As an employer it is vital that you are informed on new labour law related issues that could negatively affect your organisation. In this legal insights we explore a number of these important legal points.
- An employer's right to compensation from an employee
- Incorrect instruction regarding an employee's right to appeal to court against a termination notice
- Employment after parental leave
- Longer notice period and compensation amounts
- Refusal to carry out an official order
- Manager of a separate organisational unit and compensation for overtime work
1. An employer's right to compensation from an employee
According to art. 61¹ of the Labour Code, in the case of an unjustified resignation of an employee without notice, the employer is entitled to a flat compensation rate corresponding to the employee's remuneration for the period of notice.
In the verdict of 13 January 2016 the Supreme Court confirmed that the compensation does not depend on the occurrence of material damage and its amount. The employee cannot demand lowering of the compensation based on the argument that the employer did not suffer any material damage or that the damage was lower. At the same time the Supreme Court did not exclude the possibility of claiming higher compensation by the employer if the unjustified resignation incurred substantial material losses on the part of the employer.
In the case analysed by the Supreme Court an employee terminated the employment contract without a notice period due to a serious breach of the fundamental employer's duties towards the employee, i.e. not paying part of the remuneration, refusal to grant vacation and lack of promotion. The employer demanded compensation due to unjustified resignation without notice. The courts of all instances recognised that the resignation without notice was unjustified because the employer did not commit a breach of its duties and ruled that the employer be compensated. The employee questioned the amount of compensation as the employer did not suffer any material damage.
- Supreme Court verdict of 13 January 2016 (II PK 302/14)
2. Incorrect instruction regarding an employee's right to appeal to court against a termination notice
According to art. 30 § 5 of the Labour Code, a termination declaration with or without a notice period given by an employer is required to include instructions on the employee's right to appeal against it to the labour court. The instruction must include the deadline and the name of the court to which the employee may appeal.
In the case analysed by the court an employee demanded compensation due to mistakes in the instruction on the employee's right to appeal to the court.
The Supreme Court ruled that an employer's mistake in the instruction on the right to appeal to court does not result in the right for compensation. It is irrelevant if the mistake concerns a wrong deadline, improperly determined court or if the termination declaration does not include the instruction to appeal to the court at all. Such a mistake does not render the termination declaration defective and thus it is not a basis to claim compensation by the employee. The only result of a wrong instruction, or a lack of one, is the employee's right to reinstate the deadline to file an appeal against the termination of the employment contract.
- Supreme Court verdict of 3 February 2016 (II PK 333/14)
3. Employment after parental leave
According to art. 186⁴ of the Labour Code, after the return of an employee after parental leave, the employer is obliged to employ the person in the previous position held and if not possible – to an equivalent position or another position corresponding with their qualifications. The regulation determines that the employer is obliged to offer the employee an equivalent position when employment in the previous position is impossible. In other words the employer is entitled to transfer the employee to a position different from the one specified in the employment contract and the employee is obliged to work in the new position.
In the case at hand, an employee, who worked as Client Consultant-Store Manager before parental leave, was offered work in the position of Market Research Manager after returning from leave. The employee did not accept the equivalent position and did not return to work. Based on the above the employer terminated the employment contract without notice due to a serious breach of the employee's duties. The employee demanded compensation for unlawful termination of employment contract.
The Supreme Court ruled that if an employee does not take up work in an equivalent position or a position corresponding with their qualifications, the employer is entitled to terminate the employment contract without notice. Refusal to work is a serious breach of the fundamental employee's duties because work itself has a fundamental character. Employees, who decide on their own that a proposed position does not correspond with their qualifications and do not take up work after returning from parental leave, must be prepared that their behaviour will be classified as a serious breach of the employee's duties, which justifies termination of the employment agreement with immediate effect.
- Supreme Court verdict of 27 October 2015 (III PK 13/15)
4. Longer notice period and compensation amounts
The statutory period of notice for employment contracts for definite or indefinite period of time is from two weeks to three months, depending on the length of service. The parties of the contract often contractually prolong the period of notice.
In case of unlawful termination of employment contract by the employer the employee is entitled, according to art. 47¹ of the Labour Code, to compensation for unlawful termination of employment contract corresponding to two weeks' up to three months' remuneration, but not smaller than the notice period.
In the analysed matter, the employee had a prolonged contractual notice period of six months. Due to a termination of the employment contract the employee appealed to the labour court and demanded compensation amounting to six months' remuneration because the period of notice defined in his employment contract was six months. Although the court ruled that the employer violated the law terminating the employment agreement, it decided on compensation amounting to three months' remuneration.
The Supreme Court ruled that even if the employment contract provides for a longer period of notice than the statutory one, the compensation for unlawful termination of an employment agreement amounts to the statutory period of notice, i.e. a maximum of three months. An exception would be a situation in which the parties stipulated clearly in the employment agreement that the compensation will correspond to remuneration for the prolonged period of notice. In case of lack of such a provision, the employee, in spite of a longer notice period, is entitled to the statutory amount of compensation.
- Supreme Court verdict of 5 November 2015 (III PK 26/15)
5. Refusal to carry out an official order
According to art. 100 § 1 of the Labour Code the employee is obliged to follow the supervisors' orders concerning their work, unless they are against the law or the employment contract.
In the current case an employee, in spite of repeated instructions from his supervisor, did not appear to a meeting concerning his duties. The employee explained that he cannot show up because he was on business trip. When the employer checked it, it turned out that the employee did not receive an instruction to go on a business trip. As a result, the employer terminated the employment contract with the employee without a notice period.
The employee appealed to the labour court claiming that his behaviour did not result in material damage of the employer's property and did not pose a threat to incur such damage.
The Supreme Court ruled that the termination of the employment contract without a notice period was justified because a repeated failure to follow the supervisor's order violated the required work discipline and threatened the employer's interests. In the estimation of the Supreme Court, the employer's interests were threatened. The threatening of interests does not need to be material; it also contains immaterial elements, including the work discipline understood as the duty to follow the employer's orders. Following the employer's orders by the employee belongs to the core of the employment relationship and failure to comply with this duty always violates a major interest of the employer.
- Supreme Court verdict of 20 January 2016 (II PK 311/14)
6. Manager of a separate organisational unit and compensation for overtime work
As a rule, people employed in managerial positions are not entitled to compensation for overtime work. Individuals falling into these managerial positions are employees managing the workplace alone, their substitutes, chief accountants, board members and managers of separate organisational units.
The Labour Code does not define the concept of a manager of a separate organisational unit. It often leads to situations when employers describe positions as managerial in spite of the fact that they do not meet the required criteria.
In the case at hand an employee was employed in the position of the dispatch department manager in a print shop. The manager was responsible for a team of 20 employees, for which he organised the work and assigned duties. He was responsible for production organisation and the whole process of newspaper publishing. Moreover, he worked together with the other employees and reported the need to enlarge the team. Due to the fact that he frequently worked longer hours than the statutory working time he demanded compensation for overtime work.
According to the facts of the case the Supreme Court ruled that the position of the manager in the print shop did not meet the required criteria and thus the employee was entitled to compensation for overtime work. The court ruled that the manager did not have the required independence in taking actions as he could not decide to hire more employees. He did not have management authority but just organisational powers. Moreover, the manager worked alongside the team members and this excluded the possibility of recognising an employee as a manager of a separate organisational unit.
- Supreme Court verdict of 11 February 2016 (II PK 337/14)