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Are employers required to give notice of termination?
Pursuant to the Labour Law, an employment contract may cease only by:
- mutual agreement;
- termination by the employee, with or without cause; or
- termination with cause by the employer.
Therefore, there is no at-will termination by serving an employee with a notice period.
However, in relation to a fixed-term employment contract, the employer should serve the employee with prior written notice before the contract expires, under penalty of the same being automatically renewed for an equal period or converted into an indefinite employment contract. Prior notice of termination is also required in the context of dismissals for technological, structural or market-related reasons that are essential to the competiveness, economic restructuring or administrative or productive reorganisation of the company (redundancy procedures).
What are the rules that govern redundancy procedures?
Pursuant to the Labour Law, employers may terminate one or more employment contracts, provided that termination is based on technological, structural or market-related reasons and is essential to the competiveness, economic restructuring or administrative or productive reorganisation of the company. These reasons are defined as follows:
- Structural reasons – these relate to the reorganisation or restructuring of production, changes in activity or lack of economic and financial resources which may result in a surplus of jobs.
- Technological reasons – these relate to the introduction of new technology, work processes or methods or the computerisation of services which may make it necessary to downsize staff.
- Market-related reasons – these relate to difficulties in placing goods or services on the market or a decline in the company’s activity.
Are there particular rules for collective redundancies/mass layoffs?
If a dismissal is due to technological, structural or market-related reasons and involves 10 or more employees, it will qualify as a collective dismissal and a more stringent procedure applies.
What protections do employees have on dismissal?
As a rule, employees may bring a case for reinstatement, which includes remuneration between the date of termination and the date of their effective reinstatement, subject to a maximum of six months. Any amount which was previously paid by the employer as compensation for termination will be deducted.
Should the employee so choose, or where circumstances objectively make reinstatement impossible, the employer must provide the following compensation:
- employees under permanent contracts – an amount corresponding to 45 days’ salary per each year of service; and
- employees under fixed-term contracts – the remuneration that the employee would have earned between the date of termination and the date on which his or her contract would have expired.