Termination of the employment relationship

An employment relationship may be terminated because of the expiry of its fixed term, dismissal, cancellation or, in special circumstances, because it is deemed cancelled. What is the difference between these?

An employment relationship may be terminated because of the expiry of its fixed term, dismissal, cancellation or, in special circumstances, because it is deemed cancelled. Both employer and employee may terminate the employment relationship when grounds for termination as provided for by law exist.

End of a fixed-term employment contract

  • A fixed-term employment contract expires without either party giving notice either when the agreed term ends or when the work agreed to be performed under the contract has been completed.
  • Notice may be given to terminate a fixed-term employment contract only if the employer and employee agree that the contract may be terminated, either in a clause in the contract itself or during the employment relationship.

End of an indefinitely valid employment contract

  • The contract is usually terminated by either the employee or the employer.

The employee is not required to give any specific grounds for giving notice. However, they are obligated to observe the period of notice.

The employer on the other hand must have appropriate and weighty grounds for the termination.

These may be financial grounds, production-related grounds or grounds related to the employee’s person.

Deterioration of financial situation

Often the reason for termination is that there is no more work available due to deterioration of the employer’s financial situation. Even if there is less work available, the employer is obligated to try to provide the employee with some other work or train them to carry out new work duties before terminating the employee’s contract.

If the employer is declared bankrupt, the employment contract can be terminated to end.

Change in ownership is not a reason for termination. Neither is the employee’s pregnancy or family leave.

The employer is entitled to terminate the employment contract of an employee on maternity, paternity, parental or child-care leave on financial and production-related grounds only if the employer’s operations cease completely.

Ground of termination related to the employee’s person

The employer may also terminate an employment contract because of the employee’s person. A valid and cogent reason may be, say, a serious breach or neglect of obligations that have an essential impact on the employment relationship.

Before termination, the employer must give the employee a warning.

If for example the employee is constantly late despite having received a warning, or if he/she is absent from work, the employer may have the right to dismiss the employee.

If the dismissal is due to reasons related to the employee’s person, the employee must always be heard before the dismissal.

If the employee so desires, they have the right to have a shop steward participate in the hearing. Also the employer must comply with the period of notice.

Check the collective agreement that your workplace complies with to see what has been agreed on the periods of notice.

Cancellation of the employment relationship

Sometimes, an employment relationship can also be cancelled. Cancellation means that there is no period of notice – the employment relationship ends immediately.

There must be an extremely weighty reason for the cancellation. The reason must be so weighty that the employer no longer can trust the employee.

For example, if the employee acts violently towards their supervisor or co-worker, is intoxicated at work, or ignores the health of others and causes danger to other people, the employer can terminate the employment relationship immediately. If the employee is absent from work for seven calendar days without a valid reason and without notifying their workplace of the absence, that can also constitute grounds for termination.

Also the employee can cancel the employment relationship if the employer violates or neglects their responsibilities in an extremely serious manner.

The reasons that justify cancellation are, say, that the employer has given misleading information to the employee on an essential point when concluding the employment contract, that the employer or their substitute has grossly jeopardised occupational safety in the workplace or otherwise injured the employee, or that the employee’s pay does not correspond to the employment contract. The right to cancel an employment contract may also come about if the employer acts violently towards the employee, or if the employee is subjected to sexual harassment in the workplace.

Trial period and cancellation of the employment relationship

The employer and employee may agree on a trial period at the beginning of the employment relationship (for more information, see the page Making an employment contract). During this period, either party may cancel the employment relationship.

The employment relationship may not be cancelled even during the trial period on discriminatory or inappropriate grounds.

Grounds on which an employment relationship may not be cancelled during the trial period include age, national or ethnic origin, gender orientation, trade union activity, political activity, or any comparable grounds.

If the employee does not perform the work up to standard, it may constitute valid grounds for cancellation. Objectively viewed, the reason must weaken the employer’s faith in the employee’s capacity to fulfil their tasks.

The employer must consult the employee before terminating the employment relationship.

The other party must be notified of termination of the employment relationship in person. If this is not possible, the notification may be sent by post or e-mail.

Before the employer terminates the employment relationship, the employee must be given an opportunity to be heard on the grounds for termination. The employee is also entitled to use an assistant, such as a shop steward, in the hearing. If the employee so requests, the employer must without delay issue a written statement indicating the date when the employment relationship is to end and the grounds for termination known to the employer.

Warning

If the employee has neglected their duties arising from the employment relationship, the employer may issue a warning.

Repeated negligence constitutes grounds for termination of the employment relationship, but principally the employee may not be terminated before being issued a warning and given a chance to amend their conduct.

If the employer decides to terminate the employment relationship because of repeated negligence, the employer must be able to prove that a warning has already been issued.  Because of this, it is in the interests of both employer and employee that warnings are issued in writing.

The employer may require the employee to sign the warning in acknowledgement of receipt. However, signing the warning does not mean that the employee accepts the content of the warning as accurate.

There are no provisions on the warning’s validity.

The employer’s warning procedure must be consistent and equal.

If an employee is not guilty of any breach or neglect, the warning is insignificant and the employer cannot appeal to it as grounds for termination. To avoid ambiguity, an employee should always verifiably dispute an unwarranted warning. This may take place orally or in writing.  What is essential is that the employee can, if necessary, prove to have notified the employer of the fact that the employee has considered the warning unwarranted.

Notice

A notice is used in so-called petty cases where the employee acts in an improper manner. It can be oral or written.

A notice can be compared to the stipulation related to the right to direct and supervise work. A notice can be used with the aim to correct employees’ slight errors in performing their work duties, and to prevent the error from taking place again.