The termination of an employment contract by the employer’s decision does not in every case produce a conclusive and unassailable legal result. A reinstatement action is the judicial remedy by which an employee under the umbrella of job security seeks to return to their former post on the ground that the termination directed at them does not rest on a valid reason. Labour Act No. 4857 affords employees who benefit from this protection a window of one month running from the moment the notice of termination reaches them, and requires recourse to mandatory mediation within that period. Where no settlement emerges from the mediation table, the dispute is taken to court and the validity of the termination is made subject to judicial review.
A finding at the end of the proceedings that the termination was invalid represents a twofold gain for the employee. The employee either returns in fact to their post or, if the employer is unwilling to employ them, may claim pay for up to four months spent out of work together with compensation for failure to reinstate in the amount of four to eight months’ wages. The function of the institution lies precisely here: to prevent the unlimited exercise of the power of termination and to safeguard the employee’s financial position where a termination is unfounded.
In this briefing note we address, in turn, the legal nature of the institution, the conditions required for the action to be brought, the periods that cannot be remedied once missed, the course of the proceedings and the consequences the judgment produces for the parties.
What Is a Reinstatement Action?
The action in question is a particular type of dispute in which an employee whose employment relationship has been brought to an end by the employer without a valid reason being shown seeks to return to their post in reliance on the job security provisions. Article 18 and the following articles of the Labour Act afford employees within the scope of this protection the possibility of seeking both a finding that the termination was invalid and an order for their reinstatement.
The protection the action affords is not confined to the re-establishment of the working relationship. Where the employer does not comply with the judgment, pay for the period out of work and compensation for failure to reinstate may also be awarded. In this respect the institution is one of the fundamental balancing mechanisms limiting the employer’s freedom to end the employment relationship at any moment and on any ground it chooses.
The Legal Nature of the Action
A reinstatement claim is an employment action of composite structure, containing both declaratory and performance elements. The court’s first task is to review whether a valid reason lies behind the termination. If, at the end of that review, the termination is found invalid, reinstatement is ordered. That judgment does not, however, of itself return the employee to their desk; the ensuing legal position is shaped by the employer’s choice whether or not actually to employ the employee.
There is accordingly no action for a debt in the ordinary sense. The institution forms part of the job security system, and its rationale is to open the unfounded termination of an employment contract to judicial review.
In What Circumstances Does It Arise?
The basic fact opening the way to the action is the employer’s termination of the contract without resting it on a valid basis. Among the typical situations in which invalidity results in practice may be mentioned terminations carried out for trade union motives; terminations effected on abstract or wholly arbitrary grounds resting on no concrete fact; a claim that the undertaking is in economic difficulty which does not correspond to the true position; an assertion of inadequate performance that cannot be evidenced; and a failure to obtain the employee’s statement in defence even though performance is relied upon as the ground. In these and similar situations the termination may be treated as invalid and the employee’s request to return to work may be granted.
The Meaning of Job Security
Job security is a protective regime that prevents the employer from bringing the contract to an end without limit and arbitrarily. In respect of employees who possess the characteristics required by the statute, the employer may found its termination only on "a valid reason"; this safeguard arises from the statute itself.
The practical counterpart of the system is the burden of proof. An alleged termination founded on performance, on conduct or on the requirements of the undertaking must be supported by concrete evidence. Where that obligation cannot be met, the termination is treated as invalid and the rules on reinstatement come into play.
Conditions for Bringing the Action
Whether the claim can be examined on the merits depends on the employee meeting the criteria for benefiting from the job security provisions of the Labour Act. Actions brought without those criteria being satisfied together are dismissed on procedural grounds without the merits being reached. The statute requires the following conditions to be present together.
The possibility of relying on the institution is afforded only to employees within the scope of job security. Before turning to litigation, therefore, the number of employees at the workplace, the employee’s length of service, the type of contract and the validity of the termination must be weighed as a whole.
Employment of Thirty Employees at the Workplace
For the job security provisions to apply, the total number of employees employed by the employer at one or more workplaces in the same branch of activity must not fall below thirty. In carrying out the count, not only the workplace at which the claimant works but also the employees at other workplaces belonging to the same employer are taken into account. What is decisive is the actual position existing at the workplace on the date of termination.
A Minimum of Six Months’ Service
The employee’s ability to bring this action depends on their having at least six months’ service as at the moment of termination. In calculating length of service, the whole of the service spent with the same employer, including the probationary period, is assessed together. How the period is to be calculated where the work has been interrupted or the workplace has been transferred must be addressed separately on the particular facts of the case.
An Indefinite-Term Contract
As a rule, a request to return to work is available to employees engaged under an indefinite-term contract. Since fixed-term contracts come to an end automatically upon the expiry of the agreed period, those working within such a relationship may in principle not seek reinstatement. Where, however, it is alleged that the fixed-term appearance of the contract was in truth devised in order to conceal a continuing working relationship, the court examines separately the true nature of the contract.
Even if the employer contends that the contract was concluded for a fixed term, where it can be shown that that choice does not rest on an objective reason and was intended to render ineffective the protections afforded by an indefinite-term relationship, the contract is treated as being of indefinite term and the reinstatement claim may be upheld.
Absence of a Valid Reason for Termination
The core condition of the action is that the termination effected by the employer lacks a valid foundation. It is the employer’s task to explain the fact relied upon in support of the termination in a manner leaving no room for hesitation and to support it with concrete evidence. In terminations founded on performance, on the employee’s conduct or on operational requirements, compliance with the principles of proportionality and of termination as a last resort is required; in addition, the taking of a statement in defence and the establishment of a regime of minutes and written documents are the elements determining the outcome in most files. Where the ground remains at an abstract level or is not supported by evidence, the termination may meet with the sanction of invalidity.
For detail on the subject, our note entitled On What Grounds May an Employer Terminate an Employment Contract with Immediate Effect? may also be consulted.
Preclusive Periods
In this type of dispute the periods are preclusive in nature. Once the period has passed, however strongly the employee may show the termination to be unfounded, they may not seek to return to work. The calendar must therefore be followed scrupulously, taking as the starting point the day on which the notice of termination was served.
The One-Month Period for Applying to Mediation
Recourse to mandatory mediation within one month of the date on which the contract was brought to an end is compulsory. That period is preclusive; if it is missed, the entitlement to seek reinstatement is entirely extinguished.
The moment at which the period begins to run is the date on which the notice of termination was served on the employee. Where no written notice has been given, the measure is the day on which the contract in fact came to an end. If no application is made to a mediator within the one-month period, the option of applying directly to the court is likewise lost.
The Period for Bringing the Action
Where no result is obtained from the mediation meetings, application must be made to the labour court within two weeks of the day on which the final minute recording the failure to agree was drawn up.
This two-week period is likewise preclusive. Once it is missed, the route of reinstatement closes entirely; the employee is left only with the possibility of claiming sums such as severance and notice pay, where the conditions for these have arisen.
The Consequence of Missing the Periods
Where the one-month period allowed for mediation, or the two-week period for bringing the action that runs after mediation, has elapsed, the reinstatement claim is not examined on the merits; the court dismisses the action on grounds of time.
In such a situation the employee may, in asserting that the termination was unfounded, raise only claims directed at employment entitlements. They may no longer seek to return to their post or claim compensation for failure to reinstate.
How the Proceedings Work
These actions are heard under the simplified procedure, the aim being to conclude the dispute as quickly as possible. Even so, since witnesses must be heard, a court-appointed expert examination carried out and other evidence gathered, the duration of the proceedings may vary according to the nature of the file.
The dispute comes before the labour court once the mandatory mediation stage has closed in disagreement. The court’s examination at this stage proceeds along three axes: whether the job security rules are applicable on the facts before it, whether the procedure was complied with in the termination, and whether the termination rests on a valid ground.
The Mediation Stage
The bringing of an action seeking a return to work depends on prior recourse to mandatory mediation. Application to a mediator within one month of the date on which the contract was terminated is compulsory, and that period is preclusive in nature.
Where the parties reach common ground in the meetings, the statute accords the settlement document to be drawn up the value of a document in the nature of a judgment; the dispute is thereby conclusively closed. In that event there is no question of an action additionally being brought.
Where no settlement can be reached, the mediator draws up the final minute. The employee may apply to the labour court within two weeks of the date on which the minute was drawn up. If an action is brought directly without mediation being completed, the action is dismissed on procedural grounds because the procedural requirement has not been satisfied.
Courts with Subject-Matter and Territorial Jurisdiction
Subject-matter jurisdiction lies with the labour court. In places where no labour court has been established, these actions are heard by the civil courts of first instance sitting as labour courts.
As to territorial jurisdiction, the rule is that two courts are jointly competent: the court of the place where the work was in fact performed and the court of the domicile of the respondent employer. The choice belongs to the employee. Since jurisdiction here is not exclusive, the court does not raise the matter of its own motion unless the respondent raises an objection to jurisdiction in time.
The Burden of Proof and the Evidence
As a rule, the burden of proving that the termination rests on a valid reason lies with the employer. The employer is bound by the reason set out in the notice of termination; it may not substitute another ground for it during the proceedings. The reason for termination must therefore be set out from the outset in a clear and concrete manner and on the basis of objective evidence.
In terminations founded on inadequate performance, it is decisive that the performance criteria were established in advance, that the measurement results were recorded in writing and that the employee was asked for a statement in defence. In terminations founded on conduct, it is required that the disciplinary process was conducted in accordance with the proper procedure and supported by minutes and written documents. In terminations founded on operational grounds, the reality and internal consistency of facts such as downsizing, a change in organisation or economic necessity must be established.
On the employee’s side, by contrast, there is freedom of proof: they may prove by any means of evidence that the termination was in truth carried out for another motive, that the process was operated unlawfully, or that the reason given by the employer does not reflect the truth.
The types of evidence most frequently relied upon in these files in practice are as follows:
- The notice of termination itself and internal workplace correspondence
- Records kept at the workplace and written documents
- Social Security Institution records and the service statement
- The employee’s personnel file and statements in defence
- Witness testimony
The court reaches its conclusion on the validity of the termination by assessing as a whole all the evidence submitted to the file by the parties.
Fees, Expert Costs and Litigation Expenses
A fixed fee applies in these actions. At the stage of commencing the action, the application fee and the costs of the first service of process are borne by the claimant. By contrast, for items arising during the proceedings such as the court-appointed expert examination, on-site examination, witness costs and further service of process, the court frequently requires an advance on costs from the respondent employer.
Because of this arrangement, the greater part of the costs arising between the bringing of the action and the giving of judgment is in fact borne by the respondent employer. At the end of the proceedings, the costs are awarded against the losing party in accordance with the general rule.
The Appeal Remedy
An appeal against the judgment given by the court of first instance may be lodged within a period of two weeks running from the day on which the judgment was served on the parties. The appeal is lodged through the court that gave the judgment; the file is reviewed by the Regional Court of Appeal both as to the facts and as to compliance with the law.
The Regional Court of Appeal has three options: it may dismiss the appeal on the merits and uphold the judgment at first instance, it may correct the judgment and give a new one, or it may set the judgment aside in its entirety.
Under Art. 8(1)(a) of the Labour Courts Act No. 7036, judgments given by the Regional Court of Appeal in reinstatement actions are final and no appeal on points of law may be lodged against them before the Court of Cassation. Judgments given by the appellate court on matters of subject-matter jurisdiction, territorial jurisdiction and the designation of the competent forum as between courts of first instance are likewise final.
The judgment on appeal becoming final renders the decision definitive; from that moment the statutory periods relating to the reinstatement stage also begin to run.
The Application to Be Reinstated and Its Time Limits
An employee in whose favour judgment has been given must apply to the employer and request actually to be employed within ten working days after the judgment has become final and been served on them. This period too is preclusive; if no application is made within it, the judgment produces no legal effect and the termination becomes valid.
Where the application is made in time, the employer is expected within one month either to take the employee back into work or to make clear its intention not to employ them. If nothing is done by the employer within that one-month period, the employee is deemed not to have been reinstated and the rules on compensation for failure to reinstate apply.
***NOTE: The application must be made in writing and by a method capable of being proved subsequently. The safest course in practice is for the request to be employed to be communicated to the employer by a formal notice drawn up through a notary. Although they do not carry the same weight of proof as a notarial notice, registered electronic mail (KEP), recorded delivery letters, and written documents and records clearly establishing that the employer received the application may also be used for this purpose.*
The Legal Consequences of the Judgment
Where the court holds the termination invalid and orders the employee’s reinstatement, the employment contract is not treated as having come to an end in law. For the judgment to produce its effect, however, two conditions are required: that the judgment become final and that the employee request to be employed within the statutory period. Although the judgment affords the employee the possibility of returning to work, the position changes entirely if that possibility is not exercised or if the employer does not employ the employee.
Once the judgment has become final and been served, the employee must apply to the employer within ten working days. Within one month of that application, the employer either takes the employee back into work or makes clear its intention not to employ them. The employer’s choice at this stage produces decisive consequences for the determination of the date on which the contract came to an end, for compensation for failure to reinstate and for pay in respect of the period out of work.
Pay for the Period out of Work
A court finding the termination invalid also orders payment to the employee of pay for the period spent out of work, not exceeding four months, together with the other entitlements falling within that period. The period in question is the time during which the employee did not in fact work but the contract is deemed to have remained in being in law.
The measure taken as the basis of the calculation is the employee’s gross wage at the date of termination. This calculation includes not only the bare wage but also monetary entitlements paid regularly and on a continuing basis.
The insurance contributions for this period must be paid, and the period concerned is taken into account in calculating length of service. The upper limit of the pay is, however, four months; proceedings lasting longer than that do not extend the period to be awarded.
Compensation for Failure to Reinstate
If the employer does not take the employee back into work within one month even though the employee applied within ten working days of service of the final judgment, the employer becomes liable to pay compensation for failure to reinstate.
The court assesses the amount of the compensation having regard to the employee’s length of service, the reason relied upon for the termination and the particular circumstances of the case. The range drawn by the statute is, on the gross wage, a minimum of four and a maximum of eight months’ pay.
This item is independent of the pay for the period out of work and is a consequence in its own right. Where the employee is not taken back into work, the contract is deemed to have come to an end on the day on which the employer made clear its intention not to employ them. The calculation of employment claims, notice and severance pay foremost among them, is likewise tied to that date.
Social Entitlements and Insurance Declarations
Where the employee has made their application in time, the pay for the period out of work awarded by the court and the other entitlements relating to that period must be paid. The employer is also obliged to declare and pay the insurance contributions for that period to the Social Security Institution. The period concerned is added to the service period and included in the calculation of length of service.
Where the employer takes the employee back into work, the employment relationship is deemed to have continued as though it had never been interrupted. Wages, annual leave, length of service and other social entitlements are determined on the basis of that continuity.
Where the employer declines to employ the employee, by contrast, the contract is deemed to have come to an end on the date on which that intention was made clear. Accordingly, the employee’s severance and notice pay and other claims are also calculated by reference to that date.
What If the Employer Does Not Reinstate the Employee?
Where an employee who applied within ten working days of service of the final judgment is not taken back into work despite the passing of a month, the statute lays down a series of consequences protecting the employee. In this situation the employer must pay both compensation for failure to reinstate and pay for the period out of work.
The employer may state expressly in response to the application that it will not employ the employee; in that event the contract is deemed to have come to an end on the date of the statement. Where the employer remains silent for a month, the employee is deemed not to have been reinstated upon the expiry of the period, and the contract is deemed to have come to an end on that date.
The principal entitlements of an employee who is not taken back into work consist of the following items:
- Notice pay and other employment claims, where the conditions for them have arisen
- The difference in severance pay to be calculated by reference to the date on which the contract is deemed to have come to an end
- Compensation for failure to reinstate, in the amount of four to eight months’ wages as assessed by the court
- Pay for the period out of work, not exceeding four months, and the other entitlements relating to that period
Since pay for the period out of work and compensation for failure to reinstate are separate entitlements, they may be claimed together in the same action. The insurance contributions for the period out of work must also be paid.
Where a Successful Employee Does Not Return to Work
An employee who makes no application at all to the employer within the ten working days following service of the final judgment loses the possibility of benefiting from the particular protection afforded by the reinstatement order. In such a case the termination becomes valid and the provisions on reinstatement find no application.
- As Regards Pay for the Period out of Work
An employee who does not make their application in time has no possibility of claiming this pay. Pay for the period out of work is tied to the judgment producing legal effect and to the application having been made in time. If no application is made, even an award by the court does not enable this item to be claimed.
An employee who makes their application in time but who, despite being genuinely and properly called to their post by the employer, does not return to work without a valid excuse, cannot benefit from compensation for failure to reinstate.
Although differing approaches exist in practice as regards pay for the period out of work, the prevailing view is that the employee, having made their application in time, becomes entitled to that pay for up to four months. Judgments are nevertheless to be found in which such pay has also been refused in cases where the employer’s call was genuine and serious and the employee nonetheless did not start work without good reason.
- As Regards Compensation for Failure to Reinstate
This compensation too depends on the employee having applied in time and on the employer nevertheless not employing them. Where no application is made at all, or where the employee does not return to work despite the invitation, the compensation cannot be claimed.
- As Regards Other Employment Claims
For an employee who makes no application, or who does not start work without a proper basis, the contract is deemed to have come to an end on the date of the original termination. In such a situation the employee’s right to claim notice and severance pay and other sums, where the conditions for them have arisen, is preserved; they cannot, however, benefit from the particular protection tied to the reinstatement order.
Where it is alleged that the failure to start work rests on a proper ground, the particular case is assessed separately on its own circumstances. The outcome may differ in situations such as the employer’s invitation lacking sincerity, an essential change being made to the working conditions, or the employer having no genuine intention of employing the employee.
Independent Legal Assessment
In reinstatement disputes the element determining the outcome is often the correct management of the calendar, before any debate on the substance of the termination. The one-month mediation window, the two-week period for bringing the action and the ten working days for applying after the judgment has become final are preclusive in nature; missing only one of them can leave fruitless a file that could otherwise have been won. On the employer’s side, risk management begins long before the moment of termination: a process in which no statement in defence was taken, nothing was recorded in minutes and nothing was set down in writing will not be capable of discharging the burden of proof in the proceedings.
In devising a route map for a given file, it is advisable to address the following points as a matter of priority:
- Documenting the thirty-employee criterion and the six months’ service by reference to the actual position on the date of termination
- Establishing with certainty the date on which the notice of termination was served and building the calculation of periods upon it
- Where the contract appears to be for a fixed term, examining whether the objective condition is present
- On the employer’s side, setting out the reason for termination expressly in the notice, bearing in mind that the ground cannot be changed subsequently
- Communicating the request to be employed after the judgment has become final by a route of high evidential value, such as a notarial notice
- Bearing in mind that pay for the period out of work and compensation for failure to reinstate are separate items and may be claimed together
Independent Legal provides advisory and litigation services to employees and employers alike throughout disputes arising from the termination of an employment contract, from the mandatory mediation stage through to the enforcement of the judgment.