Employment Contract Termination: Causes, Procedures, and Compensation

Employment Contract Termination Rules

1. Termination Due to Contract Duration Compliance

This applies when the contract reaches its stipulated end date or the completion of the service for which it was hired.

Causes

• Completion of the agreed duration or performance of the contracted work or service.

Procedure

• If the contract duration is greater than 1 year, the employer must notify the company at least 15 days in advance.

Indemnity

• The employee is entitled to 8 days' wages per year of service (or the legally established rate for temporary contracts).

2. Worker Resignation (Voluntary Termination)

Causes

• The worker's decision need not be justified.

Procedure

• The worker must provide notice of resignation at least 15 days in advance.
• In case of breach of the notice period, the employer may deduct the equivalent of the missing days from the final settlement.

Indemnity

• The worker is not entitled to severance pay.
• The worker is not entitled to unemployment compensation.

3. Resignation Due to Employer Breach (Constructive Dismissal)

This occurs when the employee terminates the contract due to serious misconduct by the employer.

Causes

• Substantial change in working conditions detrimental to the worker's dignity or professional training.
• Lack or continued delay in the payment of wages.
• Any other serious breach by the employer.

Procedure

• The employee must request the termination of employment in the Social Court (Labor Court).

Indemnity

• Compensation stipulated for unfair dismissal: 45 days' wages for each year of service, with a maximum of 42 months.

4. Dismissal for Objective Reasons

Causes

• Worker Ineptitude: Proven lack of professional competence (e.g., failure to meet standards).
• Lack of Adaptation: Failure to adapt to technical changes in the company (e.g., new technologies).
• Job Amortization: Elimination of the job due to technical or economic reasons that objectively do not require the employee.
• Accredited need to objectively eliminate jobs.
• Absence from work, even if justified, exceeding certain legal limits.
• Lack of budget (typically applicable to public organizations).

Procedure

• The dismissal must be notified in writing.
• A notice period of 30 days must be given in advance.
• During the notice period, the worker is entitled to 6 hours per week of paid leave to search for a new job.
• The employee may appeal the dismissal as if it were a disciplinary dismissal.

Compensation

• Compensation of 20 days' wages per year worked, with a maximum of 12 months.

5. Redundancies (Collective Dismissal)

This applies when dismissals affect a specific number of workers within a defined scale (e.g., if a company has 200 employees, affecting X number).

Causes

• Technical causes.
• Economic causes.
• Organizational or production causes.

Procedure

• Must be processed through an Employment Regulation File (ERE).
• The employer must inform and consult with workers' representatives and unions.

Compensation

• Workers must receive 20 days' wages per year worked, with a maximum of 12 monthly payments.

6. Disciplinary Dismissal

Causes

• Repeated or unexcused faults or tardiness.
• Indiscipline or disobedience.
• Verbal or physical offenses directed at the employer, colleagues, or their family members.
• Transgression of contractual good faith or breach of trust.
• Continued and voluntary decrease in normal work performance.
• Intoxication or drug addiction if it adversely affects the employee's performance.
• Harassment.

Procedure

• There is no mandatory notice period for the employee.
• A Letter of Dismissal must be issued, notified in writing, justifying the facts and the reasons for the dismissal.
• The statute of limitations for the employer to notify the dismissal is 60 days from the date the employer became aware of the breach, with a maximum of 6 months since the breach was committed.

Compensation

• None.