If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
Employment & Labour Law
If the employer does not comply with the EA and the employment agreement, the employee may challenge the termination by filing a complaint or claim with the Ministry of Manpower or bringing a civil action before the courts for wrongful dismissal. The normal measure of damages that the employee may recover against the employer for wrongful termination is the amount the employee would have earned during the notice period, less the amount he could reasonably be expected to earn in other employment. Depending on the circumstances of the termination, there may also be reputational consequences on the employer.
Failure by the employer to follow the procedure set forth in the employment contract may result in any contractual remedies stipulated.
An employer may face additional consequences if a wrongful termination lawsuit is brought. The U.S. “at will” employment doctrine has been tempered in some states by a “good faith and fair dealing” provision that prohibits employers from taking advantage of an employee’s at will status. For example, an employer could be liable for terminating an employee just prior to receiving his/her bonus to avoid payment of the bonus. Generally consequences are monetary and may include compensation of lost wages and benefits, damages for pain and suffering, punitive damages, attorneys’ fees, and court costs. Other non-monetary consequences include reinstating the employee to his/her former position.
In case of disciplinary dismissal or individual redundancy, the dismissal will be considered as unfair, which consequence is the payment for the employee of the statutory unfair dismissal severance, except for the cases of employees protected from dismissals, which consequence would be the null and void declaration. In this latter case (null and void dismissal scenario), the employee will be entitled to the reinstatement in his/her job position plus payment of the salaries accrued from the termination date until the notification of the Court’s resolution, with the possibility to pay an additional indemnity if damages are proven before Court (some examples of employees protected from dismissals are pregnant employees, workers’ legal representatives, employees who have requested a reduction on working hours, employees who previously filed claims against the Company, etc.).
In relation to collective layoff, please take into consideration that if the consultation period has not been complied with or if the employer has not provided the corresponding mandatory documentation to the workers’ legal representatives, such collective layoff would be considered as null and void, which consequences before mentioned.
If the employer does not follow the procedural requirements prescribed under Article 19 of the Labour Law in a context where the job security provisions of the Labour Law are applicable, the employee may apply to the labour court claiming lack of valid reason and reinstatement to work. In the event the Labour Court confirms that the employment contract has been terminated without an objective valid reason, the Court may decide on the following:
- Payment of up to four months' wages and other benefits of the employee for the time they are not reinstated to work,
- Reinstatement compensation, to be not less than four months' and not more than eight months' wages (if the employee is not reinstated to work upon his/her timely application to the employer).
If the employer does not follow the corresponding procedures, it will be considered that the employment agreement was terminated without just cause and the employee will be entitled to the payment of severance.
If notice is given during a proscribed period according to art. 336c of the Swiss Code of Obligations, the notice has no legal effects at all. If the proscribed period falls within an ongoing notice period, the latter only stands still, however.
Non-compliance with the requirements regarding a termination of an older employee with many years of service only leads to the wrongfulness of the termination according to art. 336 of the Swiss Code of Obligations.
In principle, a dismissal without the 30-day advance notice or payment in lieu of notice is still valid as a notice of termination, and the employment ends at the expiry of 30 days after notice or when the employer makes payment in lieu of notice, whichever is earlier.
An employee would be entitled to claim against the employer for (i) payment in lieu of advance notice (if no advance notice is given as required by law), (ii) statutory severance pay, and (iii) interest on all unpaid amounts. In addition, an employer would be liable to a fine and a term of imprisonment for failure to comply with the requirements under the LPA.
The consequences of non-compliance involves fines and imprisonment. Additionally, the employer could also be required to reinstate the employee with or without back wages.
As there is no legal requirement in order to comply with a certain procedure there are no consequences. However, as mentioned in question 7, it is convenient to have a formal notification in writing in order to determine the exact date and time of the dismissal.
If an employer purports to terminate the services of an employee otherwise than in accordance with the requirements of the Labour Law, then such termination would be treated as wrongful.
If the employer does not follow any of the prescribed procedures as described in response to question 7, then such behaviour shall be deemed as illegal termination and the employee is entitled to the ‘double economic compensation’ (see question 15) or reinstatement.
An employer, which is incompliant with the rules of the EPA and the CDA, may be liable to pay both economic and general damages to the employee. The economic damages can amount up to 16 monthly salaries (if the employee has been employed with the employer for less than five years), 24 monthly salaries (if the employee has been employed with the employer for five but not 10 years) and 32 monthly salaries (if the employee has been employed with the employer for more than 10 years). The general damages are generally considered to be low. Violations of the formal rules of the EPA and the CDA may also imply an obligation for the employer to pay general damages to the concerned union.
If the employer fails to follow any prescribed procedures as described in the LSA, the rules of employment or collective bargaining agreement, in general, the disciplinary dismissal would be invalid. If dismissal is invalidated, the employee must be reinstated and paid his accrued wages until the date of reinstatement. Please note however that the employer may take disciplinary action again against the reinstated employee based on the same reason as the previous one unless otherwise provided for in the rules of employment or collective bargaining agreement.
Any termination by notice that takes place without the works council (if established) being informed or prior to the lapse of its period of deliberation (see question 7) is null and void.
If an employee does not accept the severance package, if any, offered by the employer in exchange for a release, the employee may bring a civil action claiming damages for wrongful dismissal. If an employer dismisses an employee in a vindictive, dishonest, or otherwise harsh manner, the employee may also assert entitlements beyond the “economic” wrongful dismissal damages, and claim aggravated, punitive or mental distress damages.
If the employer does not comply with the formalities applicable in case of termination upon notice (see question 7), including if the duration of the notice period mentioned in the notice letter is not correct, the notice period will be null and void. As a result, the employment relationship will be regarded as terminated without notice and the worker will be entitled to claim a severance allowance.
If the employer fails to follow the prescribed dismissal notification, the dismissal is deemed irregular and the employee may claim compensation which may not exceed one month of his remuneration.
If the employer fails to provide the employee with the grounds within the legal timeframe or fails to provide the employee with detailed grounds characterising a “real and serious” cause, the dismissal is deemed to be without cause and therefore abusive.
Dismissal is regarded as abusive if:
- the employer fails to provide the employee with detailed grounds as required by law,
- the dismissal is not founded on valid grounds related to the employee’s aptitude or conduct, or arising from the operating needs of the business, establishment or department,
- the reasons are not genuine,
- the reasons are not serious enough,
- the dismissed employee was legally protected against any dismissal (for example, during sickness leave).
If the employer does not hear the works council or does not provide the works council with all the relevant information the dismissal is invalid. The same consequence applies if the dismissal is not declared clearly and in writing or if it is not signed.
The lack of a written notification to the employee or the Labour Board will alone be enough to consider the separation unjustified, and consequently nullify the dismissal. The employee will be entitled to full severance payment consisting of:
- Payment of proportional parts of those labour benefits accrued on the date of the termination (i.e., Christmas bonus, vacation, vacation premium);
- Payment of an amount equivalent to 12 days per year of rendered services, capped at twice the daily minimum wage ($80.04 pesos) for the geographic area, as seniority premium;
- Payment of an amount equal to 3 months’ salary, paid with consolidated salary (consolidated salary is the base salary plus the proportional part of the accrued benefits) as Constitutional Severance;
- Payment of an amount equivalent to 20 days of consolidated salary per full year of rendered services (if the employee requested reinstatement); and
- Payment of back wages from the moment of the termination to the date on which the employer pays the awarded amounts.
If a court finds that the employee has been dismissed without warning them before when warning would have been necessary, the employer is deemed not to have had legal grounds for termination and is therefore liable to pay the employee compensation for an illegal termination. The minimum compensation equals to three months' and the maximum compensation to 24 months' salary of the dismissed employee. The amount depends primarily on the length of the employment relationship, the employee's age and possibility to find new employment, judgment of the procedure carried out by the employer and whether the employee has given reason for his/her dismissal. Further, if the notice period is not observed when necessary, the employee is entitled to a compensation equivalent to his/her salary notice period.