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.
The Employer can terminate the Employee for reasons specifically established by Law. All reasons are grouped into four categories, which are:
- Reasons related to the Employee's workability and behavior;
- Reasons related to the Employee's breach of work obligations;
- Reasons related to the Employee's breach of work discipline, and
- Reasons related to the existence of a justified reason related to the Employer's needs.
Each of these groups contains reasons for contract termination. Due to the large number of reasons an Employment Agreement can be terminated, this blog will not focus on listing the reasons for terminating an Employment Agreement but will instead go through certain questions to highlight specific reasons for termination.
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.
Unlike the Employer, the Employee can resign for any reason, with the obligation to respect the notice period. The length of the notice period cannot be less than 15 days, and it can be extended beyond 30 days by a company's internal regulation or Employment Agreement. Therefore, there is no additional procedure to follow when giving notice, except for providing written notice of resignation.
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.
Kada govorimo o pojmu „kolektivni otkazi“, mislimo na otkaz ugovora o radu zbog tehnoloških promena. Kolektivni otkazi i sindikalne aktivnosti su dva neodvojiva pojma kada je tema otkaz ugovora o radu zbog tehnoloških promena. Kada je potrebno dati otkaz većem broju zaposlenih zbog određenih tehnoloških, ekonomskih i organizacionih promena kod poslodavca, poslodavac je dužan da sarađuje sa reprezentativnim sindikatom i Nacionalnom službom za zapošljavanje radi preduzimanja određenih mera zapošljavanja lica koja će dobiti otkaz kao rezultat navedenih promena, kao i da u određenim slučajevima donese program rešavanja viška zaposlenih.
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.
THE RIGHT TO SEVERANCE PAY UPON TERMINATION OF AN EMPLOYMENT AGREEMENT
The right to severance pay upon the termination of an Employment Agreement is granted to an Employee whose employment is terminated due to technological changes. Severance pay serves as compensation for the worker who is laid off due to technological changes. The Employer is obliged to pay severance pay to the Employee who is entitled to it upon the termination of their Employment Agreement due to technological changes, before the actual termination.
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.
Furthermore, changes in ownership (a transition from state to private ownership, and vice versa) do not constitute a change of the Employer. This means that an Employee who is entitled to severance pay due to the termination of the Employment Agreement, and who has worked for an Employer that has undergone a change in capital structure in accordance with privatization laws, will not be considered as having changed Employers.
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.
Poslodavci koji angažuju advokata za otkaz ugovora o radu koji može da ih pravno savetuje i zaštiti, često u ugovor o radu zaključen na određeno vreme stave formulaciju „najdalje do“, te imaju pravo da otkažu ugovor u svako vreme, odnosno u momentu kada prestanu okolnosti koje su bile osnov za zaključenje ugovora o radu.
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.
Whether you want to engage a lawyer as a representative for the individual or collective termination process, or you need legal advice in the field of labor law or representation in a legal proceeding, it is advisable to contact the Pekić Law Firm via email at[email protected]
Featured Photo by Romain V on Unsplash
