Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, describe the requirements of that procedure or procedures.
Employment & Labour Law (2nd Edition)
Yes. The employment law requires the employer to give a notice of termination to the employee and pay the severances in 10 days after the termination; in addition, the employee must be submitted to medical examination, to confirm that he/she is able to work. The employer also has to record the termination in the employee's booklet and in the company’s book of employees (a proper book to register all employments' data).
In principle, an employer must: (1) adhere to the disciplinary procedures (if any) outlined in its policies or regulations; and (2) provide a written notice of termination (either served in advance or with immediate effect pursuant to an appropriate payment in lieu thereof). Please refer to Question 4 for more details on written termination notices.
Termination on valid grounds and on justified grounds have different procedures to be followed by the employer in order to achieve an effective termination. However, irrespective of the type of ground for termination, a written termination notice shall be served to the employee, in which the reasons for termination was explained clearly.
1. Termination on valid ground
If the employer intends to terminate the employment contract on a valid ground (See Question 1), due to the principle of termination to be last resort, before terminating the contract the employer shall,
a. Give the employee a warning letter, explaining the valid grounds, in which (s)he will be requested to compile a defence. These valid grounds should be proven with concrete evidences and witnesses in case of a dispute.
b. After getting the defence, the employer may terminate the employment contract by,
- giving a written termination notice in which, the valid grounds, requiring the termination, is stated,
- recognising abovementioned notice periods (See Question 4) depending on employee’s length of service at the workplace, or paying a notice pay in lieu,
- paying the severance pay, which is equal to the last monthly gross salary of the employee, for each year of passed service,
- paying the vested, but uncovered allowances (if any) e.g. unused annual leave entitlement, unpaid salary or bonus.
Termination due to performance
If the valid ground for termination is the employee’s performance, then a specific procedure shall be followed. Firstly, the employer shall prove the performance decrease. Therefore, the employer shall need to create a performance evaluation system based on objective criteria and provide documents regarding the performance decrease.
Performance criteria shall be proper and realistic. The employer shall prepare performance evaluation forms regarding these standards for each employee. The performance evaluation criteria shall be predetermined and notified to the employee. In case the performance of the employee is lower than the stipulated criteria, the employer shall explain in detail his/her future expectations, the professional and personal improvements expected from the employee. After that, if there is no improvement on the performance, then the employer may terminate the employment relationship.
2. Termination on justified ground
In case of a termination on a justified ground (See Question 1), the employer shall terminate the contract within six days after learning the reason for termination and in anyway within one year following the action. However, if the employee gained some financial benefit due to such action, this one-year period will not be applied.
Mutual termination protocol
Although termination through mutual termination protocol is not designated under TLC, it is recognised by case law and hence is preferred by the employers to mitigate the reinstatement risk. Pursuant to case law, for a mutual settlement protocol to be construed as valid, a reasonable benefit shall be provided to the employee in addition to the termination payables that (s)he is entitled by law. Whilst a certain calculation criterion or a method is not defined by case law for the determination of the amount of the reasonable benefit, according to the well settled precedents of the High Court;
- When mutual termination is offered by the employee, the employee shall be entitled to an exit package consisting of notice pay, severance pay and an additional payment of up to 4 months’ salary,
- When mutual termination is offered by the employer, the employee shall be entitled to an exit package consisting of her notice pay, severance pay and an additional payment of minimum 4 months’ salary (See Question 15).
Firstly, the employer must set out the grounds of termination precisely in the notification letter. The ground on which the termination of the employment is based determines the procedure the employer must follow. Termination based on (business) economic reasons or long-term disability, which is the case if an employee has been incapacitated for in excess of 2 years (grounds a and b of question 1) must be assessed by the UWV beforehand. Termination based on the other exhaustive grounds (c through h of question 1) shall be assessed by the labour department of a district court.
The UWV-procedure requires:
- The employer to send an application for a dismissal. The reasons for the application must be substantiated sufficiently to carry the dismissal and the employer must prove that he did enough to prevent the dismissal;
- There are several specifics in case of (business) economic reasons. Employer must fill in 3 different forms, A, B and C. Employer must make the structural redundancy of jobs due to the close down of business or actions to continue the business plausible. Several other factors must be substantiated to make a successful application;
- The assessment of the application takes approximately 4 weeks;
- The employee can put up a defence if he does not agree with the application. This instigates the hearing of both parties. Parties can request an expert opinion in this stage;
- After this round the UWV will give a decision. Parties can enter an objection to this decision at the district court judge. After this objection the procedure follows the normal Dutch civil procedure rules.
The district court procedure requires:
- Employers have to submit an application to the district court judge requesting the termination of the employment contract;
- The employee is allowed to send in a state of defence.
- The judge will dissolve the employement, provided that reasonable grounds do occur’, meaning one of the grounds of points c through h of question 1.
- When terminating an employment agreement of an employee who has been in the employer’s service for 24 months, the transition payment is due by operation of law. The judge may grant fair compensation in excess when the employer is seriously culpable.
It is always possible to terminate the employment by mutual consent. This, of course requires a settlement agreement.
Except in cases that fall under Section 119 of the LPA, generally, under the law, an employer is required to give prior notice to an employee in order to terminate the employee’s employment or make payment of lieu of advance notice for the termination of employment to be effective immediately (please see paragraph 6 above). The employer would also be required to pay wages, overtime pay, holiday pay, holiday overtime pay and unused annual leave which the employee is entitled to receive, to the employee, within three days from the date of termination of employment. In all cases which do not fall within Section 119 of the LPA, the employer would also be required to make payment of statutory severance pay, and any other contractual benefits to which the employee would be entitled under the employee’s contract of employment.
However, in the case where the employees have set up a labour union, the termination of employment of an employee who is a member of the Employee’s Committee of the labour union must be approved by the Labour Court only. Save for the Labour Court’s approval, the termination of employment of a member of the Employee’s Committee can be made without having to give notice to any other third party.
Termination of the employment relationship will be valid whether or not the employer follows any prescribed procedures.
A Code of Practice applies to grievances and dismissals, other than dismissals on the grounds of redundancy. Employers have no legal obligation to follow the Code, therefore an employee cannot bring a claim against the employer on the grounds that they have not followed it. However, where the employer has failed to comply with the Code, it can be taken into account by an Employment Tribunal judge in relation to another complaint and as a result, the employer can be required to pay an increased sum of compensation.
Employers may also be obliged to follow any contractual dismissal procedures included in the contract of employment.
procedure or procedures.
Although an employer must provide an employee with his or her statutory and contractual entitlements upon termination of employment, the employer generally does not, except in the case of mass terminations (see Question 2), have to follow a prescribed procedure to effectively dismiss an employee.
While there is no prescribed procedure, the manner in which an employer terminates an employee—including the employer’s conduct both before and after the termination meeting—can result in an adverse award of aggravated damages or punitive damages. As such, there are a number of ‘best practices’ that can mitigate an employer’s risks in terminating employment.
While such practices may vary depending on the employer’s relationship with the employee and the context of his or her termination, employers should, at minimum, carefully plan the day of termination and aim to hold the termination meeting in a manner that minimises the employee’s embarrassment and distress, optimises privacy, and avoids any behaviour that could be characterised as harsh, vindictive, malicious, dishonest, or in bad faith. The employer should take notes at or immediately after the meeting. The termination letter should be provided to the employee at the time of the termination meeting. If the employer is offering a separation package in exchange for the execution of a release, the employer should not require the employee to sign the release on the same date as he or she receives it, since a court may find that the employer put undue pressure on the employee to sign and thereby conclude that the release is unenforceable. In Québec, employees can require that the termination letter, and other relevant documents, be drafted in French.
While not a ‘prescribed procedure’ per se, an employer must provide various government documents to an employee upon termination, pursuant to unemployment legislation and other applicable statutes.
The procedure for a valid termination of an employer depends on the cause for the same.
For just causes, the employer is required to:
(a) Serve the employee with a written notice containing the specific grounds of termination against him, giving him an opportunity to explain at least five calendar days from receipt to clarify his defense;
(b) Conduct a hearing to allow the employee to explain his defenses, present evidence, and rebut the evidence presented against him; and
(c) Serve the employee a written notice of termination indicating that all circumstances involving the charge against him has been considered and that the grounds to justify the severance of his employment.
For authorized causes, the employer must send written notices to the worker and to the appropriate Department of Labor and Employment (“DOLE”) Regional Office at least one month before the intended date of termination. The employee must also be granted separation pay.
According to case law, employers are required to hold a hearing with their employees, prior to making a final decision regarding the termination of their employment.
The purpose of the hearing procedure is to inform the employees of the reasons for which the employer is considering the termination of their employment, and to give the employees the opportunity to respond to the employer's proposed reasons. The hearing must be carried out in good faith, with a sincere and fair willingness to listen and consider the views of the employees.
Such a hearing is required in all circumstances, regardless of whether the dismissal is based on grounds of redundancy, misconduct or poor performance.
The employees should be notified of the hearing in advance, in order to allow them to prepare themselves and their arguments ahead of time. In addition, the hearing procedure should be documented.
Upon decision to terminate an employee's employment, the employer is required to provide the employee with a written notification which must state its date, as well as the date upon which the termination will become effective. In addition, upon termination of employment, the employer is required to provide the employee with a statement of service letter which should set out the dates on which the employee’s employment with the employer commenced and terminated.
The EPA and the CDA set forth rules regarding the process of termination and summary dismissal. The procedure differentiates depending on whether the termination is based on personal reasons or redundancy.
When there is a redundancy at the workplace, the basic principle is that the employee with the longest length of service will be entitled to stay the longest. The employer must select the employees to be terminated on a ‘last in, first out’ basis meaning that an employee, whose role is redundant has a right to be relocated to a position held by an employee with less seniority of employment. Employers with 10 or less employees is entitled to exempt two key employees from this order of priority. Prior to termination due to redundancy, the employer is obligated to conduct consultations under the CDA. This is mandatory if the employer is bound by a collective bargaining agreement or if any of the affected employees are members of a union. Thus, if there is no collective bargaining agreement, the employer must ask the affected employees whether they are members of a union.
For terminations due to personal reasons, the employer must notify the employee and the employee’s union about the potential termination two weeks in advance. For a summary dismissal, such notice must be sent to the affected parties one week prior to the dismissal. The employee and the union may, within one week from receiving the notice, request consultations with the employer concerning the dismissal.
The notice of termination or the summary dismissal must be in writing and should be handed over to the employee in person. If this is not possible, the notification may be sent as a registered letter by mail. The notice of termination must include information regarding the employee’s right to contend the validity of the termination, his possibilities to claim damages and the limitation periods for such claims. It must also include information on potential priority to right of re-employment.
An employer must follow a fair and proper procedure to effect the termination of an employment relationship. What constitutes a fair and proper procedure will normally be a matter of contention between employer and employee.
The general principles of a fair procedure include, but are not limited to:-
- being informed in writing of the detail of the allegations against the employee;
- access to documentary evidence pertaining to the dismissal;
- an entitlement to be accompanied to meetings;
- affording employees an opportunity to respond to allegations against them;
- compliance with the principle of proportionality.
A recent High Court case stated that employees have the right to be legally represented and to cross examine witnesses if there is a risk of termination of the employment relationship.
Depending on the reason for the dismissal, there may be additional requirements as part of the procedure to ensure that the termination is effective. By way of example, a termination for poor performance will normally be preceded by an employer having placed an employee on a performance improvement plan, failure of which could ultimately lead to the invoking of a disciplinary procedure.
Employers are required as a matter of law to provide employees with the terms of any procedure that might result in dismissal (i.e. a disciplinary procedure) no later than 28 days after the entering into the employment contract.
In Germany, a lot of formal requirements need to be fulfilled.
If a works council exists, it must be heard before every dismissal. It is important that the dismissal is declared clearly and unambiguously in writing. If the employer is a legal entity (e.g a limited liability company) the dismissal needs to be signed by a representative. The representative must present his or her power of attorney (unless he or she is authorized pursuant to the commercial register or is the head of personnel). The grounds for the dismissal generally do not need to be stated in the notice. Dismissals must be delivered in order to become effective.
In any event, the grounds of dismissal must be precisely set out in the notification letter. As mentioned in question 1, the grounds of dismissal must be contained in the dismissal letter, but additional details can be provided within 15 days following the notification.
In addition, except in the event of a large layoff procedure, dismissal must be preceded by the invitation of the employee to a preliminary meeting, where he may be assisted by staff representatives for example. A minimum of five business days must elapse between the invitation and the meeting, and at least two business days must elapse between invitation and notification of dismissal.
Depending on the grounds for dismissal, further requirements may have to be complied with, e.g.:
- dismissals on grounds of physical unfitness require prior consultation of staff delegates, medical examination and redeployment searches in order to find an alternative to dismissal.
- disciplinary dismissals must comply with specific requirements, among which the necessity to start the procedure no later than two months after the facts were committed or discovered, and the dismissal must be notified no later than one month after the preliminary meeting;
- Economic redundancies must be preceded by various steps (please refer to question 2).
The termination on individual grounds typically requires a prior warning issued to the employee. An employee is generally liable to understand that his/her breaches are severe enough to result in termination only if he/she has been warned and he/she continues the breaches despite the warning. A prior warning is not deemed necessary only in case an employee must have understood the severity of the matter also without one. Therefore, issuing a warning to a negligent employee or an employee breaching against his/her duties first is generally advisable instead of immediately terminating his/her employment contract.
The notice of termination must be given in writing. The notice must contain a short description of the reasons for the termination, the length of the notice period, and the date of the last day of work. The notice period is calculated from the date of the delivery of the notice to the employee.
The employer must prove that the employee has received the notice. It is therefore advisable to deliver the notice personally to the employee. If this is not possible, the notice can be sent by mail or in electric form. The employee is then considered to have received it on the seventh day following its sending. If a notice of termination is delivered during annual vacation, the period of notice starts when the employee returns to work.
The employer shall give a written notice in advance or pay one month’s salary in lieu of notice, in situations where termination without fault of employees (see question 1) is permitted. Furthermore, some requirements of procedure shall be followed under different circumstances, such as in cases of dismissing an incompetent employee. In this case the employer must provide a training for the employee to improve his/her performance or assign him/her to a new position. If the employee continues to display incompetency after this process, the employee may be legally dismissed. In cases of mass redundancy, employers must also follow certain conditions and procedures (see question 2).
If the employer wants to dismiss the employee with a notice period to be served, he must do it by registered letter taking effect after three working days or by bailiff notification. The letter must contain the beginning and the duration of the notice to be served (not the end because the notice period can be suspended e.g. in case of sickness). The notice period takes effect as from the next Monday after the week during which it is served to the worker.
There is no formalism for a dismissal with immediate effect and payment of an indemnity in lieu of notice.
If the employee is dismissed for serious cause, i.e. with immediate effect and without payment of an indemnity in lieu of notice, the employer must notify the dismissal by registered letter or serve it by bailiff in the three working days (Saturday included) after his knowledge of the reasons justifying the dismissal for serious cause. The reasons for the dismissal must be notified in the same way (registered letter or bailiff) in the three following working days. The employer can also decide to notify the dismissal and the reasons for the dismissal in the same letter, that must therefore be sent in the first three-day period.
Specific procedures may apply, for instance for employees’ representatives in the works council, health and safety committee or union delegation. At sectoral level, it is also possible to foresee a procedure before dismissing an employee.
If established, the works council must be informed at least a week before providing an employee with a notice of termination. After the employer has notified the works council, the council has seven days to deliberate on the termination and provide a response. This period starts the day following its information and ends upon expiry of the seventh day hereafter. This period of deliberating serves for the works council to decide whether it will explicitly approve the termination, object to the termination, or refrain from any comment. The decision taken by the works council is only relevant to post-termination matters, like a legal contest of termination.
Unless otherwise provided in an employment contract or collective bargaining agreement, no federal law requires employers to follow a formal procedure when discharging individual employees. Several states do require employers to provide notice to a terminated employee as to the date of termination and loss of employee welfare benefits, if provided, as well as issue the last paycheck within a set time period. Additionally, employees covered under an employer’s health insurance program must be provided notice as to the option to continue coverage for a specific period of time following the termination, typically 18 months, at the employee’s own expense.
In principle, an employer does not have to follow a prescribed procedure to effectively terminate an employment. The employer must only observe the proscribed periods according to art. 336c of the Swiss Code of Obligations (eg applicable in case of an employee’s absence from work due to illness; the maximum duration of such proscribed period depends on the employee’s years of employment).
Only in case of a termination of an older employee with many years of employment, according to case law, the employer has to inform and consult the employee and evaluate the possibilities to continue the employment prior to making him/her redundant. Non-compliance with these requirements merely leads to the abusiveness of the termination according to art. 336 of the Swiss Code of Obligations and not to the invalidity of the termination, however.
Generally, there is no statutorily-prescribed procedure if the employment is terminated by notice or salary in lieu of notice. It is common for employment agreements to prescribe a termination notice period, and how notice may be given to the employee. In this regard, the employer should ensure that the employee is terminated and given notice (or salary in lieu of notice) in accordance with the employment agreement. Please see our response to question 4 for more details on notice periods.
We also set out some additional considerations:
First, this is subject to any collective agreement, which might require the trade union to be notified/consulted.
Where the termination is a retrenchment, additional requirements may apply. See our response to question 2.
If an employee covered under the EA has committed an act of misconduct, the employer must conduct an inquiry before deciding whether to dismiss an employee.
If the employee is a foreigner holding a work pass, then the employer should cancel his/her work pass and seek tax clearance from the Inland Revenue Authority of Singapore.
In addition to substantive cause, the Employment Relations Act 2000 requires that an employer follow a fair process prior to termination. A fair process requires that prior to terminating employment the employer must, at a minimum:
- Investigate allegations against the employee sufficiently (as appropriate);
- Raise any concerns with the employee;
- Give the employee a reasonable opportunity to respond to the employer’s concerns; and
- Consider the employee’s explanation in relation to the allegations.
The process is underpinned by a statutory duty of good faith which requires an employer who is proposing to make a decision that will, or is likely to have an adverse effect on the continuation of employment to provide any affected employee with information relevant to the continuation of employment, and provide the affected employee with the opportunity to comment on the information before making a final decision.
An employment agreement or employer's policy may contain additional procedural requirements or consultation obligations which must be complied with prior to terminating employment.
An employee is entitled to be represented throughout a termination process by a union or other representative.
According to Italian law the dismissal must always be in writing and there are various procedures to be followed depending on the type of termination, the size of the company and the date of hiring of the employee/his or her level. In particular, the procedures are the following:
- Disciplinary procedure;
- Procedure for dismissal for objective reasons;
- Collective redundancy procedures.
The employer must promptly provide the employee with a written description of the objectionable behaviour or conduct.
The employee has the right to respond within 5 days (or the timeframe set out under the applicable NCBA) via a “justification letter”. The employee can also request a meeting with the employer if he/she wishes to provide his/her response orally and can be accompanied by an employee representative.
The employer can dismiss the employee following (i) the employee’s failure to respond to the charges laid against him/her within the above 5 days (or the timeframe set out under the applicable NCBA) or (ii) immediately following the receipt by the employer of the justification letter. In particular, the employer should explain why the employee’s justifications are not acceptable.
Procedure for dismissal for objective reasons
According to Law no. 604 of 15 July 1966 as modified by Law no. 92 of 28 June 2012, the employer must communicate in advance its intention to proceed with individual dismissal to the Labour Office of the employee’s workplace copying the same employee and explaining the reasons for the termination. This procedure applies only to the dismissal of employees hired before 7 March 2015 and employed by companies having sixty-one or more employees in the whole Italian territory or sixteen or more employees in a single business unit or in more business units within the same municipality (“Comune”). This procedure does not apply to “Dirigenti”.
Within seven days from the receipt of the above communication, the Labour Office summons the parties before the Conciliation Office for a meeting in which the parties will attempt to reach an agreement. The procedure will terminate by and not later than twenty days starting from the day in which the Labour Office sent the communication of summoning.
In case the parties reach an agreement, the employee may have access to a social security cushion which provides unemployed with a monthly indemnity that is now called ‘NASPI’ (Nuova Assicurazione Sociale Per l’Impiego) that has replaced the ASPI (Assicurazione Sociale Per l’Impiego) from 1 May 2015.
Should not the parties reach an agreement or, in any case, after seven days have elapsed without any summoning communication by the Labour Office, the employer can serve the dismissal.
The served dismissal is effective from the day the communication of the intention to serve the dismissal was sent, without prejudice for the employee’s right to notice period.
Collective redundancy procedures
The procedure provided by the law lasts maximum 75 days.
It is possible that the NCBA may provide a previous and additional consultation to be implemented before the one provided by the law.
The employer should notify the staff representatives and the relevant (external) Trade Unions of the decision to proceed to the collective dismissal. If there are not staff representatives, the notification has to be sent to the Trade Unions of the sector most representatives on a national level. If there is no existing works council, there is no obligation on the Company to organise elections for one.
Same notification has to be sent also to the competent Labour Office.
The Company is not required to inform employees generally or to ask them to elect employee representatives.
The dismissals may be served within a period of 120 days from the conclusion of the procedure unless the parties have agreed a longer term.
Under a labor profile, no approvals are required to close a unit/business. The trade unions have no veto powers on the redundancy project.
The collective dismissal procedure applies also to “Dirigenti” (previously excluded from the application of the procedure) but it does not apply to fixed-term workers and temporary workers.
Yes, as mentioned above, under Mexican legislation the termination of employment relationships must follow specific procedures.
When the employer has a justified cause for the termination, pursuant to the aforementioned article 47 of the FLL, the employer must inform the employee in writing of the date and cause or causes of the termination, this must be done within 30 days of the justified cause. This document must be brought to the attention of the employee, or directly to the Labour Board within five days of the termination, providing the Labour Board with the address the employer has on file, and requesting the Authority to notify the employee.
The lack of a written notification to the employee or the Labour Board will alone be enough to consider the separation unjustified, and consequently, the nullity of the dismissal.
If the employer does not have a cause for termination, but still would like to terminate the employment relationship by mutual consent with the employee, then we commonly suggest following one of these two procedures:
a. By executing a Termination Agreement before the Conciliation and Arbitration Labour Board, sanctioned and ratified by such Board with respect to its content, signing, delivery and receipt of the amount by the employee, as well as the signing of a settlement (finiquito) that breaks down the elements of the amount referred to in the Agreement and being paid. The advantage of this scenario is that the Termination Agreement is a public document, unassailable with respect to its authenticity in the case of a labour claim, and much more defensible evidence than a resignation letter.
b. By a signed and fingerprinted resignation letter having the following characteristics:
b.1. ADVANTAGES: No intervention by the officers of the Board required; the termination process is more agile.
b.2. DISADVANTAGES: It is a private document that, although valid, may be objected to by an employee deciding to file a labour claim and disavowing his signature and fingerprint, or alleging that he was forced or misled to sign said document.
Although a resignation letter is a unilateral and voluntary way to terminate the employment relationship, it is a common practice in Mexico to ask an employee to sign one when dismissed. The reasons behind this is that (i) there is no employment at will; and (ii) the burden of proof in litigation lies on the employer at all times, including the cause of termination or dismissal. That lack of flexibility make employers opt for a more agile way to terminate employees.
Any employer with one hundred fifty (150) employees or more who contemplates dismissing any employee must, before reaching any decision, interview the employee concerned.
Notice of such interview must be given in writing by registered mail or by hand delivery with acknowledged receipt. The letter must give an indication of the purpose of the interview and its date, time and place.
Whether dismissal requires a period of notice or is for gross misconduct, notification of such dismissal must be:
- no earlier than the day following the interview;
- no more than one week later.
If the employee does not attend the interview after being summoned to do so, notification of dismissal must be:
- no earlier than the day following the day set for the interview;
- no more than one week later.
The dismissal must be notified under penalty of invalidity:
- Either by registered letter,
- Or by hand delivery. In this case, the employee must acknowledge receipt of the dismissal letter on a copy which will be kept by the employer as proof of receipt.
The employee may request communication of the reasons, although such request must be made to the employer by registered letter within one month of the date of the notification of the dismissal. The employer must state the reasons in detail within one month further by registered letter.
- Collective layoff
- A consultation period with the workers’ legal representatives shall be followed before the collective layoff takes place. Such consultation period shall not exceed 30 calendar days, or 15 in case of companies employing less than 50 employees.
- The consultation period shall minimum deal with the possibilities of preventing or reducing the redundancy dismissals as well as mitigating their consequences through the application of social support measures such as outplacement measures or training or professional and recycling activities that could be used to improve employability.
- Notice of the opening of the consultation period shall be notified in writing by the employer to the workers’ legal representatives, a copy of which shall be sent to the Administrative Labour Authority. Spanish law also stipulates the information that such letter shall include.
- During the consultation period, parties must negotiate in good faith with a view of achieving agreement. However, there is no obligation to reach an agreement.
- Once the consultation period finishes, its result must be communicated by the employer to the Administrative Labour Authority. If an agreement is reached, the employer shall deliver a copy of it to the Administrative Labour Authority. However, if parties have not reached an agreement during the consultation period, the employer shall communicate to the workers’ legal representatives and the Administrative Labour Authority its adopted final decision related to the redundancy dismissal as well as its conditions and terms.
- Where the extinction affects more than 50% of the employees, notice shall be given to the workers’ legal representatives and as well to the corresponding authorities of the sale of the company property by the employer, except for those goods making up its normal traffic.
- Once the final decision is notified to the workers’ legal representatives, the employer should notify the individual dismissals to the affected employees according to the following procedure:
- Written notice to the employee, stating the reasons for the dismissal.
- Simultaneously with the delivery of the letter, the statutory redundancy severance payment (20 days of salary per worked year of service with a maximum of 12 monthly payments) shall be made available in such moment to the employee. However, a severance payment higher than the statutory one could be stated by the Company unilaterally or according to the conditions negotiated by the Company and the workers’ legal representatives during the consultation period.
- 15 days prior notice following the delivery of the letter must be granted before the dismissal takes effect, although the employer may choose to replace this period with the payment in lieu of notice. In any case, at least 30 days should exist between the notification date to the Administrative Labour Authority about the opening of the consultation period and the dismissal date.
- Workers’ legal representatives shall have the priority of permanence in the company. By collective bargaining agreement or agreement reached during the consultation period the parties can state permanence priorities for other employees groups such as employees with family care, disabled employees or workers above a certain age.
- If collective layoffs affect employees aged 50 years or older, companies shall have to pay an economic contribution to the Spanish Public Treasury under the terms and conditions stated in law. Please note that certain legal requirements must be met by employers to pay the economic contribution mentioned above.
- Employers shall be obliged to offer outplacement plans when collective layoffs affect more than 50 employees.
- Simultaneously with the delivery of the written dismissal letter detailing the corresponding legal reason, the statutory redundancy severance payment (20 days of salary per worked year with a cap of 12 monthly payments) shall be made available in such moment to the employee.
- Furthermore and as mentioned before, 15 day prior notice following the delivery of the letter must be granted before the dismissal takes effect, although the Company may choose to replace this period with payment of salary in lieu of notice. If the Company chooses the first option, notice that during such period of time the employee shall have to continue providing his/her services, although he will be entitled to spend 6 hours per week looking for new employment.
- A copy of the redundancy dismissal letter must be given to the workers’ legal representatives.
In any case, it is highly advisable to check the applicable collective bargaining agreement in order to determine if additional provisions shall be complied with.
There are no statutory procedures for lawful dismissal except for the required notice period of 30 days or payment in lieu of notice (please see reply to Questions 4 and 5).
In order to give effect to the termination of an employee’s services, it is imperative to identify the nature of such employee’s engagement with the establishment to ascertain whether such employee will fall under the definition of a ‘workman’ under the ID Act or not.
For employees who are ‘workmen’ as per the ID Act:
The provisions of the ID Act will be applicable in case of employees who fall under the definition of ‘workman’. In addition to fulfilling the notice period requirements and the retrenchment compensation payable to the employee as discussed in Question 2 above, the employer must ordinarily follow the ‘last-in first-out policy’ for terminating the services of workers, unless the employer records reasons for retrenching any other workman.
As discussed in Question 1 above, discharge or dismissal for misconduct, without conducting a domestic enquiry or with undue haste, in violation of the principles of natural justice, will constitute an unfair labour practice and the courts may order the reinstatement of the employee to his post.
As discussed in Question 4 above, the compliance with the S&E Act is required in relation to the notice period requirements, in case of termination of the employment of a non-workman. The termination of such non-workman, other than for misconduct, would be ‘termination simpliciter’ and will have to be guided by the terms of his employment, the principles of natural justice, and judicial precedents.