Pursuant to Section 2118 of the Civil Code, and except in certain cases (ie, in the event of termination for cause or during a probationary period), employers and employees are entitled to terminate a permanent employment agreement provided that they comply with the obligation to give the counterparty adequate notice.
The duration of the notice period is usually determined by the applicable national collective agreement for the sector in question, based on the classification of the employee and his or her seniority in the company. An individual employment agreement can derogate from the collective agreement only in favour of the employee (ie, by providing for a longer notice period).
In the event of dismissal or resignation, indemnity may be paid in lieu of notice. Such indemnity must be equal to the employee’s salary for the entirety of the notice period, which must be specified in the dismissal letter. The rationale of this provision is to prevent the immediate termination of the employment agreement by one party from being prejudicial to the counterparty, which would otherwise be left without an employee or without a job, and uncompensated for the fact.
Suggested strategy for dismissals
From the employer’s standpoint, it is advisable to consider asking the employee to stop work immediately and paying him or her the relevant indemnity in lieu of notice.
An employee who has been dismissed is likely to be much less motivated to perform his or her professional activities during the notice period. As a result, he or she is more likely to make mistakes, commit disciplinary violations or even perpetrate offences.
In order to postpone the effects of dismissal, an employee may also decide to take tactical advantage of factors which legally suspend and extend a notice period, such as illness, pregnancy and injury. Apart from the implications for the timing of the dismissal, such an approach can have serious economic consequences for the employer that should not be underestimated. In such cases a proportion of an employee’s monthly salary is covered by the national public institutions, but in the event of a manager’s absence through illness, the employer must pay his or her full salary for up to 12 months.
Recent case law
In Decision 22443, issued on November 4 2010, the Labour Section of the Supreme Court went so far as to state that during the notice period, an employer may not dismiss an employee even if it has cause to do so.
This decision further confirms that employers should strongly consider indemnity in lieu of notice. If an employee is working his or her notice period, even if he or she commits an irreparable breach of the obligation of trust between employer and employee, the employer cannot terminate the employment relationship, but must wait until the notice period ends.
Thus, in cases of dismissal it is preferable to pay the indemnity due in lieu of notice – this ensures that the dismissal will take effect immediately, according to the company’s needs.