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 (3rd edition)
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 does not follow the procedure, it is understood that he has operated a dismissal without cause so the employee will be entitled to claim the correspondent legal indemnification.
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 the employer does not follow the works council consultation procedure properly (e.g., does not provide 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.
The employee may then claim for continued employment which in practice in the vast majority of cases leads to an agreement or a settlement involving compensation (severance payment).
If the employer fails to serve the termination notice as required or within the term limits, these will not affect the validity of the termination; however, it may result in a fine issued by the Labour Authority which could €63,69/USD72,01 to €3,821/USD 4319,89 approx.
If the labour release is not executed before Notary Public, it would not be enforceable.
If an employer does not follow the termination procedure in Indonesia – the termination of employment will not be binding and the employee will be still be deemed as an employee of the employer.
Whenever the dismissal is orally served, this as to be considered as being null and void, thus being the relevant employees entitled - regardless the number of employees dismissed (individual or collective dismissals), their qualification and date of hiring or the size of the employer's business - to be reinstated in their previous position as well as to be granted with an indemnity amounting to those salaries which would have been accrued as from the dismissal date until the date of actual reinstatement (a minimum floor of 5 months of salary is provided for).
Otherwise, remedies which apply when dismissals are found to be unfair due to an employer’s breach of rules governing the statutory procedure to be mandatorily complied with when serving dismissals vary depending on the number of employees dismissed (individual dismissals or collective ones), affected employees’ qualification and date of hiring as well as the breach by the employer and the size of its business, as follows.
- middle-managers (“quadri”), white-collars and blue-collars hired before 7 March 2015: payment of an indemnity whose amount is in the range between 6 and 12 months of salary;
- middle-managers (“quadri”), white-collars and blue-collars hired as from 7 March 2015: payment of an indemnity equal to 1 month of salary per each year of service, within a minimum and a maximum floor of - respectively - 2 and 12 months of salary;
- executive status employees (“dirigenti”): payment of the so-called “additional indemnity” established by the applicable national collective bargaining agreement (the longer is the executive’s seniority, the higher is the amount of the indemnity: the actual amount of this indemnity is generally in the range between 2 and 24 months of salary; certain increases in light of the executive’s age may be provided for);
- middle-managers, white-collars and blue-collars hired before 7 March 2015 who are in force at employers which are staffed with up to overall 60 employees in Italy and employs up to 15 employees at each production unit/within each municipality: payment of an indemnity whose amount is in the range between 2.5 and 6 months of salary (to be increased up to 10 or 14 months for employees having accrued a rather long seniority);
- middle-managers, white-collars and blue-collars hired as from 7 March 2015 who are in force at employers which are staffed with up to overall 60 employees in Italy and employs up to 15 employees at each production unit/within each municipality: payment of an indemnity whose amount is in the range between 1 and 6 months of salary;
- middle-managers, white-collars and blue-collars hired before 7 March 2015: reinstatement and payment of an indemnity up to 12 months of salary whenever selection criteria are breached;
- middle-managers, white-collars and blue-collars hired before 7 March 2015: payment of an indemnity whose amount is in the range between 12 and 24 months of salary in case of breaches of the statutory procedure for collective dismissals other than the failure to comply with selection criteria;
- executive status employees (“dirigenti”): payment of a specific “additional indemnity” against unfair collective dismissals established by the applicable national collective bargaining agreement, if any, or - alternatively - payment of an indemnity whose amount is in the range between 12 and 24 months of salary;
- employees hired as from 7 March 2015: payment of an indemnity whose amount is in the range between 6 and 36 months of salary, either in case of breach of selection criteria or in case of other breaches of the statutory collective dismissal procedure.
There is a likelihood that the Industrial Court may find that the dismissal is wrongful.
If the employee succeeds in his claim, the primary remedy available to him is reinstatement together with payment of backwages (not exceeding 24 months’ salary for confirmed employees). If the Industrial Court decides that reinstatement is not expedient, compensation in lieu of reinstatement at the rate of 1 month’s salary for every completed year of service will be awarded in addition to backwages (not exceeding 24 months’ salary).
Probationers are not entitled to reinstatement and their remedy will be limited to an award of backwages not exceeding 12 months’ salary.
Fixed term employees are only entitled to their salary for the balance duration of their fixed term contract unless they fall within the ambit of the Minimum Retirement Age Act 2012.
If the employer does not comply with the procedural rules, there is a high risk that the court will find that the process conducted by the employer was not justifiable and that the decision to terminate employment would not have been made if a fair and due process had taken place. In addition to continuing to be employed, the employee may claim compensation for their loss and compensation for damage of non-pecuniary nature.
Failure to comply with the procedural due process does not render the dismissal invalid. However, the employer may be liable to pay nominal damages to the employee in the amount of up to Php30,000 (for just cause termination) or up to Php50,000 (for authorized cause termination).
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 (if a tort claim is stated), attorneys’ fees, and court costs. Other non-monetary consequences include reinstating the employee to his/her former position, although this is an infrequent remedy in the US outside of the unionized workforce.
Mattos: It depends on the type of breach, but the termination may be considered null; further, the relevant collective bargaining agreement may provide for additional penalties.
An employee would be entitled to claim against the employer for (i) payment in lieu of advance notice (if no advance notice is given as required by law), (ii) statutory severance pay, and (iii) interest on all unpaid amounts. In addition, an employer would be liable to a fine and a term of imprisonment for failure to comply with the requirements under the LPA.
The 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).
If notice is not given, or not in the prescribed form, the termination is null and void. This is also the case if notice is given by the employer during a protected period (see question 13).
If an employee is dismissed without notice in the absence of 'just cause', the termination is valid and takes effect at the time of notice, but the employee is entitled to compensation (Article 337c CO).
The amount of this compensation is equal to the salary and other statutory or contractual advantages that the employee would have received had notice been given in compliance with the statutory or contractual notice period (as applicable), minus all cost savings and income earned (or intentionally renounced) by the employee due to the end of the employment relationship. Moreover, the employee is entitled to an additional indemnity, the amount of which the court can freely decide on according to all circumstances of the case. This indemnity can however not exceed an amount corresponding to six monthly salaries.
Notice given for 'abusive reasons' is valid but entitles the employee to seek compensation (see question 12).
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.
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 (or a combination of those remedies). Reinstatement must be provided for wherever practicable and reasonable.
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.
The employee may file a lawsuit to receive damages for either wrongful or unfair dismissal.
If the employer does not comply with its obligation for a preliminary meeting (if any), the termination is deemed irregular and the employee wrongly dismissed is entitled to damages up to one month’s salary.
If the employer does not provide the reasons for terminating the employment contract without notice for gross misconduct (or does not provide them with the required level of detail or provide reasons that do not qualify as gross misconduct), then the termination is deemed unfair by a court and the employee is entitled to the applicable notice period and severance pay, if any, and damages (financial damages and injury-to-feelings damages).
In the case of a termination with notice, the employer must (if requested by the employee) provide in due time by registered mail the specific, serious and real reasons for dismissal. This is a crucial step for the employers as they may not fulfil that duty at a later stage: a termination with belated, vague or incomplete reasons is deemed unfair by courts. As a result the employee is entitled to damages (financial damages and injury-to-feelings damages).
The employer may also be ordered by courts to reimburse part or all of the unemployment benefits paid by the relevant administration (in Luxembourg or abroad) to the employee unfairly dismissed.
The employer's failure to fully observe the applicable dismissal procedure (as varying depending on the relevant dismissal ground) is ground for an unlawful dismissal claim. These are fairly common in Romania - probably since, by law, employees are not obliged to pay any judicial taxes to bring such a claim and the burden of proof lies with the employer.
In terms of potential employer exposure:
- reinstatement, if expressly requested by the employee;
- compensation of all lost wages, for the period starting with the date of the dismissal decision up until the date of the final court decision. In fact, Romania is a "double recovery" jurisdiction - meaning that the right to compensation applies in full irrespective if the employee secured alternative employment in the meantime;
- pecuniary and moral damages, if proven;
- legal fees;
- in certain circumstances, administrative liability or even criminal liability (for abuse in service) cannot be excluded; and
- finally, a general reputational concern must be factored - also considering the public character of court hearings.
In view of this, mutual agreed exits have definitely gained a lot of popularity over the last couple of years in Romania. Please see our input to questions 15 and 16 below, for details on this.
Workers dismissed without a legal cause become entitled to judicially claim any of the following requests:
- Payment of an indemnification for unfair dismissal, which would equivalent to:
- 1.5 monthly salaries per year of salaries per year of services, up to a maximum of twelve (12) salaries, for employees who have an indefinite term employment agreement.
- 1.5 monthly salaries per months that will not be worked, up to a maximum of twelve (12) salaries, in the case of an anticipated termination of a fixed-term employment agreement.
- His or her reinstatement in the workplace. In this case, the worker could as well claim an indemnification for loss of profit during the period such person was dismissed.
- Moral damage caused by the unfair dismissal.
On the other hand, workers dismissed with a legal cause but through an incomplete or irregular dismissal procedure, according to law, would only be entitled to claim through a judicial process the indemnification for unfair dismissal.
Furthermore, if it is determined that the dismissal is void (forbidden cause) or fraudulent (when the worker is dismissed by the employer’s bad faith, for non-existent events or under false evidence), the worker would be entitle to request his or her reinstatement in the workplace, along with the payment of labor benefits accrued and indemnification for moral damages.
Please bear in mind that the above mentioned is not applicable to employees in a trust and/or management position, since, according to the latest criteria applied by the Supreme Court (highest instance), they are not entitled to receive any indemnification payment for unfair dismissal, nor reinstatement, in the cases in which they have held such position since the beginning of their services.
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.
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.
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.
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.
A dismissal is more likely to be found to be unfair if the Code of Practice applying to grievances and dismissals is not followed by the employer. 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, but it can be taken into account in relation to another complaint, for example, unfair dismissal. If such a complaint is successful, the Employment Tribunal can award an uplift in compensation of up to 25%. There is also the potential for the Employment Tribunal to order reinstatement of the employee, although in practice this is rarely used.
If the employee does not agree with a dissolution of the labour contract initiated by the employer, the employee is entitled to appeal to the court within two months upon receiving the corresponding individual legal act. Employees are exempted from payment of state duty in case of any reference to the court for labour disputes.
In the case of any dissolution of the labour contract without legal grounds or in defiance of the defined procedures, the employee can be re-employed judicially, be paid for the whole period of forced leave or receive compensation in the amount of one to 12 times his/ her average monthly salary if re-employment is impossible.
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.
If the employer does not follow the procedure regarding termination, the termination will be considered null and void.