Risks and Requirements for Proper Grounds in Termination of Employment Contracts
Introduction
The Labour Code defines specific grounds under which an employment contract may be lawfully terminated. These grounds include:
- Reorganization of the company;
- Expiry of the fixed-term contract;
- Completion of the work for which the contract was concluded;
- Voluntary resignation by the employee;
- Mutual written agreement between the parties;
- Employee’s lack of qualification or unsatisfactory skills;
- Prolonged incapacity for work (consecutive 40 days or cumulative 60 days);
- Illegal strike declaration;
- Death of the employee;
- Other objective circumstances.
Any termination outside these grounds is deemed unlawful.
Risks for the Employer in Unlawful Termination
Terminating an employment contract without proper legal grounds exposes the employer to significant legal and financial risks, including but not limited to:
- Judicial annulment of the termination decision;
- Court-mandated reinstatement of the employee to their original position or provision of equivalent work;
- Payment of monetary compensation;
- Obligation to pay forced salary (compensation) for the period from termination until enforcement of the court’s final decision annulling the termination;
- Potential legal costs and damage to the company’s reputation.
Burden of Proof
In disputes concerning unlawful dismissal, the burden of proof primarily rests on the employer. While the employee must assert the illegality of the dismissal, the employer must substantiate that the termination was lawful and complied with applicable labour legislation. This evidentiary burden arises from the unequal access to information and documentation between the parties.
Importance of Proper Grounds and Documentation
Each termination case requires careful evaluation and clear documentation of the grounds for dismissal, taking into account the specific circumstances. Failure to provide a valid legal basis or proper documentation may lead to the annulment of the dismissal order and impose significant financial and operational liabilities on the employer.
Conclusion
To minimize legal exposure and comply with labour laws, employers should base terminations on legitimate, well-documented grounds as stipulated by the Labour Code. This approach protects the employer’s legal interests, ensures timely and fair handling of termination procedures, and helps avoid costly litigation and reputational harm.
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