What you need to know about termination of employment contracts

One of the commonest queries I receive from clients and readers is on termination of employment contracts. Most of the queries are usually about whether the inquirer can resign, whether there are sufficient grounds to dismiss an employee in a specific instance, how to go about terminating the employment contract or the obligations owed by the party terminating the contract towards the other party. Termination of an employment contract may be occasioned by a number of reasons, some of which may include; a fixed-term employment contract coming to an end, the employee opting to resign so as to pursue further studies, taking care of young children or take on more lucrative job, the employer dismissing the employee for unsatisfactory performance or some form of misconduct e.g. stealing from the employer or the employer deciding to close business. Whatever the reason for termination, it is important that it is done in accordance with labour law provisions so as to avoid costly legal battles. The labour code recognizes two grounds for termination of employment contracts; legitimate motives and gross misconduct. Both of these grounds are not defined by the code and thus determining whether these grounds have been satisfied can be a challenge for anyone using the code including judges, lawyers, employers and employees. In simple terms “legitimate motives” are constituted whenever there is a justifiable reason for termination of contract for instance, an employee may terminate a contract so as to pursue further studies. An employer may dismiss an employee if the employee persists in absconding from work without justification. “Gross misconduct” is a grave act or omission which will give the wronged party the right to terminate the contract without having to give prior notice to other party. Since gross misconduct is not defined by the code, some employers tend to include examples of acts of misconduct in employment contracts and staff manuals for purposes of clarity. If you are an employee wishing to resign, it is very important to give prior written notice to the employer. The length of notice will normally be determined by how long the employment contract has run. In labour disputes, employers are generally held to a much higher standard by the courts when determining whether a termination was lawful. For a dismissal to be determined as lawful, courts will normally require the employer to prove that there is a valid reason for dismissal, that the employee was notified of the reason and given an opportunity to respond to the reason and that upon dismissal, the employer gave the employee all the terminal benefits provided by the law. Terminal benefits will usually include any unpaid salary arrears, notice pay where no notice is given, compensation for leave not taken in the past two years, a certificate of service and severance pay if the reason for dismissal is not gross misconduct. Whether you are an employee or employer, it is always very useful to keep any written communications between you and the other party carefully, as these can become handy in case of any future disagreements. Such documents may include employment contracts, warnings and leave requests. Ideally, these correspondences should be signed by both parties to avoid any future claims that were never received by the other party. According to the new Ministerial order determining the modalities of declaration of the enterprise, workers and nature of employer’s registration, whenever an employee’s contract is terminated, the employer is required to notify the labour inspector, within 30 days from the termination date. The notification should state when the employee started and ended his/her employment in the enterprise and mention the cause for termination. As with all other legal issues, it is always a good idea to seek legal advice before terminating an employment contract. kalricardo@yahoo.com Richard Balenzi is a lawyer