Termination by the employer: valid reason, just cause and job security
Termination of the employment contract by the employer: scope of job security, valid reasons, obtaining a defence statement, written and reasoned termination, notice periods, immediate termination for just cause, the reinstatement process and a pre-termination checklist.
Parting ways with an employee is one of the decisions an employer must manage most carefully. A termination made without following the procedure can end in reinstatement or compensation even if there is a good reason. In this article we go through the process using the questions you should ask before deciding to terminate.
Question 1: Is the employee covered by job security?
The employee is covered by job security if all of the following conditions are met:
- 30 or more employees work at the workplace (workplaces in the same sector counted together),
- The employee has at least six months' service,
- The contract is indefinite-term,
- The employee is not an employer's representative managing the whole business.
The contract of an employee covered by job security can only be terminated for a valid reason. For employees outside the scope, termination can be made by observing the notice period and paying severance pay; however, abuse of the right to terminate can give rise to compensation.
Question 2: What is a valid reason?
| Group of reasons | Examples |
|---|---|
| The employee's capability | Consistently low performance compared with those doing similar work, health problems affecting fitness for the job |
| The employee's conduct | Frequently arriving late for work, neglecting duties despite warnings, persistent incompatibility with colleagues |
| Business requirements | Falling sales, closure of a department, a move to new technology, restructuring |
Reasons that are not valid are also listed in the Law: trade union membership, employee representation, filing a complaint or lawsuit, race, sex, marital status, family responsibilities, pregnancy, birth, religion and political opinion, maternity leave and temporary absence due to illness.
In terminations based on business requirements, it must also be possible to show that termination is the last resort (that there was no possibility of employment in another position) and that the employer acted consistently in its decision.
Question 3: Did I follow the procedure?
- Defence: before termination for reasons relating to conduct or performance, the employee's defence must be obtained. A reasonable time is given for the defence and the process is documented in writing.
- Written and reasoned termination: the termination notice must be made in writing and the reason for termination must be stated clearly and precisely. Template: Termination notice
- Notice period: the period is observed, or pay for the period is paid in advance.
- Payments: severance pay, notice pay (if no notice was given), pay for unused annual leave and the final month's wages are paid.
- SGK: the leaving notification is filed within 10 days with the correct exit code: SGK exit codes
Notice periods
| Length of service | Notice period |
|---|---|
| Less than 6 months | 2 weeks |
| 6 months – 1.5 years | 4 weeks |
| 1.5 years – 3 years | 6 weeks |
| More than 3 years | 8 weeks |
Calculation: Notice period and pay · Severance pay
Immediate termination for just cause
In cases of serious conduct by the employee contrary to morality and good faith (e.g. theft, insulting the employer, absence without permission), the employer can terminate the contract without giving notice and without paying severance pay. Two time limits are critical:
- The right to terminate must be exercised within six working days of learning of the event,
- And in any case within one year of the event occurring.
The event must be documented with written records, witnesses and correspondence. In a dispute, the burden of proving just cause is on the employer. In the notification to SGK, one of codes 42–50 matching the event is selected.
If the employee objects
An employee covered by job security first applies to a mediator within one month of service of the termination notice; if no agreement is reached, they can bring a reinstatement lawsuit in the labour court: Mediation in labour law
If the termination is held invalid, the employer must either reinstate the employee within one month or pay compensation for non-reinstatement equal to four to eight months' wages. In addition, the employee is paid wages and other rights for the period they were not employed during the lawsuit, up to four months.
Pre-termination checklist
- Is the reason for termination documented in writing?
- If the reason is conduct or performance, was a defence obtained?
- Was the possibility of employment in another position considered?
- Is the termination notice prepared in writing, with reasons and in a form that can be served?
- Have compensation and claims been calculated?
- Is there a process for assigned items and access rights? Equipment assignment record · Employee exit checklist
Our related service: Termination and job security
Legal basis: Labour Law No. 4857 arts. 17, 18, 19, 20, 21, 25 and 26; Labour Courts Law No. 7036 art. 3.