Coronadvice 15 – A dismissal, and how to avoid paying an extra month.

Let's face it, tourism is in crisis and, although nobody wants it and despite support from the state, there will certainly be some layoffs. Some entrepreneurs with zero income simply cannot afford to pay their employees. If an employer wants to lay off employees, it is better to do so today. Tomorrow, it may cost the employer one more month in salary.

The employer may either agree on termination of the employment contract with the employee, or may terminate the contract unilaterally on grounds of the legal reasoning. The reason for dismissal due to the lack of orders or closure of the business caused by coronavirus pandemic is covered under §52 (a) and (c) of the Labour Code - redundancy of an employee.

Why is it important that the notice of termination of employment will be delivered to the employee today on 31^st March instead of tomorrow on 1^st April? With the notice of termination being delivered on the last day of the month, which is today, the notice period starts on the first day of the following calendar month (which is tomorrow, 1^st April). The minimum period of notice is two months, so the employment will terminate at the end of May. Whereas being delivered tomorrow, on the 1^st April, the notice period will start running from the beginning of the following month (May) and, with a two-month notice period, will end on 31^st June. The employer will thus have to pay one extra month of salary. However, employers should be aware of their obligation to inform the Labour Office in case they plan a mass layoff. If the employer fails to inform the Labour Office, the employment will not terminate till 30 days after informing the Labour Office.

In order to end the notice period on 31^st May, the notice must be hand delivered to the employees today. It has to be delivered, it is not sufficient to just dispatch it. The employer can serve the notice in person at the workplace, at the employee's apartment, or wherever the employee can be reached. In case the employee refuses to accept the notice, it is advisable to have at least one witness who can confirm the refusal to accept the notice.

However, the employer's financial obligations do not end with the notice. The employer should not forget that employees who have been made redundant are still entitled to redundancy payments in the minimum amount of:

- one time the average monthly earnings, if they have worked for the employer for less than one year;

- twice the average monthly earnings, if they have worked for the employer for one to two years, and

- three times the average monthly earnings, if they have worked for the employer for at least two years.

Termination of contracts for work and work performance agreements is a lot easier, and also cheaper. From these types of contract, the employer is not obliged to assign and schedule work performance in advance. If the employee does not work, respectively the work is not assigned to him, he is not entitled to remuneration. Compared to the employment contract, it can be terminated for any reason or without reason. The notice period is much shorter, being only 15 days. Further, there is no need to watch out for the end of the month since the notice period begins to run immediately on the day after the delivery of the notice. These contracts can be also terminated by an agreement.

We are preparing a special April Coronadvice for tomorrow. Stay tuned!