wages paid to the Employee who did not work from the day of the unlawful termination decision, for the period during which they did not work due to the Employer's actions considered an abuse of termination and a violation of workers' rights.
TERMINATING A FIXED-TERM EMPLOYMENT AGREEMENT
Employment can be based on a fixed-term contract. This Employment, like indefinite- term Employment, is established through an Employment Agreement. A fixed-term Employment Agreement can last for a maximum of two years, after which the Employment terminates upon the expiration of the agreed-upon term.
However, if one of the reasons for termination of the fixed-term Employment Agreement occurs during the agreed-upon period, it leads to what is called the termination of the fixed-term Employment Agreement. Everything we mentioned in the previous part of the text regarding reasons and procedures for terminating an Employment Agreement, the existence of prohibitions on termination, limitations, and collective terminations, also applies to fixed-term Employment Agreements. When the Employment ends upon the expiration of the agreed-upon term, there is no need to provide written notice of the reasons for termination of the Employment Agreement.
Employers who engage a lawyer for termination of employment contracts — one who can provide them with legal advice and protection — often include in fixed-term employment contracts the phrase “no later than”, thereby reserving the right to terminate the contract at any time, that is, at the moment when the circumstances that served as the basis for concluding the employment contract cease to exist.
We would only add at this point that a fixed-term Employment Agreement can also terminate due to one additional, very specific condition. Termination of a fixed-term Employment Agreement may occur because the work permit has expired, which was issued for a period shorter than two years and was not renewed. It is clear that this termination of a fixed-term Employment Agreement is specific to foreign workers employed by our Employer. Therefore, the termination of a fixed-term Employment Agreement concluded with a foreigner will occur if the foreigner's work permit expires.
EMPLOYMENT TERMINATION LAWYER
Although termination of employment has become a common occurrence in the business world, both in large and small companies, it is important to pay attention to this process and consider it from a legal perspective. In the event that you have been terminated and believe that your labor rights have been violated, it is advisable to contact an Employment termination Lawyer to obtain expert advice from someone knowledgeable about the regulations and practices of terminations. Additionally, when it comes to individual and collective terminations, it is important to follow specific steps to ensure a lawful termination procedure. In this regard, hiring a lawyer can help employers avoid mistakes that could have significant financial consequences for their company.
Featured Photo by Romain V on Unsplash
