The forthcoming amendment to the Labour Code by the Ministry of Labour and Social Affairs is intended to bring greater flexibility to the labour market, where employers have been facing labour shortages in recent years. This is to be contributed to, among other things, by new regulations on termination of employment and related institutes, which should give employers and employees greater flexibility in terminating employment relationships.
First of all, the amendment modifies the length of the notice period. According to the current regulation, the length of the notice period is 2 months, but it does not start until the first day of the month following the delivery of the notice to the other party. In practice, this can easily lead to a situation where the notice period is almost three months. Under the current arrangements, if notice is served on the other party on 2 February, for example, the employment relationship will not end until 30 April. The amendment is intended to change this. The new two-month notice period will start immediately on the date of delivery of the notice. In the case presented above, the employment relationship would therefore have ended already on 2 April.
The amendment also shortens the notice period in the event of a gross or repeated breach of an employee’s work obligations from the current two months to one month. Recall that under the current rules, an employer may also terminate the employment relationship immediately for a particularly gross breach of employment obligations. This regulation will remain in place. After just one month, instead of the current two, the notice period is also to end for an employee who does not meet the prerequisites laid down by law for the performance of the agreed work or does not meet (through no fault of the employer) the requirements for the proper performance of that work.
The amendment also merges the two existing grounds for termination under Section 52(d) and Section 52(e) of the Labour Code. Both of these grounds relate to the employee’s loss of medical capacity to perform work. While in the case of Section 52(d) the cause of this loss of capacity is an occupational accident or disease, in the case of Section 52(e) the cause is an accident or disease unrelated to work. If the employer incorrectly identifies the cause of the loss of medical capacity in the notice, i.e., e.g., gives a notice under Section 52(e), even though the cause of the employee’s loss of medical capacity is an occupational disease, not a common disease, this error results, according to case law, in the invalidity of the notice as such. This excessive formalism should be curtailed by merging the two grounds of termination. The severance pay of 12 times the average earnings to which the employee is entitled in such cases will now be covered by statutory insurance. This is not currently the case and the employer has to cover it from its own resources, which can be particularly damaging for smaller employers.
The amendment also introduces changes to the probationary period, during which both parties can terminate their relationship immediately, even without giving a reason. Under the current rules, the employer and the employee can agree on a probationary period, which may last for a maximum of three months, or six months for senior employees. The amendment would increase the limit for probationary periods to a maximum of four months, or eight months for senior employees. It will also be possible to extend the probationary period. However, in total, it must not exceed the above limits, i.e. four months for ordinary staff and eight months for senior staff.
The amendment has met with considerable criticism from trade unions, which have expressed concern about reduced protection for employees. Employers’ representatives, on the other hand, welcome the amendment. Due to the controversy, the most ambitious proposal, which was the employer’s termination of an employee without giving a reason, did not make it into the amendment. It will be interesting to see whether the employee representatives will still be able to have a significant say in the final form of the amendment to the Labour Code.
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This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.