Contract Termination: Reasons, Procedures, and Effects

Contract Termination

Reasons for Termination

Employer-Related Reasons

Death of Employer

Upon the employer's death, all heirs in the transmission company inherit the contracts. Business closure and contract termination must be genuine. If the business continues under a third party, contracts may continue. The contract's expiration upon the employer's death carries statutory compensation equivalent to one month's salary.

Employer's Failure

The employer's inability to fulfill contractual obligations may justify contract termination. The level of inability required depends on the specific case. Compensation is equivalent to one month's salary.

Retirement of Employer

Contract termination due to employer retirement is possible under Social Security schemes. This can involve either cessation of business or continuation of business under new management.

Legal Entity Employer

Dissolution of a legal entity employer can lead to employment contract termination, following procedures outlined in Art. 51 ET.

Worker-Related Reasons

Death of Worker

The worker's death terminates the contract. The employer is required to pay 15 days' wages to the deceased worker's heirs.

Permanent Disability of Worker

Contract termination due to total permanent disability is addressed in Art. 137 ET, covering total and absolute disability and severe disability. Termination for permanent disability typically does not entitle the employee to compensation, unless specified otherwise in a collective agreement.

• If full working capacity is regained, the worker is entitled to be readmitted to the first vacancy in their class or professional group.
• If a partial permanent disability persists, the worker is entitled to be readmitted to the first suitable vacancy based on their work capacity.

Termination by Agreement

A settlement agreement involves the employee agreeing to contract termination in exchange for payment from the employer covering all aspects of the employment relationship. This includes a settlement and liquidation of assets, encompassing simple accruals, salary adjustments, or asset liquidation. The settlement receipt acts as a release, extinguishing the contract. Workers can request the presence of a legal representative during the signing of the settlement receipt. The receipt should indicate whether the worker utilized this option.

Termination Due to Contractual Clauses

Contracts can be terminated for reasons explicitly stated in the contract, unless doing so constitutes an abuse of rights by the employer. This requires the condition to be present in the contract, the provision to be valid (not impossible), and no clear abuse of rights by the employer.

Termination by Worker's Will

Without Cause (Resignation)

• Without notice (leaving)
• With notice (15 days). Notice is binding, irrevocable, and cannot be retracted without company consent. No compensation is typically provided unless agreed upon.

With Cause

• Substantial changes to working conditions contrary to professional training or dignity.
• Failure or delay in wage payment.
• Voluntary redundancy due to being a victim of gender violence (requires proof of victim status, such as a protection order).