Employment may end independently of the will of the parties to the employment relationship (by force of law), by their mutual agreement, or by the will of only one contracting party (dismissal by the employer or resignation by the employee).
Termination by force of law
Employment ends automatically once the legally prescribed conditions are met — conditions that objectively prevent the employee from working (for a shorter or longer period, or permanently).
The decision on termination in these cases has a declarative character — it merely acknowledges (does not establish) the existence of the grounds for termination.
Example: reaching 67 years of age
When an employee reaches 67 years of age and at least 15 years of insurance service, employment ends on the day the final decision is delivered.
Both conditions must be met cumulatively: 67 years + 15 years of service.
The concept of permanent inability to pay
A debtor (employer) in bankruptcy is deemed permanently unable to pay if:
- It cannot meet its monetary obligations within 45 days of their due date, and/or
- It has completely suspended all payments for 30 consecutive days
Over-indebtedness: assets below liabilities (taking expected income and the type of assets into account).
Liquidation of a company
Under the Companies Act, liquidation may be:
- Voluntary — when the company has sufficient funds to cover its obligations
- Compulsory
Important: in voluntary liquidation, the Labor Law obliges the employer to pay severance to employees in advance in the amount of two of the employee’s average monthly net salaries (or two average net salaries — whichever is more favorable for the employee).
Prior payment of severance is a precondition for entering voluntary liquidation proceedings.
Mutual termination of employment
Mutual termination arises by agreement of the parties’ wills. Features:
- Written form is mandatory
- Must contain the date of termination of employment (specified by date)
- The initiative may be taken by the employee or the employer
- The employee cannot withdraw the initiative after the employer has issued a decision to accept it
A mutual termination of the employment contract must be certified by a notary.
Dismissal by the employer
Before issuing a dismissal, the employer should pay attention to:
- The type of employment — fixed-term or indefinite
- The reason for dismissal — whether it is justified
- The moment the circumstance justifying dismissal arose
- The dismissal procedure — that it is fully carried out in accordance with the law
- The payment of all wages, allowances and other receipts owed to the employee up to the date of termination
Expiry of a fixed-term contract
The simplest way — the contract terminates by force of law upon expiry of the term. In practice, a decision is issued for the purposes of deregistration with insurance funds.
If grounds for dismissal arise during the term, the employer may dismiss the employee before the expiry, by the same procedure as for indefinite-term contracts.
Dismissal of an indefinite-term contract
The most common reasons for dismissal:
- Breach of work duties
- Failure to observe work discipline
- Deficiencies in performance or abilities of the employee
It is critical to fully comply with the dismissal procedure prescribed by the Labor Law.
Annual leave before termination
The employer is obliged to enable the employee to take annual leave.
If the employee has not fully used the annual leave through the employer’s fault, the employee may claim damages in an employment dispute.
Alternative: the employer may pay compensation for unused annual leave — no later than 30 days from the date of termination of employment.
Final payments — 30-day deadline
Regardless of the manner of termination, the employer is obliged to pay the employee:
- All unpaid wages
- Wage compensation
- Other receipts (transport costs, hot meal)
Deadline: no later than 30 days from the date of termination of employment.
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