Where an employment relationship becomes intolerable for one of the parties, the legislature has allowed a departure from the ordinary routes to termination. The employee’s right to immediate termination for just cause is a statutory power that allows the contract to be brought to an end by a unilateral declaration of intent without waiting for a notice period. The source of that power is Article 24 of the Labour Act No. 4857.
Unlike ordinary terminations, this form of termination is not tied to a notice period. Where one of the grounds listed in the statute arises, the employee may bring the contract to an end immediately, without any obligation to give the employer prior notice; even so, they retain the right to claim the entitlements that have accrued, severance pay first among them.
Below we address the grounds for termination under Art. 24 of the Labour Act, the period within which the right must be exercised, the items that may be claimed after termination, and the procedural conditions required in practice.
The Concept of Immediate Termination for Just Cause
Immediate termination for just cause is an extraordinary form of termination that allows the contract to be brought to an end by one of the parties without waiting for a notice period. Here the continuation of the employment relationship has, within the framework of the rule of good faith, become unbearable for one of the parties; maintaining the contract can therefore no longer be expected in law.
For the employee, this right is regulated in Article 24 of the Labour Act No. 4857. Under that provision, the employee may unilaterally bring their contract to an end where there are health grounds, circumstances contrary to the rules of morality and good faith, or compelling reasons.
Among the grounds most frequently relied on in practice are the complete non-payment or late payment of wages, underpayment, mobbing, insult, sexual harassment, the worsening of working conditions and misleading statements by the employer.
What Does Immediate Termination Mean?
Immediate termination brings the employment contract to an end with prospective effect and without a notice period. The contract ends the moment the declaration of termination reaches the other party. This feature distinguishes it from the ordinary forms of termination and places it outside the notice period.
How It Differs from Termination with Notice
In termination with notice, the contract is brought to an end in compliance with the notice periods laid down in the statute. The parties are obliged to observe those periods; otherwise notice pay comes into play.
In immediate termination for just cause, by contrast, there is no question of a notice period. Where just cause exists, the employee may bring the contract to an end at once. In such a case the employee is, as a rule, entitled to severance pay, but may not claim notice pay.
The Structure of Art. 24 of the Labour Act
The statute groups the employee’s grounds for termination for just cause under three headings:
- Compelling reasons
- Circumstances contrary to the rules of morality and good faith
- Health grounds
This enumeration is exhaustive in nature; the heading “contravention of the rules of morality and good faith”, however, is broadly interpreted in practice and is shaped by the case law of the Court of Cassation.
The Distinction Between Termination with Notice and Termination for Just Cause
Termination with notice is one of the ordinary routes by which a contract comes to an end and is effected in compliance with the notice periods. Termination for just cause, by contrast, is an extraordinary route; it comes into play in serious breaches where the continuation of the employment relationship cannot objectively be expected.
The consequence of this distinction is as follows: in termination for just cause no notice period applies, the termination takes effect immediately, and the parties’ rights to compensation are tied to different principles.
Grounds for Termination for Just Cause Under Article 24 of the Labour Act
Article 24 of the Labour Act No. 4857 regulates the power of immediate termination granted to the employee under three headings: health grounds, circumstances contrary to the rules of morality and good faith, and compelling reasons. Where one of these grounds arises, the employee may bring their contract to an end by a unilateral declaration of intent without waiting for the notice period.
Whether just cause exists is assessed according to the circumstances of the particular case. In terminations based on health grounds in particular, it is required that the work be shown by objective data to pose a serious risk to the employee.
Health Grounds (Labour Act, Art. 24(I))
Article 24(I) of the Labour Act grants the employee the power of immediate termination where there are circumstances endangering their health or life. What is decisive in terminations of this kind is that the continuation of the employment relationship cannot reasonably be expected of the employee.
The Work Posing a Danger to the Employee’s Health
Where the nature of the work, the working environment or the conditions at the workplace pose a serious threat to the employee’s health or life, the power of termination for just cause arises.
A failure to take the necessary occupational health and safety measures, being made to work on dangerous machinery without protective equipment, assignment to heavy work harmful to health, or employment in work unsuited to the employee’s state of health may be assessed within this scope.
In such an allegation, it is important that the danger the work poses to the employee be established by a medical report, workplace records or an examination by a court-appointed expert.
Contagious Illness of the Employer or of Other Employees
Where the employer or the persons with whom the employee works contracts a contagious illness, or one carrying a serious risk to the employee’s health, and this threatens the employee, immediate termination may be resorted to.
The criterion required here is that the illness give rise to a concrete and serious danger for the employee. Temporary or minor ailments do not count as just cause. Where, on the other hand, no protective measures are taken at the workplace despite the existence of a contagious illness, it is legally open to the employee to bring their contract to an end immediately.
Contravention of the Rules of Morality and Good Faith (Labour Act, Art. 24(II))
Article 24(II) of the Labour Act gives the employee the power of immediate termination in the face of conduct by the employer contrary to the rules of morality and good faith. This sub-paragraph is the ground most broadly interpreted and most frequently relied on in practice.
The legislature has given a limited number of examples here; the concept of “contravention of the rules of morality and good faith”, however, has been broadened by decisions of the Court of Cassation. The real question is whether the employer’s conduct has objectively rendered the continuation of the employment relationship unbearable.
The fundamental criterion is that maintaining the contract has, within the framework of the rule of good faith, become something that can no longer be expected of the employee.
Non-Payment of Wages
Wages are an essential element of the employment contract. The complete failure to make this payment, which is the return for the employee’s labour, or its continual postponement, is the most typical ground for termination for just cause on the employee’s side.
In the practice of the Court of Cassation, the following circumstances are regarded as sufficient:
- Arbitrary payment practices
- Continual delays that have become habitual
- The complete non-payment of wages
The fact that part of the wages has been paid does not alter the outcome; payment must be made in full and on time.
Underpayment of Wages and Failure to Provide Ancillary Benefits
Not only basic wages: the non-payment of contractual wage components such as overtime, premiums, bonuses, and travel and meal allowances may also constitute a ground for termination for just cause. Under this heading the following practices stand out in particular:
- Declaring wages to the SGK on the basis of the minimum wage even though a higher wage is in fact paid
- Making payments in cash by hand
- Drawing up the payslip contrary to the truth
- Failing to pay for overtime work
The circumstances listed are characterised as conduct by the employer contrary to the rule of good faith.
Mobbing at the Workplace
Systematic pressure, intimidation, exclusion, humiliation and psychological harassment directed at an employee are regarded as mobbing. Three elements are required before this characterisation can be made:
- Damage to the employee’s personal rights
- The conduct being systematic
- Its showing continuity
Mobbing is a breach that damages the employee’s mental integrity and constitutes a ground for termination for just cause. Where the conditions are met, non-pecuniary damages may also be claimed.
Sexual Harassment
Sexual harassment by the employer, by the employer’s representative or by another employee at the workplace is among the gravest grounds for termination for just cause. In such a case the employee may;
- If they wish, initiate a criminal investigation,
- Claim pecuniary and non-pecuniary damages,
- Exercise the power of immediate termination.
In the face of sexual harassment, it is not legally possible to expect the employee to continue working at the workplace.
Insults and Conduct Damaging to Dignity
Where the employer, in relation to their employee;
- Applies psychological pressure,
- Makes threats,
- Uses humiliating expressions,
- Utters insults
this amounts to a breach of personal rights. In the practice of the Court of Cassation, serious words and conduct that damage the employee’s dignity are treated as a ground for termination for just cause. As the employment relationship rests on a foundation of trust, where that trust is severely shaken the continuation of the contract cannot be expected.
Misleading Statements and Deception
Where, at the time the contract is concluded or during its continuation, the employer;
- Presents the working conditions as other than they are,
- Describes the job definition contrary to the truth,
- Represents the amount of the wage differently
this may amount to deception of the employee. Conduct of this kind causes the employee’s intent to be vitiated and may constitute a ground for termination for just cause.
Worsening of Working Conditions
Where a substantial change is to be made to the working conditions, the employer must notify this in writing and obtain the employee’s consent. Substantial changes made without consent are unlawful.
Within this scope the following practices may be treated as grounds for termination for just cause:
- Assigning the employee to work unsuited to their qualifications
- Increasing the workload to an excessive degree
- Changing the place of work in an unreasonable manner
- Reducing the wage
The change must be both to the employee’s detriment and substantial in nature.
The Question of Proof in Termination for Just Cause
An employee alleging termination for just cause bears the burden of proving the ground relied on. It is therefore important in practice that evidence be gathered before the termination, that the notification be made in writing and that, where possible, a notarial warning be used.
Compelling Reasons (Labour Act, Art. 24(III))
Under Article 24(III) of the Labour Act, where a compelling reason arises at the workplace at which the employee works and work is halted for more than one week for that reason, the employee may terminate their contract immediately for just cause.
A compelling reason denotes extraordinary events occurring outside the will of the parties, unforeseeable and unpreventable in advance, that render the performance of the work impossible. As the continuation of the employment relationship is in practice impossible in such circumstances, the statute grants the employee the power to bring the contract to an end.
The situations that may count as compelling reasons in practice are as follows:
- Production at the workplace becoming entirely impossible
- Work being halted because of an epidemic
- Closure of the workplace by the official authorities
- The declaration of war, mobilisation or a state of emergency
- Natural disasters such as earthquake, flood and fire
For the power of termination to arise, the compelling reason must have halted the performance of work at the workplace for at least one week. Short-lived and temporary disruptions are not assessed within this scope.
During the first week the employment contract is suspended, and the payment of half wages to the employee may come into play during that period. Where the situation exceeds one week, the power of termination arises.
The existence and duration of the compelling reason are assessed separately within the circumstances of each event.
The Time Condition in Termination for Just Cause: The Six Working Day Rule
The power of immediate termination cannot be exercised without a time limit. Under Article 26 of the Labour Act, the power of termination based on the rules of morality and good faith must be exercised within 6 working days from the date on which the ground became known and in any event within one year from the date on which the act took place. This period is preclusive in nature.
The legislature introduced this limit in order to prevent the power of termination from being exercised arbitrarily and at uncertain intervals.
The Field of Application of Art. 26 of the Labour Act
The provision operates in particular in cases of contravention of the rules of morality and good faith falling within Art. 24(II). Accordingly, if the employee does not exercise their power within 6 working days from the date on which they learned of the ground, they cannot subsequently terminate on the basis of the same fact.
Where the ground is a continuing breach, however (the non-payment of wages being an example), each new breach may start a fresh period.
The Date of Knowledge
The starting point of the six working day period is the date on which the employee actually learned of the ground for termination, and it is established according to the particular features of the case. The following examples are instructive in practice:
- For mobbing, the date on which the systematic conduct was noticed
- For insult or harassment, the day on which the incident occurred
- For the non-payment of wages, the passing of the payment day
The Start and Calculation of the Period
The period begins on the first working day following the date of knowledge and is calculated as 6 working days. Weekly rest days and official holidays are not counted.
If, for example, the employee learned of the ground on a Monday, the period begins to run on the Tuesday and expires at the end of the following 6 working days.
The Consequences of Missing the Period
A power of termination for just cause not exercised within six working days lapses. The employee can no longer terminate on the basis of the same fact, and any termination they effect may be treated as unjustified.
Where the power is not exercised in time:
- Compensation claims may be dismissed,
- The termination may be characterised as a resignation,
- The employee may lose their severance pay.
For this reason the accurate identification of the ground, the date of knowledge and the period before termination is of great importance.
The Employee’s Rights After Termination for Just Cause
Where an employee brings their contract to an end for just cause under Art. 24, they retain the right to claim the entitlements that have accrued, severance pay first among them, even though the termination originated with them. Notice pay, by contrast, does not come into play.
The Right to Severance Pay
In termination for just cause, the employee becomes entitled to severance pay provided they have at least 1 year of service at the workplace. So long as the termination rests on just cause, it is not characterised as a resignation and the right to compensation does not lapse. The calculation is made on the basis of the employee’s last gross wage, taking 30 days’ wages for each full year. For the details of the subject, our note entitled Can an Employee Who Resigns Claim Severance Pay? may be consulted.
Unpaid Wage Claims
The employee may claim all wage items left unpaid up to the date of termination. These items may arise as delayed wages, shortfalls in wages underpaid and salaries never paid at all. In respect of wage claims, the application of the highest interest rate applied to deposits may come into play.
Overtime Pay
An employee whose overtime work has gone unpaid may claim that entitlement. Overtime pay is calculated on the basis of the hourly wage uplifted by 50%. In the event of termination for just cause, this item too is among the claims that may be made, as is severance pay.
Untaken Paid Annual Leave
Payment for periods of annual leave not granted as at the date of termination may also be claimed. The calculation is made on the basis of the last gross wage in force at the date of termination, and interest runs on the claim from the date of termination.
Premiums, Bonuses and Other Wage Items
All rights in the nature of wages, such as weekly rest day pay, premiums, bonuses, and travel and meal allowances, payable under the employment contract or by workplace practice may be claimed.
The non-payment of these items may on the one hand constitute a ground for termination for just cause and may on the other be made the subject of a separate claim after termination.
Non-Pecuniary Damages (in Particular Cases)
Where the termination is based on mobbing, insult, sexual harassment or a serious breach of personal rights, non-pecuniary damages may be claimed if the conditions are met. This requires the gravity of the breach and damage to personal rights.
Notice Pay Does Not Come Into Play
In immediate termination no notice period applies, because this form of termination is not ordinary but extraordinary in nature. The notice periods regulated in Art. 17 of the Labour Act are valid only in terminations with notice. In termination for just cause the contract comes to an end immediately upon the declaration reaching the other party.
The employee therefore cannot claim notice pay. Equally, there is no question of their paying notice pay to the employer on the ground that they did not observe the notice period; there is no termination subject to a notice period here.
The critical point here is this: if the termination does not in reality rest on just cause and it is established in the proceedings that the conditions were not met, the act may be assessed as a resignation or as an unjustified termination. In such an outcome the employee;
- May face the risk of paying notice pay to the employer if the conditions arise,
- May lose their severance pay.
In brief summary:
- The outcome changes if the termination is treated as unjustified.
- The employee does not pay notice pay.
- The employee cannot claim notice pay.
- In termination for just cause there is no notice period.
As can be seen, the fact that notice pay does not come into play depends on the termination being accepted as justified in law.
How Should Termination for Just Cause Be Effected?
The employee must observe certain procedures when exercising the power of immediate termination. As decisive as the existence of the ground is that the act be effected in the proper form and be capable of proof. Terminations that are procedurally defective or cannot be proved may not be treated as justified and may give rise to a loss of rights for the employee.
Is Written Termination Mandatory?
The statute lays down no express requirement of written form for termination for just cause. Even so, it is important that the notification be made in writing, in order to facilitate proof and to prevent disputes that may arise later.
The written notification should contain the following three matters:
- A statement of the date of termination
- A written account of the incident underlying the termination for just cause
- A clear statement of the ground for termination
A notification without reasons, or an uncertain one, may weaken an allegation of termination for just cause.
Is a Notarial Warning Necessary?
Sending a notarial warning is not mandatory. However, the safest method in practice is for the notification to be made through a notary.
A notarial warning;
- Prevents the allegation from being changed later,
- Facilitates proof,
- Places the ground for termination on record,
- Fixes the date of termination with certainty.
A notarial warning is therefore recommended particularly in situations such as wage claims, mobbing and insult.
The Importance of Gathering Evidence
In termination for just cause the burden of proof rests, as a rule, on the employee. As much evidence as possible should therefore be gathered before the termination.
The following documents may be used in proving the ground:
- Camera recordings
- Medical reports
- Witness statements
- WhatsApp and e-mail correspondence
- Payslips
- Bank records showing that wages were not paid
Terminations effected without evidential support may be characterised as unjustified terminations at the litigation stage.
Frequently Asked Questions
May an employee bring a reinstatement action after terminating for just cause?
As a rule, they may not. The reinstatement action is envisaged for terminations effected by the employer. An employee who brings the contract to an end of their own volition cannot resort to this route. Where the employee’s termination is in reality in the nature of an employer’s termination, however, the position is assessed separately.
Is the SGK exit code decisive in termination for just cause?
The exit code does not by itself determine the type of termination. Although in practice an employee’s termination for just cause is often notified with the “resignation” code, the real reason for the termination is examined during the proceedings. The exit code itself therefore does not give rise to a loss of rights.
Independent Legal Assessment
Termination for just cause is a powerful but fragile right on the employee’s side. As decisive as the existence of the ground are its timing and the manner in which it is documented; missing the six working day period, or failing to state the ground in the notification at all, can lead to a termination that is essentially justified being treated as unjustified. The most frequently encountered error in practice is making the declaration of termination orally or changing the ground afterwards.
On the employer’s side, making wage payments in full and through banking channels, obtaining written consent for substantial changes and operating complaint mechanisms are the basic measures that forestall allegations of termination for just cause.
In a particular file, the following headings should be assessed as a priority:
- Determining clearly which sub-paragraph of Art. 24 the ground for termination rests on
- Establishing the date of knowledge and the six working day period by documents
- Observing, in continuing breaches, that the period is renewed with each new breach
- Making the notification in writing and preferably through a notary
- Gathering bank records, payslips and correspondence before the termination
- Examining the conditions for non-pecuniary damages separately from the standpoint of the breach of personal rights
Independent Legal provides advisory services and conducts litigation throughout the whole process in disputes concerning the termination of an employment contract for just cause, from setting the strategy before termination to the collection of the entitlements.