If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
Employment & Labour Law (2nd Edition)
If the employer does not follow the prescribed procedure, the termination would be held invalid for procedural error. If the employee had challenged the termination to the Labor Relations Commission (LRC) or the courts, the available remedies are reinstatement and back-pay.
If an employer chooses not to comply with the LRC’s order, LRC will impose a compulsory fine of up to KRW 20 million (approx. USD 20,000). This compulsory fine can be levied up to twice per year but no more four times in total. The compulsory fine would be imposed even though the employer formally appeals the LRC’s order; provided that, if the decision is subsequently reversed, the compulsory fine would be returned.
Please note that these consequences of an invalid termination are the same for layoffs.
The employee may claim reinstatement via court within one month following the termination, asserting that the termination is null and void since the mandatory procedure was not followed. If the court rules against the employer as a result of the reinstatement case, then the employer shall be required either,
- to make the employee start at his/her former position and pay an amount equal to employee’s 4 months’ salary to compensate the term passed in the meantime (in such case the notice and severance pays paid by the employer shall be returned to the employer); or
- (instead of making the employee start at his/her former position) to pay an amount equal to his/her 4 months’ salary to compensate the term passed in the meantime and pay a compensation equal to his/her salary of 4 to 8 months.
If the employer terminates the employment relationship on a justified ground by paying no compensation, but the court rules that there was no justified ground, then the employee may file another lawsuit for employee receivables. In this case, the employer shall also be required to pay severance pay, notice pay and uncovered allowances and overtime payments (if any).
Failure to set out and substantiate the termination grounds may result in a rejection of the request by either UWV or district court. The district court may under special circumstances nevertheless terminate the employment, granting an additional compensation on top of the transitional payment.
An employee would be entitled to claim against the employer for (i) payment in lieu of advance notice (if no advance notice is given as required by law), (ii) statutory severance pay, and (iii) interest on all unpaid amounts. In addition, an employer would be liable to a fine and a term of imprisonment for failure to comply with the requirements under the LPA.
If the Code of Practice applying to grievances and dismissals is not followed by the employer, then a dismissal is more likely to be found to be unfair. Fairness is required in all the circumstances, including in relation to procedures followed (see question 1 above). This also applies to claims arising out of grievances, for example, discrimination claims.
An employee who is affected by their employer’s failure to follow any prescribed procedures cannot bring a stand-alone complaint in relation to such a failure, however this failure can be taken into account in relation to another complaint, for example, unfair dismissal (see question 7 above). If such a complaint is successful, the Employment Tribunal can award an uplift in compensation of up to 25%.
If an employee does not accept the severance package, if any, offered by the employer in exchange for a release, the employee may bring a civil action claiming damages for wrongful dismissal. If an employer dismisses an employee in a vindictive, dishonest, or otherwise harsh manner, the employee may also assert entitlements beyond the “economic” wrongful dismissal damages, and claim aggravated, punitive or mental distress damages.
If the employer fails to follow any of the prescribed procedures as described in response to question 7, then such behaviour shall be deemed as illegal termination and the employee is entitled to the ‘double economic compensation’ (see question 15) or reinstatement.
If the employer fails to follow the procedural requirements under the law:
(a) In terminations for a just cause, the dismissal will be valid but the employer will be required to pay nominal damages of up to PhP30,000.00 for violating the employee’s right to due process in the form of the two notices and hearing.
(b) In terminations for an authorized cause, the dismissal will be valid but the employee is entitled to nominal damages of up to PhP50,000.00 and to separation pay.
In general, if termination of employment is not made in good faith or for valid reasons, or if the employer does not meet all of the relevant requirements or process for such termination as set out above, the labor courts may decide that the termination is unlawful.
Wrongful dismissal may result in monetary compensation (usually several monthly salaries depending on the circumstances), which shall be payable by the employer. Theoretically, reinstatement of the employee is also an option (although this is rarely the primary remedy).
An employer, which is incompliant with the rules of the EPA and the CDA, may be liable to pay both economic and general damages to the employee. The economic damages can amount up to 16 monthly salaries (if the employee has been employed with the employer for less than five years), 24 monthly salaries (if the employee has been employed with the employer for more than five but less than 10 years) and 32 monthly salaries (if the employee has been employed with the employer for more than 10 years). The general damages are usually deemed low. Violations of the formal rules of the EPA and the CDA may also imply an obligation for the employer to pay general damages to the concerned union.
If the employer does not follow a fair and proper procedure, the employee could apply to the High Court for an injunction restraining the termination of his or her employment relationship.
A failure to follow a fair and proper procedure can result in an employee bringing a successful unfair dismissal claim (and or equality claim depending on the circumstances) against the employer. The Workplace Relations Commission hears such claims and can award remedies including compensation of up to two years' remuneration (limited to actual financial loss), reinstatement in the employee’s old role or re-engagement of the employee in a new role in the employer entity.
In circumstances where an employee can link the failure of the employer to provide a fair and proper procedure to one of the nine protected discrimination grounds, the employee could arguably obtain a compensatory award for both the discriminatory treatment and the termination itself.
If the employer does not hear the works council or does not provide the works council with all the relevant information the dismissal is invalid. The same consequence applies if the dismissal is not declared clearly or if it is not signed.
Failure to set out the dismissal grounds has the same effect as an absence of “real and serious cause” and entitles the employee to damages for unfair dismissal. The same applies to non-compliance with the timeframes applicable to disciplinary procedures. Other violations of the procedure (e.g. non-compliance with the required five business days’ timeframe between invitation and preliminary meetings) result in damages of a maximum of one-month’s salary.
If a court finds that the employee has been dismissed without warning them before when warning would have been necessary, the employer is deemed not to have had legal grounds for termination and is therefore liable to pay the employee compensation for an illegal termination. The minimum compensation equals to three months' and the maximum compensation to 24 months' salary of the dismissed employee. The amount depends primarily on the length of the employment relationship, the employee's age and possibility to find new employment, judgment of the procedure carried out by the employer and whether the employee has given reason for his/her dismissal. Further, if the notice period is not observed when necessary, the employee is entitled to a compensation equivalent to his/her salary notice period.
If the formalism of the dismissal with a notice period to be served or of the dismissal for serious cause is not respected, the employee will be immediately entitled to an indemnity in lieu of notice.
In case the employer does not respect the applicable specific procedures for dismissal, it will have to pay extra indemnities. For employees’ representatives at works council of health and safety committee, the extra indemnity can amount to 8 years’ salary. The employee’s representative can alternatively ask his reintegration to the company and the payment of his remuneration lost in the meantime.
Any termination by notice that takes place without the works council (if established) being informed or prior to the lapse of its period of deliberation (see question 7) is null and void.
Failure by the employer to follow the procedure set forth in the employment contract may result in any contractual remedies stipulated.
An employer may face additional consequences if a wrongful termination lawsuit is brought. The U.S. “at will” employment doctrine has been tempered in some states by a “good faith and fair dealing” provision that prohibits employers from taking advantage of an employee’s at will status. For example, an employer could be liable for terminating an employee just prior to receiving his/her bonus to avoid payment of the bonus. Generally consequences are monetary and may include compensation of lost wages and benefits, damages for pain and suffering, punitive damages, attorneys’ fees, and court costs. Other non-monetary consequences include reinstating the employee to his/her former position.
If notice is given during a proscribed period pursuant to art. 336c of the Swiss Code of Obligations, the notice has no legal effects at all. If the proscribed period falls within an ongoing notice period, the latter only stands still, however.
Non-compliance with the procedural requirements regarding a termination of an older employee with many years of employment only leads to the abusiveness of the termination pursuant to art. 336 of the Swiss Code of Obligations.
If the employer does not comply with the EA and the employment agreement, the employee may challenge the termination by filing a complaint or claim with the Ministry of Manpower or bringing a civil action before the courts for wrongful dismissal. The normal measure of damages that the employee may recover against the employer for wrongful termination is the amount the employee would have earned during the notice period, less the amount he could reasonably be expected to earn in other employment. Depending on the circumstances of the termination, there may also be reputational consequences on the employer.
The employee may raise a personal grievance in respect of the termination of employment, claiming unjustifiable dismissal on the basis of procedural fairness/due process.
The personal grievance is determined in the first instance by a specialist employment tribunal, the Employment Relations Authority (Authority). The Authority is an investigative body that is tasked under the Act to resolve employment relationship problems by establishing facts, and making a determination according to the merits without regard to technicalities.
The consequences for the employer can include reinstatement of the employee, an award for loss of earnings, compensation for loss of benefits and compensation for injury to feelings.
The Authority is required to consider whether it should direct the parties to mediation or further mediation unless there are good reasons not to do so. Mediation is arranged through the Ministry of Business Innovation and Employment’s confidential and free Mediation Service. The majority of employment relationship problems are required to go to through the mediation process prior to the Authority’s investigation meeting (if required).
If a party is dissatisfied with all or part of a determination of the Authority, it may elect to have the matter heard by the Employment Court either by way of a full rehearing of the entire matter, or a challenge based on a question or error of law or fact.
Where any party to a proceeding before the Employment Court is dissatisfied with the decision, the party may apply for leave to appeal to the Court of Appeal.
If the employer does not follow the prescribed procedures, different sanctions apply depending on the size of the type of dismissal, the size of the company, the hiring date and the level of the employee.
Of course, should the judge ascertain that the dismissal is unlawful also for other reasons (and not only for violation of the procedure), other sanctions will be applied depending on the specific circumstances.
Individual dismissal (for justified reason or just cause)
i. Employees hired before 7 March 2015
If the employer has more than 60 employees in the whole Italian territory or more than 15 in a single business unit or in several business units within the same municipality (“Comune”), according to Section 18 of the Workers’ Statute, in case of dismissals where the correct legal procedure was not followed, the employee is entitled to an indemnity ranging from a minimum of 6 months’ to a maximum of 12 months’ gross salary.
On the other hand, for smaller employers, i.e. those having up to 60 employees in the whole Italian territory or up to 15 in a single business unit or in several business units within the same municipality (“Comune”) the sanctions are different the employer could be ordered to:
1. re-hire the dismissed employee under a new employment contract; or, alternatively
2. pay the dismissed employee an indemnity ranging from 2.5 to 6 months’ salary.
The law sets out various criteria which the judge should utilise to quantify the indemnity, including: (a) the number of employees working for the employer; (b) the company's size; (c) the employee's length of service; (d) the parties' behaviour; and (e), the employment conditions in the local market.
It is up to the employer to choose between re-hiring the employee and paying the indemnity under point 1) above.
ii. Employees hired after 7 March 2015
In case of dismissals where the correct legal procedure was not followed or where reasons were not provided in the written notice of dismissal, the employee is entitled to an indemnity of one month salary for each year of service (subject to a minimum of 2 and a maximum of 12 months’ salary).
It is worth noting that if the employer has up to 60 employees in the whole Italian territory or up to 15 in a single business unit or in several business units within the same municipality (“Comune”), the indemnity payable by the employer is only half of the increased indemnity described above and therefore is equal to 1 month salary for each year of service (with a minimum of 2 months’ and a maximum of 6 months’ gross salary).
iii. Dirigenti (Executives)
The executives will be entitled to the so called “supplementary indemnity” provided by the NCBA.
i. Employees hired before 7 March 2015
If the employer does not comply with the information and/or consultation procedure requirements, the dismissal will be declared unfair and the employer will be obliged to pay the employee a compensation between 12 and 24 months' salary.
ii. Employees hired on or after 7 March 2015
If the employer does not comply with the information and/or consultation procedure requirements, the dismissal will be declared unfair and the employer will be obliged to pay the employee a compensation equal to two months' salary for each year of service, with a minimum of four and a maximum of 24 months' salary.
iii. Dirigenti (Executives)
Regarding executives, if the employer fails to comply with the information and consultation procedure requirements, executives will be entitled to a compensation of between 12 and 24 months' salary. CBAs may provide for different amounts than those provided by law.
As a general remark, it is worth noting that in the event of omission of the procedures set for by the NCBA or the Law no. 223/1991 this would be considered as anti-union behaviour under Section 28 of the Workers’ Statute. Therefore the employer will have the obligation to carry out the procedure for collective dismissal and the dismissals communicated in the absence of the procedure will be null and void. As a consequence the employer shall be condemned to reinstate the employees unfairly dismissed and pay damages.
The lack of a written notification to the employee or the Labour Board will alone be enough to consider the separation unjustified, and consequently nullify the dismissal. The employee will be entitled to full severance payment consisting of:
a. Payment of proportional parts of those labour benefits accrued on the date of the termination (i.e., Christmas bonus, vacation, vacation premium);
b. Payment of an amount equivalent to 12 days per year of rendered services, capped at twice the daily minimum wage ($80.04 pesos) for the geographic area, as seniority premium;
c. Payment of an amount equal to 3 months’ salary, paid with consolidated salary (consolidated salary is the base salary plus the proportional part of the accrued benefits) as Constitutional Severance;
d. Payment of an amount equivalent to 20 days of consolidated salary per full year of rendered services (if the employee requested reinstatement); and
e. Payment of back wages from the moment of the termination to the date on which the employer pays the awarded amounts.
If the employer fails to follow the prescribed dismissal notification, the dismissal is deemed irregular and the employee may claim compensation which may not exceed one month of his remuneration.
If the employer fails to provide the employee with the grounds within the legal timeframe or fails to provide the employee with detailed grounds characterising a “real and serious” cause, the dismissal is deemed to be without cause and therefore abusive.
Dismissal is regarded as abusive if:
- the employer fails to provide the employee with detailed grounds as required by law,
- the dismissal is not founded on valid grounds related to the employee’s aptitude or conduct, or arising from the operating needs of the business, establishment or department,
- the reasons are not genuine,
- the reasons are not serious enough,
- the dismissed employee was legally protected against any dismissal (for example, during sickness leave).
In case of disciplinary dismissal or individual redundancy, the dismissal will be considered as unfair, which consequence is the payment of the statutory unfair dismissal severance to the employee, except for the cases of employees protected from dismissals, which consequence could be (a case by case analysis shall be made) the null and void declaration.
In this latter case (null and void dismissal scenario), the employee will be entitled to the reinstatement in his/her job position plus payment of the salaries accrued from the termination date until the notification of the Court’s resolution, with the possibility to pay an additional indemnity if fundamental rights have been violated and proven before Court (some examples of employees protected from dismissals are pregnant employees, workers’ legal representatives, employees who have requested a reduction on working hours, employees who previously filed claims against the Company, etc.).
In relation to collective layoff, please take into consideration that if the consultation period has not been complied with or if the employer has not provided the corresponding mandatory documentation to the workers’ legal representatives, such collective layoff would be considered as null and void, which consequences before mentioned.
In principle, a dismissal without the 30-day advance notice or payment in lieu of notice is still valid as a notice of termination, and the employment ends at the expiry of 30 days after notice or when the employer makes payment in lieu of notice, whichever is earlier.
For employees who are ‘workmen’ as per the ID Act:
Under the ID Act, any difference between an employer and workmen arising out of the workman’s retrenchment, dismissal, discharge or termination shall be deemed an industrial dispute and the workman concerned has the right to directly apply to a Labour Court or Industrial Tribunal for adjudication of the dispute, subject to a 3 year limitation period from the date of termination. Such courts/tribunal may execute an award, order or settlement against the employer and may also set aside the order of discharge or dismissal and direct reinstatement of the workman, and provide relief on such terms and conditions as it thinks fit. Additionally, the employer may also face penal consequences and fine in the event the employer does not comply with the provisions of the ID Act.
For employees who are non-workmen:
As discussed above in Question 1, if a termination simpliciter is challenged in a court of law, courts are free to determine if such employee is being victimised or punished, and being discharged on account of his misconduct. Accordingly, courts are permitted to identify if the employer has given such employee a fair hearing in accordance with the principles of natural justice, prior to effecting his termination. In the absence of such fair hearing, the court is free to set a termination order aside, and reinstate the employment of an employee whose services have been terminated. For employees to whom the S&E Act applies, the employer may also be subject to penalties under the S&E Act.