Termination of employment

Grounds for termination

May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?

Termination is an evolving issue in labour court rulings and is subject to good faith obligations. This means an employer must have a justified reason for terminating an employee’s employment.

Notice

Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?

The Advance Notice for Dismissal and Resignation Law requires both employers and employees to give a notice of termination before dismissal. The length of the notice period is set according to the duration of employment, with a maximum of 30 calendar days. An employer does not require the employee to attend work during the notice period if it pays the employee in lieu of notice.

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?

The Advance Notice for Dismissal and Resignation Law requires exceptional circumstances to eliminate an employee’s right to advanced notice.

Severance pay

Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?

The Severance Pay Law stipulates the entitlement for severance pay and its calculation. The usual calculation is to multiply seniority by the last monthly salary.

However, under section 14 of the Severance Pay Law, an employer and employee can adopt a different arrangement. This arrangement states that each month, the employer transfers an amount equal to 6 per cent or 8.33 per cent of the employee’s salary as a severance component to a pension fund or executive insurance fund on behalf of the employee. Amounts earned in the severance component will be in lieu of severance pay and belong to the employee in any case, regardless of the reason for termination (as long as not otherwise determined by a labour court or collective bargaining agreement).

Procedure

Are there any procedural requirements for dismissing an employee?

Generally, an employer can dismiss any of its employees, subject to limitations in the law, the employment agreement or any applicable collective bargaining agreement.

An internal hearing process must be conducted before making the final decision about termination and redundancies.

A consultation obligation with a workers’ union applies under collective bargaining agreements.

There are some legal limitations on the dismissal of:

  • pregnant women;
  • women on maternity leave or for 60 days after the end of maternity leave;
  • women staying in shelters for abused women;
  • men who have been called up for military or reserve service;
  • employees on sick leave;
  • employees undergoing infertility treatment; and
  • certain employees from bereaved families.

 

To terminate the employment of an employee falling under one of the above categories, the employer must seek a permit for termination from the relevant government body.

Employee protections

In what circumstances are employees protected from dismissal?

There are some legal limits on the dismissal of:

  • pregnant women;
  • women on maternity leave or for 60 days after the end of maternity leave;
  • women staying in shelters for abused women;
  • men who have been called up for military or reserve service;
  • employees on sick leave;
  • employees undergoing infertility treatment; and
  • certain employees from bereaved families.

 

In certain cases, termination is forbidden, and in certain other cases, the employer must seek a permit for termination from the relevant government body.

Further, employees have a right to a hearing before termination. In short, before making the final decision, the employer must hold a hearing with the employee in question to allow him or her to state his or her case against dismissal. The rules of the hearing process are set by case law and are constantly evolving.

Mass terminations and collective dismissals

Are there special rules for mass terminations or collective dismissals?

It is always advisable to have a fully thought-out and articulated business basis for each lay-off decision. The employer is required to conduct a hearing process before any termination, including mass terminations.

Class and collective actions

Are class or collective actions allowed or may employees only assert labour and employment claims on an individual basis?

According to the Class Actions Law, a person with a claim that applies for a large group of persons may apply for a class action on behalf of that group. This person may be an employee (or a candidate), and he or she can only file a class action claim for matters explicitly mentioned in the law.

Mandatory retirement age

Does the law in your jurisdiction allow employers to impose a mandatory retirement age? If so, at what age and under what limitations?

The Retirement Age Law stipulates eligibility for retirement at the age of 67 for men and women; however, women can elect to retire at the age of 62.

According to a national labour court ruling, if an employee wishes to remain employed after the compulsory retirement age, the employer is obliged to consider his or her request in good faith.