Does an employer need a reason in order to lawfully terminate an employment relationship? If so, describe what reasons are lawful in your jurisdiction?

Employment & Labour Law (3rd edition)

Argentina Small Flag Argentina

No, except in the case of discrimination and in the case of union representatives (whereby an employee may demand to be reinstated), employers are legally entitled to terminate any employment relationship at any time without any cause, and pay a statutory severance package set forth in the Employment Contract Law (“ECL”). Employers can only terminate employment relationships without having to pay severance when they have just cause to terminate the employee. Employers will have just cause when an employee commits an offense so serious that it is impossible to continue with the employment relationship. The definition of what constitutes a just cause is not clearly defined on the ECL so a case by case analysis must be conducted. However, the courts usually require employers to act with caution and to evidence that they attempted, whenever possible, to preserve the relationship by taking prior measures, such as disciplinary measures, in order to correct the improper behavior.

China Small Flag China

In China, a legal reason provided in the labour contract law (LCL) is always required for an employer to terminate an employment relationship, and such reasons are classified into two situations:

Unilateral termination due to the employee’s fault (‘Termination for cause’) – Termination is allowed only if:

  • It is proven that the employee fails to meet the recruitment conditions within the probation period; or
  • the employee seriously violates the internal rules and bylaws established by the employer; or
  • the employee causes severe damage to the employer due to seriously neglecting his/her duties or seeking private benefits; or
  • the employee simultaneously enters an employment relationship with another employer and thus seriously affects his/her completion of the tasks assigned by the employer, or the employee refuses to resolve such concerns after his/her employer points them out; or
  • the employment contract is fully or partially invalid because the employee forced the employer to sign the contract against its will by means of deception or coercion or by taking advantage of the employer’s difficulties; or
  • the employee is under investigation for criminal liabilities according to the law.

Unilateral termination without employee’s fault (‘Termination without cause’) – Termination is allowed only if:

  • The employee is sick or injured due to a non-work-related reason and cannot resume his/her original position after the expiration of the medical treatment period nor any other position arranged by the employer; or
  • the employee is incompetent in his/her position and still fails to meet the position requirements after training or transfer to another new position which his/her employer arranged; or
  • the performance of the employment contract cannot continue due to a considerable change to the objective situation on which the contract is based, and both the employer and the employee cannot reach an agreement on amending it after mutual negotiation; or
  • mass redundancy is also allowed when the employer meets the statutory conditions provided in LCL (see question 2).

Ecuador Small Flag Ecuador

First we need to specify that there are two ways that the employer may follow in order to unilaterally terminate an employment agreement:

  • Dismissal with a fair cause. Which requires an administrative procedure (called Visto Bueno) and in case of approval the employer has no indemnification obligation to the employee.
  • Dismissal without a cause. Which does not require a procedure or authorization and obliges the employer to pay an indemnification to the former employee.

In the first case of dismissal with a fair cause and, therefore, without economic compensation obligation proceeds prior to the administrative procedure called "Visto Bueno" before a Labor Inspector authority. This procedure lasts thirty days and the employer must prove that the employee incurred in one of the following faults:

  • Repeated and unjustified absences of punctuality or attendance at work or abandonment of the latter for a period of more than three consecutive days, without fair cause.
  • Serious indiscipline or disobedience to legally approved internal regulations;
  • Lack of probity or immoral behavior
  • Serious insults to the employer, his or her spouse or cohabitant partner, ascendants or descendants, or their representative;
  • Worker´s manifest inadequacy with respect to the occupation or work for which he or she was engaged;
  • Unjustified complaint against the employer regarding his social security obligations.
  • Do not abide the safety, prevention and hygiene measures required
  • Labor harassment.
  • Revelation of secrets that affects the employer; and
  • Induce the employer to conclude the contract by false certificates.

In the second case, of dismissal without a cause the employment relationship may terminate by the employer's unilateral will at any time with the payment of the compensation provided within the law and sometimes improved by collective agreements. In these cases, the employer does not need a reason to lawfully terminate the employment relationship. Except for the case of the union leader and the woman in maternity status in which cases the employer cannot terminate the agreement without a cause.

France Small Flag France

Unilateral termination of an open-ended contract must be justified by “real and serious grounds”. In the absence of such grounds, the employee is entitled to damages for unfair termination in case of litigation (please refer to question 21 regarding the potential amount of damages the employer may be ordered to pay in case of unfair dismissal).

This requirement applies to all types of dismissal, e.g. based on:

  • disciplinary reasons (the misconduct must be serious enough);
  • professional incompetence (the incompetence must be stated objectively and over a sufficient period of time);
  • physical unfitness (the company must follow the unfitness procedure and attempt to redeploy the employee within the company or the group in France);
  • economic grounds (the job elimination must rely on, for example, economic difficulties which are assessed at the level of the group or of the sector of activity of the group to which the company belongs, but only on the French territory, and the employer must also do his/her utmost to redeploy the employee).

From a formal perspective, in order to help companies to secure the dismissal procedures they may enforce, the “Macron laws” (ordonnances Macron) dated September 22, 2017 and corresponding decrees have published various templates of dismissal letters that employers can use.

Moreover, the Macron laws provide that, following the notification of termination, the employer has 15 days to provide further details to the concerned employee on the grounds of dismissal, while the employee also has 15 days to ask the employer for additional explanations.

The potential pitfalls surrounding dismissal have triggered the implementation and the success of a mutually agreed termination called “rupture conventionnelle”, which requires the employee’s agreement and validation by the labour administration but eliminates the necessity to provide justification.

Trial periods also offer a timeframe (of one to four months, potentially renewable depending on applicable terms) where unilateral termination may occur without justification.

Fixed-term contracts may only be unilaterally terminated by the employer on grounds of gross misconduct or physical unfitness. In the absence of such justification, the employer is bound to pay the salaries owed until the end of contract.

Germany Small Flag Germany

In general, yes, if the Protection Against Unfair Dismissal Act applies, which is the case if:

  • the employer has more than ten full-time employees and
  • the respective employee has been employed at that employer for more than six months. In that case, the employer can only terminate the employment relationship for either operational reasons (e.g., reduction of number of jobs due to restructuring of business) – which is by far the most important category of dismissals – or person-related reasons (e.g., long-term illness or frequent short illnesses) or misconduct (e.g., misconduct at the workplace, theft or fraud to the employer’s detriment).

If the Protection Against Unfair Dismissal Act does not apply, the employer can terminate at will as long as the dismissal is not arbitrary.

An immediate dismissal without notice by the employer (= extraordinary dismissal or dismissal for cause) can only take place when it is unacceptable for the employer to continue the employment relationship until the notice period has elapsed. This can be the case if the employee has committed a serious breach of contract (e.g., theft or other criminal offences, breach of confidence).

Chile Small Flag Chile

Yes, an employment relationship may only be lawfully terminated for the causes listed in the Chilean Labour Code. These grounds may be classified depending on whether they provide or not a right to severance pay.

Causes for termination without right to severance pay:

Termination by the worker: These are termination grounds originated in a unilateral decision or circumstance of the worker.

  • Mutual agreement of the parties:
  • Resignation of the worker;
  • Death of the worker;
  • Expiration of the term of a fixed term employment relationship; (v) Completion of the specific work or service for which the worker was hired; and, (vi) act of god or force majeure.

Termination grounds caused by employee’s misconduct:

  • Lack of probity in the performance of duties; sexual harassment; physical aggression; harassment, infliction of injuries; serious immoral behaviour affecting the worker;
  • By carrying out activities in the same line of business as the employer;
  • Unjustified absence during: (a) two consecutive days or two Mondays in a month or a total of three days in a month; and, (b) where the worker in question is in charge of an activity or machine which abandonment or stoppage implies a serious disruption to the employer;
  • The abandonment of work by the worker: (a) unjustified departure from the workplace during working hours; and, (b) refusal to perform the services agreed in the employment agreement;
  • Conduct affecting the safety or functioning of the business or the safe performance of work by other workers or the health of other workers;
  • Wilful act of damage against the facilities, machinery, tools, products or goods of the employer;
  • A serious breach of the worker’s obligations in the employment relationship.

Causes for termination with right to severance payment:

  • Business needs: Those deriving from circumstances such as the employer’s modernization or rationalization, decreases in the productivity; and changes in the economy market;
  • Termination at will: Only applicable to: (a) workers entitled to represent the employer (i.e. managers, assistant managers, agents or those having power of attorney), as long as, in all these cases they have power of attorney, and (b) workers who are within the confidence of the employer; and,
  • Employer’s bankruptcy.

Indonesia Small Flag Indonesia

Yes, an employer needs a reason to lawfully terminate an employment relationship. We set out below the reasons for termination under Law No. 13 of 2003 on Labour (“Labour Law”):

  • violation of the employment agreement, company regulation or collective labour agreement;
  • death of an employee;
  • resignation of an employee;
  • absence without leave of an employee;
  • employee’s gross misconduct;
  • detainment of an employee;
  • eficiency;
  • liquidation of the employer;
  • change of status, merger, consolidation and change of ownership of the employer;
  • asset sale (e.g., a division of the employer is sold to another entity); and
  • an employment agreement is terminated based on a final and binding decision of the Indonesian court.

Italy Small Flag Italy

Over the trial period, the termination of the employment relationship has not to rely on a "cause" or other specific reasons.

After the end of the trial period, employment contracts of employees holding the qualification of middle-manager ("quadro"), white-collar or blue-collar may be lawfully terminated by the employer only in the presence of:

  • a cause for termination ("giusta causa"), which is a breach by the employee whose seriousness prevents the continuation, even on a temporary basis, of the employment relationship (for example, theft of the employer’s goods);
  • subjective justified grounds ("giustificato motivo soggettivo"), which are a less serious breach by the employee (for example, unjustified absences from work);
  • objective justified grounds ("giustificato motivo oggettivo"), which relate to the production, the work organization or its regular operation (namely, individual redundancies).

Employment contracts executed with executive status employees ("dirigenti") are governed by specific rules set forth by national collective bargaining agreements applicable to such category of employees, which generally provide for that their dismissal must be “justified” (according to case-law precedents hereof, an executive’s dismissal is "justified" whenever it relies on reasons other than false, arbitrary, discriminatory or unfounded grounds).

Malaysia Small Flag Malaysia

Yes, an employer bears the burden to prove that the termination of an employee’s employment contract is with just cause or excuse.

Recognised grounds for termination of employment include misconduct, poor performance, retrenchment, closure of business and prolonged illness leading to medical board out.

Norway Small Flag Norway

According to the Norwegian Working Environment Act (“WEA”), an employee is protected against unjustified termination of the employment relationship. The employer therefore cannot terminate the employee’s contract unless there are justifiable reasons for such termination based on circumstances relating to the enterprise, the employer or the employee.

Termination of employment due to circumstances relating to the enterprise (redundancy) will in most cases be considered justifiable if it can be established that there is a long-term need for the enterprise to curtail operations, rationalise, restructure, or something similar. Before implementing redundancies, an employer is obliged to consider whether they can be avoided. Further, a termination of employment will not be justifiable if the employer has other suitable work in the enterprise to offer the employee. If there is a vacant position, a transfer must be offered to the employee even though he/she may need some training, provided such training will not cause unreasonable expense or inconvenience to the employer.

The specific situations when an employee can be dismissed with – or without - notice are not described in the WEA. In short, termination of employment due to the employee's circumstances must be based on the employee’s breach of contract or duties. In essence, the applicable provisions are meant to ensure that each individual employee’s situation is considered and weighed against the employer's situation. The threshold for termination is high and the employer must show objectively justifiable reasons. There is also a requirement of proportionality between the breach and the reaction.

Summary dismissal (i.e. the employee must leave the workplace immediately) is only permitted if the employee has committed a gross breach of contract. Examples of breaches that may constitute grounds for summary dismissal are severe insubordination, the flouting of safety requirements, embezzlement or any similar serious situation.

A termination of employment that lacks justifiable reason may be ruled invalid by a court if requested by the employee, with the effect that the employment relationship continues.

Philippines Small Flag Philippines

An employer may terminate an employment only for just or authorized causes provided under the Labor Code.

The just causes for termination are:

  • serious misconduct;
  • willful disobedience;
  • gross and habitual neglect of duty;
  • fraud or breach of trust;
  • commission of a crime or offense against the employer, his family or representative; and
  • other analogous causes.

Authorized causes, on the other hand, are:

  • installation of labor-saving devices;
  • redundancy;
  • retrenchment to prevent losses;
  • closure and cessation of business; and
  • disease / illness not curable within six months as certified by competent public authority, and continued employment of the employee is prejudicial to his health or to the health of his co-employees.

In addition, employment of probationary employees may also be terminated due to failure to meet the employment standards for regularization. It is imperative that the probationary employee should have been appraised of the standards for regularization and that the termination should be done on or before the end of the probationary period; otherwise, he will be deemed a regular employee and cannot be dismissed except for just or authorized causes.

Brazil Small Flag Brazil

Mattos: No. Except for employees with stability on the job (e.g., pregnant employee, labor union representative, victim of a work-related accident), the employer can lawfully terminate an employment relationship without cause. If the employee commits serious misconduct, the employer can also terminate the employment relationship for cause. The law provides a comprehensive list for the termination of the employee for cause:

A. Dishonest conduct
B. Improper conduct or lack of self-restrain
C. Helping competitors or business competing (without the employer's consent)
D. Criminal conviction of the employee, in a final court decision, provided the punishment has not been suspended
E. General negligence
F. Drunkenness during working hours
G. Trade secret violation
H. Indiscipline or insubordination
I. Non-attendance to work by the employee for more than 30 days
J. Act of violence or injury to the honor or reputation of any person during working hours, except in self-defense or legitimate defense of a third party
K. Act of violence of injury to the honor or reputation of the employer or a superior, except in self-defense or legitimate defense of a third party
L. Constant gambling
M. Acts of violation to national security dully proved in a governmental investigation

The recent labor and employment reform enacted on November 11, 2017 (“Labor Reform”) included another factor for termination with cause:

N. Loss of qualification or requirement for the job position because of employee's malicious action (e.g., if the bar suspends or decertifies a lawyer)

Thailand Small Flag Thailand

No. The general rule is that an employer is entitled to terminate employment of employees at its discretion and not required by law to specify a reason for termination. However, in this circumstance, an employer has the obligation to make payment of statutory severance pay at the rate set out by the Labour Protection Act 1998 (“LPA”) (which ranges from 30 to 300 days’ wages depending upon length of service) to an employee whose employment is terminated without reason or for reasons other than those set out in Section 119 of the LPA.

Examples of reasons for termination of employment under Section 119 of the LPA include the instance (i) where the employee performs his duties dishonestly or intentionally commits a criminal act against the employer or (b) where the employee intentionally causes the employer to suffer losses.

In the case that the employer needs to rely upon one of the grounds under Section 119 of the LPA to terminate employment without paying any statutory severance pay or to protect the employer from a claim for unfair termination, the termination notice must specify clearly details of the misconduct of the employee and the reasons for termination, otherwise, the employer would be prohibited by law from relying on such reasons and fact when defending a Labour Court claim against the employer.

United States Small Flag United States

Except as otherwise provided in an employment contract or collective bargaining agreement, no law requires employers to follow a formal procedure when discharging individual employees. Generally, employees employed on an “at-will” basis may be terminated, with or without cause or grounds, provided it is not for an impermissible reason, most commonly discrimination on grounds of a category protected by law or protected “whistleblowing” activity (reporting or objecting to certain employer activity where the employee reasonably believes that the employer has engaged in violations of specific laws). The employment contracts of executives and other highly-skilled individuals often incorporate a “just cause termination” clause, mandating that the employee may only be terminated (without severance or damages) for “cause” on specified permissible grounds.

New Zealand Small Flag New Zealand

An employer will not need a reason to lawfully terminate an employment relationship within the first 90 days of employment if the employment agreement contains a valid trial period, and the employer employs 19 or fewer employees.

In all other circumstances an employer must have a justifiable reason to lawfully terminate the employment relationship. The employer must also follow a fair and reasonable process in doing so.

Termination may be without notice (summary dismissal) if the employee commits serious misconduct. Generally, serious misconduct is an act or omission which destroys or significantly undermines the trust and confidence which underpins the employment relationship. Serious misconduct may include dishonesty (e.g. theft or fraud), violence, gross negligence or gross insubordination.

Where the employee’s action or omission involves a lesser level of misconduct, or poor performance then the employer must follow a formal warning or performance management process before termination can occur.

Other grounds for the termination of employment include abandonment, medical incapacity, incompatibility, redundancy and frustration of contract.

The question of whether a dismissal or other disciplinary matter action was justified is determined by reference to section 103A of the Employment Relations Act 2000. The test requires consideration of whether an employer’s actions, and how the employer acted were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred. The employer must be able to show that it had both substantive grounds for the decision to dismiss and have followed a fair process to arrive at its decision to satisfy the test.

Turkey Small Flag Turkey

The employer employing thirty or more employees (including all employees working in all entities and workplaces of the employer worldwide) may only terminate the employment relationship of the employee with at least six months seniority on a valid or justified ground.

If the employer does not employ thirty employees or if the employee is employed for less than six months, no reason is required to be asserted for termination.

While valid grounds may occur due to the competences or behaviours of the employee or the necessities of the employer, enterprise or workplace, justified grounds refer to more severe situations, a list of which is provided (numerus clausus) under the Turkish Labour Code (“TLC”). The list of justified grounds comprises of health reasons, immoral, dishonourable or malicious conduct or other similar behaviours of the employee and force majeure situations.

Switzerland Small Flag Switzerland

In principle, an employer can terminate the employment relationship at any time. Indeed, according to Articles 335 et seq of the Swiss Code of Obligations ('CO'), an employer does not need a reason to lawfully terminate an employment relationship, provided that the dismissal complies with the applicable contractual or statutory notice periods and that it is not made for reasons that are deemed abusive (see question 11).

In any case, the employer must state the reasons for the termination in writing only upon specific request from the employee.

Sweden Small Flag Sweden

Employers may terminate an employment with or without notice. The Swedish Employment Protection Act (“EPA”) sets forth that termination of an employment with notice requires objective grounds to be deemed valid.

A distinction of objective grounds is made between termination due to redundancy and termination due to reasons related to the employee personally. Redundancy covers all reasons attributable to the employer, e.g., shortage of work, restructuring due to downsizing or restructuring due to new technology. Personal reasons are all reasons attributable to the employee, such as the employee’s performance or conduct.

Redundancy is normally considered to be an objective ground and it is easy to prove while the assessments whether an objective ground due to personal reasons is at hand is much more complicated and difficult to determine. A termination due to personal reasons or redundancy will not be considered based on objective grounds if there are other alternatives than a termination available to the employer, such as relocating the employee to other positions in the workplace.

The employer is entitled to terminate an employment without notice, summary dismissal, if the employee is in severe breach of his obligations as an employee. This may be at hand if the employee acts disloyally (e.g. working for competitors during the employment) or commits criminal actions against the employer.

Please note that neither a termination of employment due to personal reasons, nor a summary dismissal can be made based solely on circumstances older than two months.

A termination of employment without objective grounds at hand or summary dismissal, which lacks legal grounds may be declared invalid by a court upon request by the employee.

Luxembourg Small Flag Luxembourg

If an employment contract is terminated during a valid probationary period, then the employer need not provide any reasons.

If an employment contract is terminated without notice for gross misconduct, the reasons must be explained in detail already in the termination letter.

If an open-ended employment contract is terminated with notice, the reasons must be provided in writing if they are formally and validly requested by the employee.

The reasons for termination are broadly based either on the company’s strategy (employee’s role made redundant further to a reorganisation, sale or shutdown) or on the employee’s behaviour or situation (poor performance, long term sick leave or other leave of absence, unfair competition, harassment, theft, etc.).

If the employee was not protected by law against dismissal, courts control that the reasons are explained with sufficient detail so that the employee concerned knows exactly why his employment contract has been terminated. Courts also control that the reasons provided by the employer are sufficiently serious to justify a termination (as opposed to a mere disciplinary warning) and that the employer is able to prove said reasons.

Romania Small Flag Romania

Unilateral termination implemented by the employer is permissible:

  • on the following grounds only: (i) for reasons not related to the individual (redundancy), and (ii) for reasons related to the employee, namely: (a) serious or repeated misconduct (disciplinary), (b) poor performance, (c) medical unfitness, and - least common - (d) arrest of the employee for a period exceeding 30 days; and
  • subject to strictly complying with the procedure provided by law for each case.

A simplified form of termination is also possible, at the initiative of either party, during or at the end the trial period (subject to this being explicitly agreed in the employment contract), exclusively based on a written notice, with no notice period, nor justification on termination grounds.

Peru Small Flag Peru

Peruvian legislation states that individual employment relationships could terminate only upon the following causes:

  • the worker’s death;
  • resignation;
  • expiration of the employment agreement’s term;
  • mutual agreement;
  • the worker’s permanent and absolute disability;
  • retirement; and
  • dismissal based on a serious misconduct. Regarding collective labour relationships, they could terminate only upon the existence of an objective cause (for example, the dissolution and liquidation of the company or due to economic, technological, structural or similar reasons).

Furthermore, the dismissal of a worker is legally accepted when there is a specific circumstance that justifies it. This is called: “justified cause” and its related, either to the worker’s capacity or misbehaviour.

Regarding the worker’s capacities Peruvian law establishes the following scenarios:

  • Physical or mental deficiencies that impede the worker from performing his or her tasks. For this to be a valid cause for terminating the employment agreement, the employer must be able to demonstrate that, even after making reasonable adjustments, the worker is not able to perform his or her duties and that there is not another position vacant to which the worker can be transferred without involving a risk to his or her own health or to third parties.
  • Poor performance in relation to the worker's capacity and average performance in work and under similar conditions.

Please bear in mind that this cause is not used by employers to terminate employment, considering the hard and complex work that the Peruvian Labour Authority demands in order to verify the validity of this termination.

  • The unjustified refusal of the worker to undergo a medical examination previously agreed or established by law.

Regarding the worker’s misbehaviour, Peruvian law establishes the following scenarios:

  • Criminal conviction of the worker for wilful crime by a final judicial decision.
  • The worker’s disqualification by a judicial or administrative authority for the execution of the activity performed in the workplace, provided that such disqualification lasts for a period of three (3) months or more.
  • Committing of a serious misconduct, which encloses the following situations:

Misconduct

Comments

1

Failure to comply with employment obligations, repeated opposition to work orders or failure to follow work-related or occupational safety or health regulations.

Other misconducts that are not specifically typified by Law may be included under this category. Nevertheless, it has to be relevant and severe enough to reasonably justify the termination of employment.

2

Deliberate and continuous decrease in work performance.

This cause has to be verified ex-ante by the Labour Authority. Therefore, due to the complexity in collecting evidence and verifying low performance, employers do not use this cause in practice.

3

Appropriation or attempted appropriation of goods or services of the employer, or for which the worker is responsible, or the unjustified retention or use of such goods or services.

The value of the goods is not relevant for this cause to be valid.

4

The use or handover to a third party of confidential information of the employer; the unauthorized subtraction or use of private documents and/or providing false information to the employer with the intention of causing harm or obtaining an advantage; as well as unfair competition.

The aim of advantage may be for the worker’s own benefit of or for a third party. Such advantage may be monetary or non-monetary.

5

Repeated attendance at work under the influence of alcohol or drugs.

The reiteration of such conduct will not be necessary in the cases in which, due to the nature of the worker’s duties, said situation may involve a serious risk to his or her co-workers and/or third parties.

6

Violent acts, serious breaches of discipline guidelines, and/or insults and disrespect to the employer’s representatives and co-workers, whether such acts take place inside or outside the workplace.

These acts may take place outside the workplace, but must materialize when the worker is rendering his/her services or fulfilling labour assignments.

7

Deliberate damage to the employer's property.

Please note that the employer cannot allege this cause if the damage is caused due to worker’s mere negligence (e.g. unintended, careless mistakes or minor negligence). In such cases, the employer could apply other sanctions different from dismissal.

8

Not showing up at the workplace for more than three (3) consecutive days, five (5) days within a period of thirty (30) calendar days, or more than fifteen (15) days within a period of 180 days.

The absences must be unjustified. In that regard, workers have a three (3) days period to justify any absence.

9

Repeated delays of the worker.

This cause is only applicable for workers that are subject to an effective control of their working time.

For this cause to be valid, the delays should have been brought to the worker's attention; and disciplinary actions, such as a written warnings, should have previously been applied to the worker.

10

Sexual harassment.

The employer must previously comply with a specific procedure of investigation provided by Law.

In addition, workers can be dismissed within the trial period, when their performance is not in accordance with the needs of the company, as described in Question N° 7.

Finally, official precedence has established the possibility of dismissing personnel in management and/or trust positions by communicating them the withdrawal of trust. This is a subjective nature termination cause of the employment and therefore, the employer’s decision does not need to be justified. In this regard, management positions are those that:

  • represent the employer before other employees or third parties;
  • share administrative and control functions; or,
  • those in whose activity and responsibility depend the results of the business; whilst trust positions are those who are in direct contact with the management personnel, having access to industrial, commercial or professional secrets and confidential information in general.

Japan Small Flag Japan

Yes. Regular full-time employees are usually employed for an indefinite term and the employer’s right of unilateral termination for such employees is strictly limited in Japan. Article 16 of the Labour Contract Act (‘LCA’) stipulates that ‘a dismissal shall, where the dismissal lacks objectively reasonable grounds and is not considered to be appropriate in light of social convention, be treated as an abuse of right to dismiss and invalid’.

Reasonable grounds for dismissal that have been recognised by the courts can be roughly categorised into the following 4 types:

  • incompetence or poor performance,
  • violation of a disciplinary rule,
  • business necessity, and
  • failure to join a trade union where union membership is compulsory.

Unless such a reasonable ground exists, any dismissal of an employee is void. Furthermore, even if a reasonable ground exists, the dismissal could still be void if it ‘is not considered to be appropriate in light of social convention’. What this standard entails is that the court would generally only acknowledge a dismissal to be valid if the ground for dismissal is of a serious level and no circumstances exist on the employee’s side that would render the dismissal to be overly severe.

As to fixed-term employment, a stricter rule applies to termination during the term. Article 17 of the LCA provides that, absent a ‘compelling reason’, an employer may not terminate fixed-term employment prior to its expiration.

Compared with such termination, not renewing a fixed-term employment is generally easier. However, in certain circumstances, the non-renewal of fixed-term employment could be nearly as difficult as the dismissal of employees employed for an indefinite term.

Under Article 19 of the LCA, if an employee requests the renewal of a fixed-term contract in either of the following cases, the employer shall be deemed to have accepted such request unless it can prove that there are reasonable grounds not to renew the contract:

  • if the contract has been renewed repeatedly, rendering it the equivalent of a contract with an indefinite term, or
  • where the employee had a reasonable expectation that the contract would be renewed.

In addition, under Article 18 of the LCA, a provision which came into effect on 1 April 2013, an employee who has been employed by the same employer under a fixed-term contract that has been renewed at least once and has continued in effect for more than five years may request the contract to be converted into a contract with an indefinite term (please see reply to Question 21).

The Netherlands Small Flag The Netherlands

In 2015 the Work and Security Act came into force, which amended Dutch dismissal and
unemployment laws. Now the dismissal of an employee can only be based on one of the
statutory grounds. A distinction is made between indefinite and fixed-term contracts.

  • The unilateral termination of an indefinite contract must be justified by ‘a reasonable
    ground’. What constitutes a reasonable ground is stated exhaustively in the Dutch Civil
    Code. Any termination of a contract not based on any of these grounds is invalid, unless
    the employee gives his/her consent.

    The grounds for termination stated in the Dutch Civil Code are:

    a. (Business) economic reasons, e.g. a reorganisation, relocation or close down of a
    company;
    b. Frequent illness absence, where no improvement is expected within 26 weeks and
    it is not possible for the employer to arrange cover for the employee’s workload
    during this period;
    c. Being occupationally disabled for a long period of time;
    d. Poor performance and the employee has been given sufficient opportunity to
    improve his or her performance and has been notified of the consequences of failure
    to do so;
    e. Culpable behaviour;
    f. Serious conscientious objections to his duties by the employee;
    g. Disturbed working relations, which causes an unrepairable relation between them;
    h. Other circumstances that are of such a severe nature that continuation of the
    employment contract cannot reasonably be expected.
    Termination for an urgent reason is also a possibility. This is possible only in very
    exceptional cases, e.g. gross negligence in the performance of duties, theft or fraud.
    The employer must substantiate the ground(s) sufficiently. The consequences of the
    termination will be compensated by the employer through a ‘transition payment’.


  • The unilateral termination of a fixed-term contract can be done by including a termination clause in the employment contract. An employer has to pay severance payments if he terminates without a termination clause.

  • The Act Balanced Labour Market – which is adopted by the House of Representatives
    in February 2019 and which most likely will come into force on 1 January 2020 if the
    Senate approves the legislative proposal – introduces a cumulative ground for dismissal,consisting of grounds c to h inclusive (the personal grounds). From that moment, multiple reasonable grounds combined can lead to termination of the indefinite contract.

Austria Small Flag Austria

Under Austrian law apart from the notification requirement, an employer is legally permitted to terminate the employment contract without being required to precisely specify the reasons for the same. Nonetheless, the Austrian Trade Regulation points out several lawful reasons which give the possibility for the employer to terminate the employment relationship effective immediately, e.g. disloyalty to the employer, non-compliance with the employer’s orders, persistent neglect of duties, incompetence with regard to work, falsified qualification, and/or theft.

Mexico Small Flag Mexico

An employer must have a justified cause to terminate an employment relationship. That cause should be set out in article 47 of the Federal Labour Law (FLL), which describes the justified causes for termination as follows:

  1. The employee deceives the employer, or when applicable, the union that suggested him or recommended him, with false certification or references that attribute qualifications, aptitudes, or abilities to the employee that he lacks. This reason for termination will elapse after the employee has rendered services for thirty days;
  2. The employee in performance of his job is not honest or honorable, commits violent acts, threatens, commits injuries on the employer, his family, the management or administrators of the company or establishment, or against clients or suppliers of the employer, except when provoked or in self-defense;
  3. The employee commits against one of his co-employees one of the acts detailed in the previous clause, if as a consequence the discipline and order of the workplace is affected;
  4. The employee commits, outside the workplace, against the employer, his family or the management or administration, any of the acts referred to in clause 2, if they are so serious that it makes the continuance of the employment relationship impossible;
  5. The employee intentionally causes material damage during the discharging of his duties to the buildings, machinery, instruments, raw materials, or any other assets related to the job;
  6. The employee negligently causes the damages mentioned in Section 5 provided that they are serious, and that negligence is the sole cause of the damage;
  7. The employee compromises, by his imprudence or inexcusable carelessness, the safety of the establishment or the people that are present inside it;
  8. The employee commits immoral acts, harassment or sexual harassment in the establishment or place of work;
  9. The employee reveals industrial secrets or makes known private personal matters, the disclosure of which damages the business;
  10. The employee has more than three absences in a period of thirty days without permission of the employer or a justifiable excuse;
  11. The employee disobeys the employer, without justified cause, in the course or scope of the contracted work.
  12. The employee refuses to adopt preventive measures or to follow the procedures established for avoiding accidents and illnesses;
  13. The employee arrives at work intoxicated or under the influence of some narcotic or intoxicating drug, except in the latter case, where there is an existing doctor’s prescription. Before beginning his service, the employee must bring this to the attention of the employer and present the prescription from the doctor;
  14. Any implemented sentence that imposes prison time on the employee that prevents him from completing his employment relationship;

    14. B is. Lack of documents required by laws and regulations necessary for the provision of services, when the responsibility of the worker, and in excess of the period specified in Section IV of Article 43.

  15. Those issues similar to those established in the previous sections that would have serious consequences.

For administrative or salaried employees, there is a special cause for termination, referred to in article 185, when there is a sufficient and reasonable motive of loss of trust in the employee’s work.

Employees engaged in sales can be terminated with cause, if there is an unjustified, important and constant reduction in sales.

In order to lawfully terminate an employment relationship with just cause, the employer must inform the employee in writing of the date and cause or causes of the termination. This document must be brought to the attention of the employee, or directly to a Labour Board, within five days of the termination, providing the Labour Board with the address the employer has on file and requesting they 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, nullify the dismissal.

United Kingdom Small Flag United Kingdom

An employer can effectively terminate the employment relationship for any reason. Employees are entitled to be given written notice of the reason for termination. Only some reasons are lawful and depending on the reason, the employer may be liable to pay compensation to the worker. Although uncommon in practice, the Employment Tribunal can order that the worker be reinstated or reengaged in their original employment. Employees (but not the broader category of workers) who meet the minimum qualifying period of employment of two years or more are protected from unfair dismissal. In order to avoid liability for unfair dismissal, an employer must only dismiss a protected employee for one of five fair legal reasons set out in the Employment Rights Act 1996. The five fair reasons are;

  • the capability or qualifications of the employee;
  • the employee’s conduct;
  • redundancy
  • illegality and
  • some other substantial reason. A dismissal for one of these reasons is potentially fair but, to avoid liability for unfair dismissal, the employer must also ensure that the dismissal is fair in all the circumstances. Following a fair dismissal process is important, as is acting consistently.

Some reasons for dismissal are automatically unfair, whatever the circumstances. For example, where an employee is dismissed for asserting certain legal rights, or because the employee has made a protected disclosure (i.e. they are a whistleblower). The minimum qualifying period of employment is not generally required to bring a claim for automatic unfair dismissal.

An employer who dismisses an employee on the grounds, whether directly or indirectly, of one of the characteristics protected from discrimination under the Equality Act 2010, will be liable for a discrimination claim, in addition to an unfair dismissal claim.

Armenia Small Flag Armenia

An employer can dismiss an employee only when have reasons and in case defined by Labour code of Republic Armenia.

The employment contract can be terminated in cases which is menthioned in Labour Code of Republic Armenia, but most spreads cases are:

  • By agreement of the parties, under any terms agreed between the employer and the employee, without any specific limitations.
  • By the employee, by presenting a written notice to the employer not less than one month before leaving the position, without explaining the grounds or giving any other explanation (in case of, for example, chronic illness, the notification term can be decreased).
  • By the employer, where there is a good reason under Article 113 of the Labour Code of Armenia and the legal procedures are observed.

The good reasons include:

  • disciplinary violations by the employee (mainly, showing up to work drunk, under influence of drugs or being absent for a whole day without excuse);
  • the employee's non-compliance with their employment obligations;
  • the employee having reached retirement age;
  • in case of restoration of the employee in his previous job;
  • failure by the employee to fulfil the duties entrusted to him by the employment contract or the internal disciplinary rules without a valid reason;
  • in case of loss of confidence in the employee;
  • in case of long-term employee disability;
  • in case of refusal or evasion from the compulsory medical examination;
    or
  • liquidation of the organisation-employee
  • staff reductions/layoffs. In the presence of the grounds under the Labour Code.

South Korea Small Flag South Korea

Korea is not an at-will termination jurisdiction. Instead, employee terminations in Korea require just-cause. Just-cause is a very high standard to satisfy. Courts have defined just-cause abstractly as a “cause that is attributable to the employee that renders the continued employment impossible from a societal perspective.”

Courts consider the totality of the circumstances when determining whether just-cause existed for an employee’s termination. Examples of reasons that may constitute sufficient just-cause include, but are not limited to, (i) serious and repeated violation of an internal employment regulation, (ii) conviction of a serious crime; (iii) falsification of one’s resume and detrimental reliance by the company, (iv) disclosure of trade secrets, and (vi) workplace sexual harassment. A complete business closure may also constitute just-cause under Korean law.

Croatia Small Flag Croatia

An employer always needs to have a lawful reason to terminate an employment relationship. Under the Croatian Labour Law Act there are two ways for an employer to lawfully terminate the employment relationship:

  • Regular notice of termination
    • Business-conditioned termination due to economic, technological or organisational reasons
    • Termination on personal grounds when the worker is unable to offer satisfactory work performance due to his specific permanent characteristics or capacities
    • Termination due to the worker's misconduct
    • Termination due to incompetence during probationary period
  • Extraordinary notice of termination.
    The employer has a just cause to terminate permanent or temporal employment contracts without observing the notice period if due to a severe breach of obligations from the employment relationship the continuation of the employment relationship is not possible.

Ireland Small Flag Ireland

Under common law, an employer can terminate an employment relationship for no reason provided the employer terminates in accordance with the contract of employment, including giving notice. However, "no fault" dismissals carry certain risks. An employee could seek to restrain their dismissal by way of an injunction in particular circumstances, therefore legal advice should be obtained before terminating employment without cause.

Under statute, the dismissal of an employee is presumed to be unfair unless the employer can show substantial grounds justifying the dismissal. To bring a claim under the Unfair Dismissals Acts 1977-2015, an employee must normally have one year's continuous service, but there are limited exceptions to this qualification.

The following are considered fair reasons for dismissal:

  • redundancy
  • reasons relating to the capability, competence or qualifications of the employee
  • reasons relating to the conduct of the employee
  • an employee being unable to work or continue to work without the employer contravening its legal obligations

Certain dismissals are automatically unfair for any of the following reasons:

  • membership or proposed membership of a trade union or engaging in trade union activities
  • religious or political opinions
  • legal proceedings against an employer where the employee is a party or witness
  • race, colour, sexual orientation, age or membership of the Traveller community
  • pregnancy, giving birth or breastfeeding or any matters connected with pregnancy or birth
  • availing of rights under legislation to maternity leave, adoptive leave, paternity leave, carer's leave, parental leave or force majeure leave
  • unfair selection for redundancy
  • making a protected disclosure (i.e. whistle-blowing)

In addition to proving that there were fair reasons for dismissing an employee, an employer must also show that it followed fair procedures in effecting the dismissal and that it acted reasonably in all the circumstances.

An employee can try to restrain their dismissal by a statutory injunction if they can demonstrate substantial grounds to contend that their dismissal would not have occurred but for having made a protected disclosure.

In addition, dismissal based on any of the nine discriminatory grounds is unlawful under the Employment Equality Acts 1998-2015. These nine grounds are gender, civil status, family status, age, disability, religious belief, race, sexual orientation and membership of the Traveller community.

Bolivia Small Flag Bolivia

In Bolivia an employer needs a legal reason to terminate an employment relationship according to the labour law in the 16th article, which means that the employee has to make, for example:

  • Damage in work materials.
  • Reveal industrial secrets
  • Actions that affect the industrial security.
  • Leave work for more than six days whit out permission.
  • Breach of contract
  • Renounce the work
  • Stealing in the place of work.

Monaco Small Flag Monaco

Permanent contracts

1.1.1 Dismissal without stating grounds

The law provides that permanent contracts can always be terminated by either party willingly. The termination shall take effect at the end of the notice period. In this event, the employer does not have to give any reasons.

However, the employer must not abuse this unilateral termination option.

Thus, the Case-Law considers that the employer cannot dismiss without stating grounds to conceal unlawful reasons (discrimination) or to deny Laws of public order, and specifically:

- Those relating to redundancies (see question 2);
- Those relating to the protection of certain employees (see question 10).

Finally, the Case-law considers that the employer must respect the employee’s rights and the circumstances of the termination must not be wrongful (see question 7).

1.1.2 Dismissal with a valid reason

Permanent contracts can also be terminated on real grounds such as, without being exhaustive:

- disciplinary reasons;
- professional incompetence;
- physical unfitness;
- economic grounds.

1.2 Fixed-term contracts

Fixed-term contracts cannot be terminated unilaterally by the employer without stating grounds.

Such contracts may be terminated before the fixed term by the employer on grounds of serious reason, gross misconduct, force majeure or those set out in the contract or the company’s internal regulations.

They can also be terminated before their end by the common will of both parties.

Singapore Small Flag Singapore

The employer generally does not need to provide a reason if it terminates the employment relationship with notice or salary in lieu of notice.

Any such termination should be conducted in accordance with the employment agreement and the Employment Act (Cap. 91) (“EA”), if it applies.

However, there is some authority that an employer may not terminate a fixed term contract by notice or salary in lieu of notice.

Introduction to Singapore Employment Law

By way of background, the EA is Singapore’s main employment legislation, and was recently amended as of 1 April 2019. It covers generally all employees, but does not cover the following:

(a) Seafarers;
(b) Domestic workers; and
(c) Statutory board employees or civil servants.

Part IV of the EA, which sets out rest days, hours of work and other conditions of service, only applies to the following categories of employees:

(a) Workmen (doing manual labour) with a basic monthly salary not exceeding S$4,500; and
(b) Employees who are not workmen but are covered by the EA with a basic monthly salary not exceeding S$2,600.

Part IV of the EA does not cover all managers or executives, regardless of their salaries.

Other statutes and the common law may also apply in various situations. Finally, the Ministry of Manpower (“MOM”), together with its tripartite partners, the National Trades Union Congress (“NTUC”) and the Singapore National Employers Federation (“SNEF”), has issued various employment guidelines and advisories. While these guidelines and advisories are not legally binding, MOM may take steps against employers who do not comply with certain guidelines or advisories.

Updated: June 26, 2019