From 1 January 2013, significant changes to the Labour Code will come into effect having been adopted by the National Council on 25 October 2012.

Please let us know if we can help you assess the ramifications of the changes for your business.

The main changes appear below.

Dependent work

This will be defined (more narrowly, using six criteria) as work carried out:

  • in a relationship where the employer is superior and the employee is subordinate
  • personally by the employee for the employer
  • under the employer’s instructions
  • on the employer’s behalf
  • during working time as determined by the employer
  • for salary or remuneration

The change is intended to make it easier to meet the criteria and so prevent the law from being circumvented through work which has the characteristics of dependent work being carried out under different contracts than those required by the Labour Code.

Probationary period

The maximum length of probationary periods will be three months (six months for executive employees). This replaces the current option for collective agreements to stipulate probationary periods of up to six months for individual employees and up to nine months for executive employees.

Fixed-term employment

It will only be possible to agree employment contracts for a definite period of up to two years, instead of the current three years. The employment contract for a definite period can be renewed up to two times within the two years, for a further definite period.

Notice period

It will be possible to agree longer notice periods than those provided for in the Labour Code.

Employers will also be able to provide in the employment contract for greater monetary compensation to be payable if the employee does not stay in post until the end of the notice period, up to a maximum of the employee’s average monthly earnings for the duration of the notice period. This kind of agreement will only be enforceable if it is set out in the employment contract and specifies the amount of monetary compensation payable.

It will no longer be possible to specify, in collective agreements, that a different amount of compensation can be agreed with a particular group of employees if they do not work out their entire notice period.

Dismissal for underperformance

Employers will be able to give notice of termination to employees who fail within a reasonable period to remedy their underperformance within 6 months of being requested in writing to do so. Currently, the request must have been made within two months prior to notice being given.

Prior negotiation of termination with employee’s representatives

Any purported dismissal of an employee (whether immediate or on notice) will be invalid unless it has been negotiated in advance with the employee’s representatives.

Concurrent notice and severance

Employees must be given severance in addition to notice of termination when dismissed:

  • because their employer is ceasing operations at their place of work (whether through closure or relocation)
  • because of organisational changes
  • because the employee has become unable to do his job in the long term due to ill health (according to medical opinion)

The minimum amount of severance payable is a multiple of average monthly earnings:

  • one, for those who have worked for the employer for at least 2 years but less than 5 years
  • two, for those who have worked for the employer for at least 5 but less than 10 years
  • three, for those who have worked for the employer for at least 10 but less than 20 years,
  • four, for those who have worked for the employer for 20 or more years.

Where termination in these circumstances is not by dismissal but by mutual agreement, the minimum severance payable is a higher multiple of average monthly earnings:

  • one, for those who have worked for the employer for less than two years
  • two, for those who have worked for the employer for at least 2 years but less than 5 years
  • three, for those who have worked for the employer for at least 5 but less than 10 years
  • four, for those who have worked for the employer for at least 10 but less than 20 years,
  • five, for those who have worked for the employer for 20 or more years.

Compensation for invalid termination

In a return to the legal position before it was amended in 2011, employees whose employment is invalidly terminated will be entitled to compensation consisting of their salary for the period starting on the day when the employee notifies the employer that he wants his employment to continue and continuing until the employer allows him to do continue employment (or a court decides that his employment was invalidly terminated).

A maximum period of 36 months will apply (currently it is 9 months). Where the compensation would exceed 12 months’ salary, employers can ask the court to reduce the compensation or limit it to 12 months’ salary.

Competing activities

Employees will require the employer’s written consent before being able to engage in activities which compete with the employer’s business. This is another return to the legal position before it was amended in 2011.

Business trips

Employers will be able to agree, in collective agreements or with employees’ representatives, the amount of financial compensation (or additional paid leave based on average earnings) payable to employees on business trips outside their scheduled working shift which do not count as overtime work or on-call duties.

Overtime work

There will be an annual limit of 150 hours of overtime work for all employees, except that the annual limit for medical personnel may be increased by 100 hours by agreement with the employees’ representatives.

Employers will have to give extra leave to employees doing overtime work within four (currently 12) months after the month in which the overtime work was done, unless they can agree a different timescale with the employee concerned. 

Night shift

Night shift work will be work done between 10pm and 6 am (currently, it ends at 5am).

Non-employee workers

Those working under contracts which are not employment contracts will gain some of the same rights as employees under the Labour Code, including those in:

  • Part 1 (general provisions)
  • Part 6 (protection of work)
  • Most of Part 3 (working time and rest periods)
  • Some provisions in Part 4 (wages and average earnings)

Entitlement to the minimum wage and to take time off for medical appointments represent examples of the rights accorded to the non-employee workers.

Trade unions

The powers of trade unions are being strengthened, having been weakened by the changes made in 2011.