It was only after our analysis that he discovered that he was entitled to severance pay equal to three months of his earnings. The employer initially resisted, but then, under pressure from the lawsuit, paid the severance.
Any employee who quits for so-called organisational reasons is entitled to severance pay. This is a situation where the employer or part of the employer is being closed down or relocated, or where the work (position) performed by the employee is no longer redundant. In Mr Richter’s case, it was precisely a case of redundancy.
It is important to note that the right to severance pay arises whether the employment relationship is terminated unilaterally by the employer’s notice or by a termination agreement signed by both parties. There is then no such thing as termination by agreement.
The termination agreement does not have to state the reason for which it was concluded, and a claim for severance pay may nevertheless arise.
“They called me into the conference room on Friday afternoon. They reminded me of the company’s deteriorating results and had me sign a termination agreement, which took an hour to finally sign, unfortunately without consulting an attorney,” Mr. Richtr recalls. “Whatwas infuriating was that they kept a few patronage people on, the HR boss’s cousin and then a friend of his from the wet district.”
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Tip na článek
Tip: The probationary period is primarily used to ensure that both the employer and the employee are satisfied with the cooperation in the months and years to come. For this reason, the Labour Code allows both parties to terminate the employment relationship prematurely during the probationary period if they find at the outset that concluding an employment contract was not the best decision. But in which case can the employee defend himself against termination during the probationary period?
Mr. Richter’s agreement did not state that the reason for his termination was departmental reorganization and redundancy. Consequently, he was not awarded statutory redundancy pay.
However, Mr Richtr later contacted us. We explained to him that there was no such thing as termination by agreement among the methods of termination. The employment relationship can be terminated either by a unilateral legal act, where the employee or the employer gives notice for reasons provided for by law. The consent of the other party is not required at this point. It is sufficient for the termination to be valid if it is signed by the person giving the notice – provided, of course, that he or she complies with the requirements of the Labour Code and delivers it to the other party. Another option is to conclude a bilateral agreement on termination of employment. But then again, it is not a termination notice. Both parties must agree on its content and both must sign it.
In Mr Richter’s case, it was indeed an agreement which he signed and nothing could be done about it at the time. However, we could have claimed the severance pay in question.
Redundancy is an objective fact, not an allegation. According to the Labour Code, if an employer terminates an employment contract for organisational reasons (e.g. a branch moves, a department is closed down), then the employee is entitled to two months’ pay for the notice period and also to severance pay (for one to three months, depending on the length of the employment relationship). During the notice period, the employee must work (or take leave).
Many people do not know that it is similar for an agreement if there are organisational reasons behind it. So here too, the employee is entitled to severance pay and is entitled to three to five months’ salary (two for the “notice period” and one to three as severance pay). However, this option was not mentioned in Mr Richter’s agreement.
It must be said that if organisational reasons are mentioned in the agreement, then the employee is entitled to severance pay regardless of whether it was expressly agreed in the agreement. If organisational reasons are not mentioned, but are a real motive for termination, then it is still possible to prove such a fact in court. However, the whole situation is much more complicated and may not lead to the desired results.
However, we were still able to prove that the entire department was reorganized. As a result, Mr Richtr received a severance payment of three average salaries (he had worked for the company for more than two years).
Thus, we recommend not to give up in similar cases and to contact an (Available) attorney in a timely manner.
Importance of the termination agreement
At first glance, it may seem that a severance agreement is just a formality that helps both parties end the employment relationship without conflict. But in reality, what is stated in the agreement is very important. If it does not mention that the reason for the termination is organisational changes, the employee may lose their severance pay, even though they would be entitled to it under the law.
What is “termination by agreement”?
Many have come across the term termination of employment by agreement, but such a term is misleading. In fact, it is not a termination notice but a bilateral agreement between the employee and the employer. A termination of employment is a unilateral act where one party notifies the other that it is terminating the employment relationship. On the other hand, an agreement to terminate employment requires the consent of both parties.
What to look out for when signing an agreement?
If your employer offers you a termination agreement, always consider the following:
- Does the agreement state the reason for the termination? If yes, and it is for organisational reasons (e.g. redundancy), you are entitled to severance pay.
- Keep in mind that even if the reason is not stated in the agreement but it was actually organisational changes, you may be able to prove your entitlement to severance pay.
- Ask for time to consult a solicitor. This will avoid a situation where you sign a document that is disadvantageous to you.
Agreement vs. notice: key differences
The differences between these two methods of terminating employment are not just formal:
- Unilateral or bilateral act: a termination is unilateral, an agreement requires the consent of both parties.
- Unemployment benefit: In the case of a termination for organisational reasons, you are entitled to full benefit; in the case of an agreement, the benefit may be reduced unless a serious reason for termination is given.
- Sickness during termination: If you fall ill during the notice period, this may prolong your employment. In the case of an agreement, the termination date is fixed.
If the employee himself is considering initiating termination by agreement, he should formulate his request clearly and concisely. It is advisable to refer to the termination by agreement templates available online.
What to do if the employer breaks the rules?
If you suspect that your termination agreement circumvents the law or that you have been misled, do not hesitate to seek legal advice. In cases like Mr. Richter’s, professional help can mean obtaining fair severance pay and other rights.
In conclusion, exercise caution when terminating employment. Understanding the differences between a termination and a severance agreement is key. When in doubt, we recommend seeking professional advice and always looking out for your legal and financial interests.
Tip na článek
Tip: Is your employer about to give you notice? Make sure you are not entitled to severance pay. When does the entitlement arise, how is severance pay calculated and what happens to the levies afterwards? We’ve looked at this in detail in our article.