Wages are the most fundamental of the reciprocal obligations that sustain the employment contract; they head the obligations the employer assumes towards the employee. A failure to perform this obligation at all, or the regular postponement of it, is regarded as a grave breach of the contract. Against that breach the legal order has afforded the employee not a passive wait but a concrete means of defence: the right to refrain from working.
Article 34 of Labour Act No. 4857 provides that an employee whose wages are not paid on time may suspend the obligation to perform work. Where an employee who exercises this option does not report for work, that does not amount to unlawfulness; nor may the employer bring the contract to an end for just cause on that ground alone.
Below we address the scope of the right in question, the conditions that must materialise for it to be exercised, the legal consequences it produces, and the other avenues open to the employee.
Legal Framework of the Right to Refrain from Working
Statutory Basis
The source of this facility afforded to the employee where wages are delayed is Article 34 of Labour Act No. 4857. The provision regulates that an employee whose wages have not been paid, in the absence of force majeure, although 20 days have passed since the payment date, need not perform the obligation to work:
Labour Act No. 4857, Art. 34(1)
“An employee whose wages are not paid within twenty days from the payment date, other than for reasons of force majeure, may refrain from performing the obligation to work.”
The exercise of this option does not amount to unlawful conduct on the part of the employee and cannot on its own be made a ground for termination.
Nature and Function of the Right
Refraining from working means that, where wages are not paid within the period indicated in the statute, the employee may temporarily suspend the obligation to perform work. The employee is thereby not compelled to continue offering labour for which no consideration has been received, and may await the employer’s performance of its payment obligation. Even where a large number of employees at the same workplace have recourse to this avenue at the same time, the resulting picture is not characterised as a strike.
Conditions Required for the Right to Be Exercised
Art. 34 of the Labour Act makes this facility subject to certain conditions. Where the conditions materialise, the employee may temporarily halt the obligation to perform work; a failure to report for work before the conditions have arisen, by contrast, does not enjoy the protection.
Wages Not Having Been Paid on Time
The first matter required is that the wages did not reach the employee on the day on which they should have been paid. The payment date is determined by the employment contract, by the collective labour agreement, or by established practice at the workplace, and the wages must be paid on that date.
This right arises where the wages are not paid in full, where payments are continually postponed, or where a considerable portion of the wages is left unpaid. A trifling shortfall or a short delay arising from a technical failure, by contrast, is assessed within the circumstances of each individual file.
Expiry of the Twenty-Day Period
The statute makes the accrual of the right subject to a particular waiting period. Under Art. 34 of the Labour Act, if the wages have not been paid in the absence of force majeure although 20 days have passed since the payment date, the employee may halt the obligation to perform work. It is not possible to have recourse to this avenue before the period has run.
Force majeure as referred to in the article denotes extraordinary events falling outside the employer’s sphere of influence which could not be expected to be foreseen. Natural disasters such as earthquakes, or states of war, may be assessed within this scope. The undertaking finding itself in financial straits or its cash flow being disrupted, by contrast, is as a rule not regarded as force majeure.
Individual Exercise of the Right
This facility is a right of an individual nature which each employee may exercise on their own. Its exercise requires no trade-union decision and no concerted action by the employees; every employee whose wages are not paid on time may suspend the obligation to perform work on their own.
By the same token, a failure by a large number of employees to report for work simultaneously on the same ground is not assessed as a strike either. The statute has expressly stated that a failure to perform the obligation to work by reason of the non-payment of wages taking on a collective appearance in numerical terms is not to be treated as a strike.
The employer accordingly cannot bring employment contracts to an end for just cause by relying on the employees’ exercise of that right; nor does this situation legitimise the application of a disciplinary sanction.
May the Contract of an Employee Refraining from Work Be Terminated?
Prohibition on Termination
Where the conditions envisaged by Art. 34 of the Labour Act materialise, the employee’s halting of the obligation to perform work is lawful conduct. For that reason the employer cannot terminate the employment contract for just cause in reliance solely on the employee having exercised this right.
Put differently, bringing the contract of an employee who does not report for work upon wages not being paid on time to an end on that ground produces an unlawful result.
Collective Exercise Not Treated as a Strike
The statute regulates that a failure to work stemming from the non-payment of wages cannot be characterised as a strike even if it takes on a collective character. The exercise of this right accordingly does not fall within the scope of the provisions on strikes, and the employer cannot apply sanctions on the ground of a strike.
Consequently, the imposition of disciplinary penalties on employees who do not work because their wages have not been paid, or the termination of their contracts on that ground, is as a rule not possible.
The Employee’s Wages and Claims During the Period of Refusal
Do Wages Continue to Accrue?
Where the statutory conditions have materialised, the conduct of an employee who halts the obligation to perform work is regarded as lawful and the employee cannot for that reason be subjected to any sanction.
During the period in which the right is exercised the employment contract does not come to an end; the bond between the parties continues to exist. Until it performs its wage obligation, the employer cannot characterise the employee’s failure to report for work as absenteeism or a breach of duty; it may on that ground neither proceed to terminate for just cause nor apply a disciplinary sanction.
That said, since no work is actually performed during this period, no separate wage arises in respect of that period. The employer’s previously unperformed wage obligation is not, however, extinguished; the employee continues to be entitled to claim the wages earned.
Interest and Available Avenues
Art. 34 of the Labour Act provides that interest at the highest rate applied to deposits shall run on wages not paid when due. The employee may therefore claim not only the unpaid wages but also the interest that will run on that claim. There is a detail here that should not be overlooked: if there is no individual or collective agreement record at the workplace indicating the payment date, it becomes important that the employer has been placed in default by a written warning notice. Otherwise the starting point of the interest may be determined, according to the circumstances of the particular case, as a later date (for example the end of the twenty-day period, the day on which notice of termination was given, or the date of mediation).
Other possibilities are also open to an employee who cannot obtain their wages. In respect of a wage claim, an application must first be made to mandatory mediation; if no settlement is reached at that stage, an action for the claim may be brought before the labour court.
Furthermore, where wages are persistently unpaid or seriously delayed, the employee may bring the employment contract to an end for just cause in reliance on Article 24 of the Labour Act. In such a termination it is possible to claim the employment claims to which the employee has become entitled, severance pay in particular.
May an Employee Who Cannot Obtain Wages End the Employment Relationship?
Immediate Termination for Just Cause
A failure to perform the obligation to pay wages may constitute a just cause for termination on the part of the employee. Under Art. 24(II)(e) of the Labour Act, where wages are not calculated in accordance with the statute or the contract, or are not paid, the employee may terminate the employment contract immediately and for just cause.
The complete non-payment of wages, their regular delay or their partial payment are counted among the grave breaches that make it difficult for the employment relationship to continue. While continuing to claim the wage due, the employee also holds the power to bring the contract to an end. In practice employees are seen mostly to suspend the obligation to perform work first and, if the payments are still not made, to proceed to terminate for just cause.
For this right to be exercised, the employer must have breached its obligation to pay wages. The delay of payment, or its complete failure, is treated as a breach of one of the core obligations that sustain the contract.
Severance Pay and Other Claims
An employee who brings the contract to an end for just cause on the ground of the non-payment of wages does not lose the right to severance pay; on the contrary, where the conditions are present, that compensation may be claimed.
The basic condition required is that the employee has at least one year’s service with the same employer. Where that condition is met, a termination for just cause on account of the non-payment of wages gives rise to an entitlement to severance pay.
The heads that may be claimed are not confined to severance pay. The employee may in addition claim
- unpaid wage claims,
- overtime pay for which no consideration has been given,
- pay for annual leave that was not granted,
- any other employment claims that have accrued.
Here too, in order to recover these heads, the mandatory mediation stage must first be completed and, where no settlement is reached, an action must be brought before the labour court.
Independent Legal Assessment
The right to refrain from working is one of those provisions which, in practice, employees hesitate to invoke even though it is theirs. Yet when exercised with the right timing and the right documentation, it establishes a strong footing both for the pursuit of the wage claim and as the basis for a later termination for just cause. Failing to report for work before the twenty-day period has run, by contrast, is a risky choice, since it may create a picture open to an allegation of absenteeism.
In setting a road map in a concrete file, the following headings should be given priority:
- Establishing whether the payment date rests on the contract, the collective labour agreement or workplace practice
- Documenting the starting date of the twenty-day period with bank records and payrolls
- Where the payment date is not fixed, creating default by serving a written warning notice so that interest begins to run
- Notifying the employer in writing that the obligation to perform work has been suspended
- Where termination for just cause is to follow, setting out the wage breach concretely in the notice of termination
- Making the mediation application within the applicable period and listing the heads of claim in full
Independent Legal provides advisory and litigation services to all parties in disputes arising from wage claims, from the warning notice stage through to mediation and the court process.