Consequences of unlawful termination of employment

The Labor Law establishes the reasons for the termination of employment. One of the reasons is termination of the employment contract. The contract can be canceled by both the employee and the employer and it is also possible for the employer and employee to reach an agreement about termination.

Termination of employment by employer should be legal, but when it is not in addition to the employer and the employee, the role of the competent court will be significant in this situation.

Accordingly, in this text we will discuss two aspects of termination by an employer:

What is the procedure for termination of employment contract by the employer?
What are the legal consequences of unlawful termination of employment?

Before answering these questions, let us remind you that on the website of the Pavleski Law Office you can read the text Common reasons for redundancy.

What is the procedure for termination of employment contract by the employer?

We have previously written about the reasons for dismissal by the employer. However, how they are certain rules related only to some cancellation reasons, we are going to reminde you that there are four groups of reasons for dismissal by the employer:

a justifiable reason for termination that is related to the employee’s ability to work and his or her behavior
through his own fault, employee commits a breach of a work obligation
employee does not respect work discipline
a justifiable reason for termination that is related to the needs of the employer

Within each of these groups, law prescribes several grounds for termination of employment.

Measures instead of dismissal

If an employee breaks a work obligation or does not respect work discipline, the employer is not obligated to fire him, but instead he may impose on him one of the following measures. But first, we need to say that this is possible only when the employer considers that:

there are extenuating circumstances or
breach of work obligation by the employee or his failure to stick to work discipline is not of such a nature that the employer should fire him

The measures that can be imposed instead of dismissal are:

temporary dismissal from work without compensation for a period of one to 15 working days
fine in the amount of 20% of the employee’s basic salary for the month in which the fine was imposed. This measure lasts three month and it is enforced by the suspension of earnings
a notice with announcement of dismissal stating that the employer will terminate the employee’s employment contract without re-warning if within the next 6 months he or she commits the same breach of duty or non-compliance with work discipline

An employer may also impose some of these measures on an employee who does not achieve work results or does not have the required knowledge and ability to perform the jobs he is working on. In order to do this, employer is obligated to give the written notice to the employee which contains list of deficiencies in his work, instructions, and a reasonable deadline for improving work. So, only if the employee does not improve his work within that time, the employer is allowed to use this measures. However, the employer is not obliged by the law to do that, so if the employee does not follow the instructions, the employer is allowed to fire him.

Regardless of the reason for termination, the employer can impose only one of these measures on the employee. In order to do that, he is obligated to bring a written decision.

Warning form the employer

If the employee breaches a work obligation or does not respect the work discipline, the employer can dismiss him only if he has warned the employee in written form that there is a reason for termination of the employment contract and left him at least 8 days from the date of delivery in order to give a chance to employee to make a statement about that warning.

In the warning, the employer must provide the following information:

reasons for dismissal
facts and evidence which indicate that he is allowed to dismiss his employee
deadline in which employee can respond to the warning

Employment restrictions

The special rule is related to dismissal for justified reasons related to needs of the employer. Precisely, it refers to a situation where, in due to technological, economic or organizational changes, the need for a particular job has stopped or there has been a decrease in work dynamics, so the employer has no choice but to reduce the number of employees.

In that case, the employer is not allowed to employ another person at that working position within 3 months from the day of termination of employment. This rule does not apply if the employee is a person with disability or health problems and the employer is not able to provide him/her to work on the workplace which is in accordance with his/her working ability.

If, during this period of 3 months, these jobs become required, a fired employee comes before any other. That means that the employer is obligated to offer a job to employee who is fired in accordance with abovesaid rule before he offers job to another person.

In which period of time the employer can dismiss the employee?

The employer can dismiss the employee within 6 months of finding out the facts that are reasons for dismissal, but not later than one year from the date of occurrence of these reasons. This applies in following situations:

the employee does not achieve wanted work results or he lacks the necessary knowledge and ability to perform the jobs he works at
the employee commits a breach of work obligation by his fault
the employee does not respect the work discipline

If the reason for dismissal is the fact that the employee has been legally convicted of criminal act at work or in connection with work, the employer may cancel the employment contract no later than the expiration date for this criminal act.

The obligation of the employer to inform the employee about the dismissal

The employment contract can be terminated by a written decision of the employer, which must contain the explanation and instruction about legal remedy which employee can use in that case.

This decision must be given to the employee in the one of the following ways:

personally at the premises of the employer or
at the address of permanent residence or residence of the employee

Of course, it may happen that the employer was unable to provide a written decision. In that case, employer is obliged to make an official note and publish the decision on its noticeboard. After 8 days from the day the decision is published, it is considered that it was delivered to the employee.

Delivery rules are important because:

The employment terminates on the day when delivery of decision is completed, but the decision itself or the law may stipulate different day for this purpose
The next day from the day of delivery the employee is obliged to inform employer in written form if he wants to settle the dispute before an arbitrator. Namely, by a general act and a contract of employment employer and employee may anticipate that arbitrator is going to settle disputes between them.

The obligation of the employer to pay the salary to the employee

In case of termination of employment, the employer is obliged to pay to the employee the following benefits which he/her has achieved until the date of termination:

all unpaid salaries
salary compensations
other earnings of the employee which he earned in accordance with the general act and the employment contract

Special protection provided for certain categories of employees

Certain categories of employees are specifically protected from dismissal:

During pregnancy, maternity leave, childcare leave and special childcare leave the employer cannot terminate the employment contract with the employee. If, despite this rule, the employer makes a decision to fire his/her, that decision will be invalid.
An employer may not terminate an employment contract or otherwise disadvantage an employee because of his/her status or activity as employee representative, union membership, or participation in union activities.

Notice period

If the employee is fired because he/she does not achieve the required work results or does not have a required knowledge and ability to perform the jobs he/she is working on, he/she is entitled to a seek a notice period that cannot be shorter than 8 nor longer than 30 days. The duration of the notice period shall be determined by a general act or employment contract, all depending on length of employee’s years of service. Regardless of the duration, the notice period begins to run next day from the receipt of the letter of dismissal.

However, the employee may agree with the competent authority or the competent person at the employer to terminate his employment even before the expiration of the notice period. In that case, employee has right to receive the salary compensation for that time, all in the amount determined by the general act and the employment contract.

What are the legal consequences of unlawful termination of employment?

If the employment is terminated without legal basis, it is an illegal termination of employment. This fact must be established by the court in the civil proceedings. For this type of dispute the competent court is basic court, while the jurisdiction of the court is determined by place of the residence or headquarters of the employer, but the court in whose area the work is or was being performed can also be competent.

At the request of the employee, the court will decide the following:

to get the employee back to work
to pay the employee compensation for damages and payment of the contributions for the social insurance for the period in which he did not work

When the employee is not returning to the work?

Regardless of the court’s finding that the termination of employment is unlawful, in certain situations the employee does not return to work:

When the employee does not want to return to work. In this situation, the court will, at the request of the employee, force the employer to pay him compensation in the amount of up to 18 employee’s salaries, depending on time he spent working for the employer, years of life of the employee and number of familiy members who are financially supported by him/her.
When the employee wants to return to work, but during the procedure the employer proves existence of circumstances which indicate that the continuation of the employment relationship, accordingly to all circumstances and interest of both parties in the dispute, is not possible. Then the court will deny the employee’s request to return to work and force employer to pay him/her damages in double the amount determined in the previous case.

In addition to these situations, there is another possibility. Namely, it may happen that the during the procedure court establishes that the reason for termination of employment does not exist, but that the employer did not act in accordance to the provisions of the law which prescribes how the procedure for termination of employment must look like. Then the court will refuse an employee’s request for coming back to work and will obligate employer to pay him compensation in amount of 6 salaries.

In all three of these situations, compensation is determined by employee ‘s salary for the month before the month in which he has been dismissed, but the compensation amount shall be reduced by the amount of income earned by the employee on the basis of his/her work performed after the termination of employment.

How is the amount of compensation determined?

This amount is determined based on the amount of lost earnings. For this purpose, lost earnings contains the tax and contributions in accordance with the law, but not the food allowance at work, annual leave bonus, another bonuses, rewards and other incomes based on employee’s contributions in the business success of the employer. The lost earnings calculated in this way are also used as a basis for calculating and payment of taxes and social security contributions for the period when the employee did not work.

As for the payment itself, the compensation is paid to the employee in the amount of lost earnings, which is reduced for the amount of taxes and social security contributions calculated on the basis of earnings in accordance with the law.

Lost earnings are also reduced by the amount of income earned by the employee on the basis of work performed after the termination of employment.

Offences of employer

If the employer terminates an employee’s contract contrary to the provisions of the law, he is committing an offense and in that case he is obliged to pay a fine in the following amount:

from 800.000 to 2.000.000 dinars if the employer is legal entity + from 50.000 to 150.000 dinars for responsible person in that legal entity
from 300.000 to 500.000 dinars for employer entrepreneur

If the employer denies the employee’s right to a notice period, ie compensation of earnings in the case of emloyee’s termination before the expiration of the notice period, he is also committing the offense for which he is obligated to pay a fine in the following amount:

from 150.000 to 300.000 dinars if the employer is legal entity + from 10.000 to 20.000 dinars for responsible person in that legal entity
from 50.000 to 150.000 dinars for employer entrepreneur

Date: 29.04.2020.