CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

1.1 Reasons for dismissal

  1. Fair Dismissals: if there is a fair cause for dismissal, the employer must identify the facts and the standards that were broken by the employee and that determine the fair cause for termination as stated in Article 62 of the Colombian Labour Code. In a set case, the employee is not entitled to any compensation or damages derived from the contract's termination.
  2. Unfair Dismissals: the employer may unilaterally end an employment contract at any time, even in absence of fair cause. In a set case, the employee is entitled to receive compensation in the form of damages (i.e. legal severance) previously stated in Article 64 of the Colombian Labour Code.
  3. Non-renewal of a fixed term contract: if the employee has a fixed term employment contract, the employer may decide not to extend the contract after the date of expiration with 30 days prior notice. 
  4. Termination of a specific task or project: If the employee was hired with an employment contract that is tied to the development of a specific task or project, once the project or task is finished, the employer can terminate the contract without any notice and without payment of compensation or severance. In this case, the reason for dismissal will be the termination of the specific task, which must be expressly stated in the contract.

The reasons for regular termination as set out in the Labour Act are as follows:

  • if the need for work ceases to exist for economic, technical or organisational reasons (‘notice due to business reasons’); or
  • the employee is incapable of fulfilling his employment-related duties due to certain personal characteristics or qualifications (‘notice due to personal reasons’); or
  • the employee intentionally breaches a contractual obligation (‘notice due to misconduct’); or
  • if the employee did not satisfy the employer’s requirements during the probationary period.

Generally, employers in Austria are not required to justify ordinary dismissals (Kündigungen). Nevertheless, they must observe prescribed notice periods and termination dates.

If an establishment employs five or more employees, however, these employees enjoy “General Protection against Dismissals”: an employee may challenge a dismissal if it has adverse effects on the individual’s personal life. In these cases, the employer must justify the dismissal for reasons related to employee capabilities, conduct or operational requirements if challenged by the employee.

Certain “vulnerable” employees enjoy additional “Special Protection against Dismissal” and may only be dismissed for one of several specific reasons, often only with the prior consent of competent authorities. These include women who are pregnant or who have recently given birth, parents on parental leave, works council members and employees formally classified as disabled persons.

Discriminatory dismissals or dismissals due to “illegal reasons” can also be challenged by employees.

1.2 Form

  1. Fair Dismissals: the employer must invoke one or more of the fair causes established in Article 62 of the Colombian Labour Code, and identify the contractual and legal standards that were broken or the facts that justify termination. For evidential purposes, the decision must be in written form.
  2. Unfair Dismissals: for evidential purposes, the decision must be in written form.
  3. Non-renewal of a fixed-term contract: the employer must provide the employee with written notice with prior notice of at least 30 days from the expiration date of the fixed-term contract.
  4. Termination of the specific task or project: For evidential purposes, the decision must be in written form. Also, it is necessary that the specific task or project be finished, which allows the employer to terminate the contract in regard to this event.

Written form, including reasons for termination. Decision is to be delivered to the employee.

Unless otherwise stipulated in a collective agreement or employment contract, dismissals do not require any particular form. However, giving notice in writing is recommended. If “Special Protection against Dismissal” applies, rules may differ.

1.3 Notice period

Only applicable to fixed-term contracts, at least 30 days to be given before the contract's date of expiration.

In exceptional cases, fair dismissal in which the employer invokes the causes established in issues 9, 10, 11, 12, 13, 14, and 15 of Article 62 of the Colombian Labour Code, the employer must provide written notice with at least 15 days prior notice before the termination date.

Regular termination: notice period ranges from two weeks to three months, dependent on the employee’s length of service with the same employer.

The three-month period is extended by an additional two weeks / one month for 50 / 55-year-old employees who have 20 or more years’ continuous service with the same employer.

Extraordinary termination (summary dismissal): no notice period. Termination during probationary period: notice period of at least seven days.

Termination by employee: notice period cannot be longer than one month if the employee has a good reason.

If the employment is terminated because the employee  breaches his contractual obligations, notice periods are halved.

Although Austrian law does provide statutory minimum notice periods and dates, employers are free to designate their own notice regimes based on collective agreements and employment contracts. In case of conflicting regulations, however, employees will always benefit from the most favourable rule, pursuant to the “favourability principle” (Günstigkeitsprinzip).

Austrian employment law distinguishes between white-collar (Angestellte) and blue-collar workers (Arbeiter), providing separate notice models for each.

White-collar workers are entitled to receive at least six weeks notice and up to five months notice, always depending on the length of their employment relationship. These terms may be modified, although no notice period may exceed six months. In addition, white-collar workers benefit from statutory notice dates, ensuring that employment relationships may only end at the end of any given annual quarter. It is possible to agree contractually that a termination is possible on the 15th or last day of any given month.

If not otherwise stipulated by collective agreement, blue-collar workers are subject to a notice period of at least 14 days. In practice, however, collective agreements often guarantee more generous notice periods. 

From 1 January 2021, the notice periods and termination dates for white-collar workers will apply to blue-collar workers. In industries where seasonal businesses predominate, collective agreements may contain different provisions and set shorter notice periods. When concluding employment agreements with blue-collar workers, it is also possible to contractually agree on a termination on the 15th or last day of any given month.

1.4 Involvement of works council

No involvement.

The works council must be informed of the employer’s intention to dismiss. The works council‘s consent is required for dismissal of the following employees:

  • members of the works council; and
  • candidates running for works council positions and members of the election committee for a period of three months following the announcement of the results of the election to the works council; and
  • employee representatives in a body of the employer; and
  • employees with diminished ability to work and employees in immediate danger of physical disability; and
  • employees over 60 years of age.

If a works council exists at an establishment, it must be informed of any proposed dismissals at least one week in advance. Within this timeframe, the works council may object, explicitly approve or refrain from commenting on the dismissal. The termination is void if the employer fails to comply with this requirement, either by failing to notify the works council or by failing to wait for its response within that week.

1.5 Involvement of a union

Prior verification of the existence of a fair cause from a labour judge is needed when employees are protected by union immunity (e.g. union officials, union founders within the first six months of foundation, members of the commission of claims).

If there is no works council, consent is given by the union commissioner (the union representative employed with the respective employer). The union‘s consent is required for the dismissal of a union commissioner during their period of office and for six months thereafter.

No involvement.

1.6 Approval of state authorities necessary

Unfair dismissal is prohibited in the following cases, which imply reinforced labour stability since contracts may only be terminated with proven fair cause for dismissal:

  1. Employees with union immunity, for which a judge is entitled to verify the existence of fair cause for termination;
  2. During pregnancy and the first six months after a birth, women may not be dismissed without fair cause. Furthermore, the Ministry of Labour is entitled to verify the existence of fair cause for terminating the contract of a pregnant woman or during the first three months after giving birth.
  3. Employees with any health condition (e.g. on sick-leave, experiencing restrictions, handicapped, etc.) that limits their interactions in the work environment may only be dismissed with a fair cause that precludes discrimination. However, the Ministry of Labour Is entitled to authorise the dismissal of employees with health limitations when the decision is founded on the medical condition of the employee. In the case of unfair dismissal of employees with health limitations, these dismissals will be presumed to be motivated on their conditions.
  4. Employees whose economically dependent partners are pregnant or are on maternity leave as defined by the Colombian Constitutional Court in Case C-005/17.
  5. Employees who are within the last three years of fulfilment of the requirements of an old-age pension.
  6. Employees who, six months prior to their termination, filed claims of labour harassment, which was verified by a judge.
  7. During collective bargaining, the potential beneficiaries of the eventual collective bargaining agreement may only be dismissed if there is fair cause.

If the works council or union commissioner do not consent, consent can be substituted by a judicial or an arbitral decision.

Obligatory only for certain groups of employees (e.g. severely disabled persons, works council representatives, pregnant women, and employees on parental leave).

1.7 Collective redundancies

It is considered a collective redundancy if a company dismisses without fair cause the following percentage of its employees within a period of six months:

  • 30% of its employees if the company has ten to 49 employees.
  • 20% if it has 50 to 99 employees.
  • 15% if it has 100 to 199 employees.
  • 9% if it has 200 to 499 employees.
  • 7% if it has 500 to 999 employees.
  • 5% if it has more than 1,000 employees.

For a company to dismiss this percentage or more of its workforce, prior authorisation must be requested from the Colombian Ministry of Labour.

To receive the employment authority’s approval, it is necessary to prove that the company is facing a financial crisis or another extraordinary situation forcing the collective redundancy.

Employer who expects to terminate at least 20 employees, five of which due to business related reasons, all within a 90-days’ period, is obliged  to duly consult the works council / union commissioner in order to possibly reach an agreement to save the employees and / or limit the number of terminations. The employer is obliged to provide the works council / union commissioner with written information concerning the reasons for termination, total number of employees, number, professions and positions of employees who are supposed to be terminated, election criteria for such employees, amounts and way of calculating their severance payments and measures undertaken to prevent such terminations. Employer is obligated to consider and explain all possibilities and suggestions that may lead to avoidance of terminations. Also, the Croatian Employment Agency needs to be informed about the previously mentioned points and consultations with the works council / union commissioner.

When collective dismissals (Massenkündigungen) are imminent, employers are required to notify the Austrian Employment Service 30 days in advance. For the sake of this notification procedure, collective dismissals are defined as employment terminations affecting:

  1. at least five workers in an establishment of 21 to 99 employees; or
  2. 5% or more of the workforce at an establishment of 100 to 600 employees; or
  3. at least 30 workers at an establishment of more than 600 employees; or
  4. at least five workers aged 50 or over, regardless of company size.

The requirements of the notification procedure are met if the employer informs the competent agency in writing and waits one month before carrying out the intended dismissals. Any failure to observe these rules will render all pertinent dismissals void.

1.8 Summary dismissals

Does not apply.

Summary termination (summary dismissal) is defined as termination without notice, and is only lawful where there has been: 

  1. a serious breach of employment obligations, or
  2. the employment relationship between the parties is no longer possible for another important reason (there are, therefore, two possible reasons: (i) breach of employment obligations; or (ii) another important fact; in either case, the employment relationship must not be possible any longer).

The employee is to be dismissed within 15 days of the day of becoming aware of the fact / reason for dismissal.

A summary dismissal (Entlassung) does not require observance of any particular notice periods but must be issued without undue delay. Summary dismissals are possible for good reasons only, as regulated by law. Disloyalty, untrustworthiness, or persistent refusal to carry out one’s contractually agreed duties are typical reasons for a summary dismissal.

Summary dismissals are effective even if they do not meet the above requirements. However, summary dismissal may then be treated as a regular dismissal, meaning the respective protection against dismissal is applicable.

1.9 Consequences if requirements are not met

If requirements for dismissal with fair cause are not met, employees are entitled to claim damages (i.e. legal severance). However, for employees with reinforced labour stability or seniority prior to 1 January 1981 who have been dismissed without fair cause, a judge may decide on their reinstatement through a constitutional action.

If it is decided the dismissal is illegal, the employee is to be reinstated. Reinstatement is possible even before the end of the court procedure to determine the legality of the dismissal if the employee so requests. If the parties do not wish to continue with their employment relationship, the court shall at the employee‘s request determine:

  1. the date of termination of the employment contract; and
  2. compensation for damages, which ranges from three to eight times the employee’s average monthly salary over the previous three months (depending on the employee’s age, length of contract and obligations in relation to supporting family members or other dependants as defined by family law).

Non-compliance by the terminating party with the prescribed or agreed periods or dates of notice constitutes untimely notice. Although such untimely notice remains effective, it entitles the employee to dismissal compensation (Kündigungsentschädigung). Such compensation consists of the remuneration that the employee would have received had the dismissal been properly expressed (i.e. all due remuneration between the actual termination of employment and the date of termination prescribed by law, collective agreement, works agreement or employment contract).

An employee is entitled to General Protection against Dismissal may claim reinstatement in court. Reinstatement is granted if it is proven that the termination of the employment contract has adverse personal effects on the employee's life (e.g. little chance of finding employment of similar standing and income in a reasonable time) and the employer cannot adequately justify the termination.

1.10 Severance pay

When an employer has fair cause to end a contract, there is no indemnification granted to the employee.

On the other hand, in case of unfair dismissal, according to Colombian Labour Law there are different types of indemnifications (i.e. legal severance) based on these types of contracts: 

i. in fixed-term contracts, the indemnification is calculated with the salary days pending until the end of the contract;

ii. in contracts for a specific project or service, the indemnification is calculated with the salary days pending until the end of the contract with a minimum of 15 days;

iii. in indefinite-term contracts, the indemnification is established as follows:

  • For employees hired after 27 December 2002:
    • If the employee has a salary ranging from one to ten Colombian minimum monthly wages, 30 days of salary for the first year of seniority, and 20 additional days for every additional year or in proportion if less.
    • If the employee has a salary of more than ten Colombian minimum monthly wages, 20 days of salary for the first year of seniority and 15 additional days for every additional year or in proportion if less.
  • For employees hired between 1 January 1981 and 27 December 2002: 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less.
  • For employees hired prior to 1 January 1981: the employee is entitled to choose between reinstatement or damages consisting of 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less. However, if the employee chooses reinstatement and it is not possible, a judge will determine whether damages should be paid consisting of 45 days of salary for the first year of seniority and 30 additional days for every additional year or in proportion if less.

An employee with an open-ended contract who has two years’ continuous service with the same employer (and is not being dismissed due to an intentional breach of contractual obligation) is entitled to a severance payment. The statutory minimum severance payment is calculated by multiplying one-third of the average monthly salary in the preceding three months by the number of years’ continuous service with that employer. The severance payment is capped at six times the average monthly salary, unless otherwise provided for by law, by-law, collective agreement or work contract

Austrian law distinguishes between two severance pay models: one is applicable to all employment relationships established prior to 1 January 2003 (“old model”), and the other to employment agreements signed after that date (“new model”).

The old severance pay model requires the employer to pay a sum based on the length of service at the end of the employment relationship unless it is the employee who terminates the contract or if the employee is dismissed without notice for good cause (i.e. summary dismissal). If the employment relationship is terminated after three years employment, the employee is entitled to severance pay of two months salary. After 25 years, the employee is entitled to twelve months salary.

The new severance pay scheme requires the employer to pay a sum of 1.53% of every monthly salary into an employee severance fund (Betriebliche Vorsorgekasse). At the end of any given employment, the employee may then either request disbursement of the collected amount or leave it in the fund for further investment.

1.11 Non-competition clauses

Employees are entitled to work for other employers outside their working hours unless otherwise stated in their employment contract (e.g. an exclusivity clause).

Post-termination restrictive covenants may be considered void in accordance with Colombian Labour Law and constitutional principles.

Post-contractual non-competition clauses must last no longer than two years from the date of termination of the contract. The employer is obliged to pay compensation (at least one-half of the average monthly salary paid in the last three months of employment). The covenant will not be valid if the employee is a minor or if the employee‘s salary amounts to less than the average national salary.

The non-competition clause does not apply if: (i) the employee terminates the contract without notice period (extraordinary termination) and does not state that he does agree that the clause applies; or (ii) if the employee is dismissed without a justified reason, unless the employer undertakes to pay the prescribed remuneration for the duration of the clause.

Non-competition clauses are only valid insofar as they last for no more than one year after the termination of employment, are restricted to the employer’s line of business and if the employee’s monthly income is above a certain threshold at the end of the employment relationship (e.g. for 2020, EUR 3,580 for contracts concluded after 29 December 2015). Also, contractual penalties are limited by law to six net monthly remunerations (without taking into account the 13th and 14th annual salary). If the parties agree to such a contractual penalty, the right to observe the non-competition clause or the compensation of any further damage is excluded.

A non-competition clause may not cause undue hardship to the employee’s career when weighed against the employer’s justified business interests.

Judges may limit the scope of a clause, or the contractual penalty to be paid when violating the law. Non-competition clauses are generally rendered void when the employer carries out the dismissals.

1.12 Miscellaneous

Other than dismissals, the non-renewal of fixed-term contracts and termination based on the conclusion of a specific task or project determined in the contract, employment contracts may be terminated through the resignation or death of an employee or by the mutual agreement of the parties.

Not applicable.

Not applicable.

2. Dismissal of managing directors

It should be noted that the title ‘managing director’ is not recognised under the Croatian Companies Act or other relevant applicable legislation. The Croatian Companies Act recognises only a ‘director’, who is authorised to represent the company and obliged to be registered as a member of the management board with the respective commercial court.

A managing director need not to have an employment agreement with the company, or any other type of agreement, in order to be able to represent the company.

Where a managing director has a  managing / service agreement  which falls under the regulation of Croatian obligatory law, only the provisions of the managing / service agreement apply. If aspects of the relationship are not dealt with in the managing / service agreement, the relevant provisions of the Croatian Obligations Act will apply.

Where a managing director does not have any employment or managing / service agreement with the company, he shall be treated as a member of the management board only.

The table below sets out the position under Croatian law with respect to the managing directors of a limited liability company, with and without service agreements.

2.1 Reasons for dismissal

  1. Fair Dismissals: if there is a fair cause for dismissal, the employer must identify the facts and the standards that were broken by the employee and that determine the fair cause for termination as stated in Article 62 of the Colombian Labour Code. In a set case, the employee is not entitled to any compensation or damages derived from the contract's termination.
  2. Unfair Dismissals: the employer may unilaterally end an employment contract at any time, even in the absence of fair cause. In a set case, the employee is entitled to receive compensation in the form of damages (i.e. legal severance) as previously stated in Article 64 of the Colombian Labour Code.
  3. Non-renewal of a fixed term contract: if the employee has a fixed term employment contract, the employer may decide not to extend the contract after the date of expiration with 30 days prior notice.
  4. Termination of the specific task or project: If the employee was hired through an employment contract tied to the development of a specific task or project, once the project or task is finished, the employer can terminate the contract without notice and without the payment of compensation or severance. In this case, the reason for dismissal is the termination of the specific task, which must be expressly defined in the contract.

No special reasons required (unless otherwise specified within the statute of the company or the contract itself).

Where the managing director has a service agreement, the provisions of that service agreement (and consequently the Croatian Obligations Act) will apply.

If the managing director is a member of the management board according to the statute of the company (and not only appointed by resolution of the shareholders), the company statute may set out that revocation is only possible for special reasons.

A company may revoke the appointment or terminate the service contract without cause, but must do so in compliance with applicable notice periods and termination dates.

2.2 Form

  1. Fair Dismissals: the employer must invoke one or more of the fair causes established in Article 62 of the Colombian Labour Code, identify the contractual and legal standards that were broken or the facts that justify termination. For all evidential purposes, the decision must be in written form.
  2. Unfair Dismissals: for evidential purposes, the decision must be in written form.
  3. Non-renewal of a fixed-term contract:  the employer must provide the employee with written notice with at least 30 days prior notice before the expiration date of the fixed-term contract.
  4. Termination of the specific task or project: For evidential purposes, the decision must be in written form. Also, it is necessary that the specific task or project be finished, which allows the employer to terminate the contract in regard to this event.

Valid shareholders’ resolution on revocation of appointment as member  of the management board. Registration of this revocation with the court registry. Termination of the service agreement in the same form in which the agreement has been signed (Obligations Act provisions shall apply).

A valid shareholder’s resolution is required on revocation of appointment as managing director and on termination of the service contract. A managing director has only to be notified in writing if so agreed in the service contract.

2.3 Notice period

Only applicable to fixed-term contracts to be given at least 30 days before the date of expiration of the contract.

In exceptional cases, fair dismissals in which the employer invokes the causes established in Issues 9, 10, 11, 12, 13, 14, and 15 of Article 62 of the Colombian Labour Code, the employer must provide written notice with at least 15 days prior notice before the termination date.

According to the Croatian Companies Act, the appointment of a director of the company can be revoked at any time without notice (for no special reason). Some restrictions (not strictly defined) can be set out within the statute of the company.

If the director has a service agreement, the notice period will be as set out in the service agreement.

Revocation of appointment: possible without notice.

Termination of the service contract: Austrian law does provide statutory minimum notice periods and dates, and rarely does collective agreements and their notice periods and termination dates apply unless a more favourable contractual agreement exists. Managing directors generally have fixed-term contracts or long contractual notice periods.

2.4 Involvement of works council

No involvement.

No involvement.

No involvement.

2.5 Involvement of a union

No involvement, since Managing Directors may not be included as union officers.

No involvement.

No involvement.

2.6 Approval of state authorities necessary

Unfair dismissal is prohibited in the following cases, which imply reinforced labour stability since contracts may only be terminated with proven fair cause for dismissal:

  1. Employees with union immunity for which a judge is entitled to verify the existence of fair cause for termination;
  2. During pregnancy and the first six months after a birth, women may not be dismissed without fair cause. Furthermore, the Ministry of Labour is entitled to verify the existence of fair cause for terminating a contract during the pregnancy of a woman or for the first three months after giving birth.
  3. Employees with any health condition (e.g. on sick-leave, experiencing restrictions, handicapped, etc.) that limits their interaction in the work environment may only be dismissed with fair cause that precludes discrimination. However, the Ministry of Labour Is entitled to authorise the dismissal of employees with health limitations when the decision is founded on the medical condition of the employee. However, in cases of unfair dismissal of employees with health limitations, the dismissals will be presumed to be motivated on their conditions.
  4. Employees whose economically dependent partners are pregnant or are on maternity leave as defined by the Colombian Constitutional Court in Case C-005/17.
  5. Employees who are within the last three years of fulfilment of the requirements of an old-age pension.
  6. Employees who, six months prior to their termination, filed claims of labour harassment,, which was verified by a judge.
  7. During collective bargaining, employees who are potential beneficiaries of an eventual collective bargaining agreement may not be dismissed without fair cause.

Respective commercial court brings a resolution on registration of the resolution in the court registry. The court’s resolution and registration are declaratory.

Not required.

2.7 Collective redundancies

It is considered a collective redundancy, if a company dismisses without fair cause the following percentage of its employees within period of six months:

  • 30% of its employees if the company has 10 to 49  employees.
  • 20% if it has 50 to 99  employees.
  • 15% if it has 100 to 199  employees.
  • 9% if it has 200 to 499  employees.
  • 7% if it has 500 to 999  employees.
  • 5% if it has more than 1000 employees.

For a company to dismiss this percentage or more of its workforce, prior authorisation must be requested from the Colombian Ministry of Labour.

To receive the employment authority’s approval, it is necessary to prove that the company is facing a financial crisis or another extraordinary situation forcing the collective redundancy.

Not applicable.

Not applicable.

2.8 Summary dismissals

Not applicable.

Not applicable.

A summary dismissal (‘Entlassung’) does not require observance of any particular notice periods, but must be issued without undue delay. Summary dismissals are possible for good reasons or serious breach of duty, as regulated by law. Disloyalty, untrustworthiness, or persistent refusal to carry out one’s contractually agreed duties are typical reasons for a summary dismissal.

2.9 Consequences if requirements are not met

If requirements for dismissal with fair cause are not met, employees are entitled to claim damages (i.e. legal severance). However, for employees with reinforced labour stability or employees with seniority prior to 1 January 1981 who are dismissed without fair cause, a judge may decide on their reinstatement through a constitutional action.

If there is no valid shareholder resolution, the revocation will be invalid and the court will refuse to register it in the court registry. Where the managing director has a service agreement, he could claim:

  1. compensation for damages; or
  2. fulfilment of contractual obligations in accordance with the provisions of the Croatian Obligations Act.

If there is no valid shareholder resolution, the revocation of appointment as managing director will be invalid.

It is possible for the revocation to be valid and for the termination of the service contract to be invalid. If this is the case, the managing director is entitled to continued payment of salary and adequate employment.

2.10 Severance pay

When an employer has fair cause to end a contract, there is no indemnification granted to the employee.

On the other hand, in case of unfair dismissal, according to Colombian Labour Law there are different types of indemnifications (i.e. legal severance) based on these types of contracts:

i. in fixed-term contracts, the indemnification is calculated with the salary days pending until the end of the contract;

ii. in contracts for a specific project or service, the indemnification is calculated with the salary days pending until the end of the contract with a minimum of 15 days;

iii. in indefinite-term contracts, the indemnification is established as follows:

  • For employees hired after 27 December 2002:
    • If the employee has a salary ranging from one to ten Colombian minimum monthly wages, 30 days of salary for the first year of seniority, and 20 additional days for every additional year or in proportion if less.
    • If the employee has a salary of more than ten Colombian minimum monthly wages, 20 days of salary for the first year of seniority, and 15 additional days for every additional year or in proportion if less.
  • For employees hired between 1 January 1981 and 27 December 2002: 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less.
  • For employees hired prior to 1 January 1981: the employee is entitled to choose between reinstatement or damages consisting of 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less. However, if the employee chooses reinstatement and it is not possible, the judge will determine whether damages should be paid consisting 45 days of salary for the first year of seniority and 30 additional days for every additional year or in proportion if less.

For dismissal of managing directors, some companies may have special severance payments (i.e. Golden Parachute Agreements). However, these will only apply In those cases in which there is a written agreement since the Colombian Labour Code does not establish special severance for managing directors.

Severance pay may be specified in the managing director’s service agreement (this is usually a large sum).

Austrian law distinguishes between two severance pay schemes: one is applicable to all employment relationships established prior to 1 January 2003 (‘old model’), and the other to employment agreements signed after that date (‘new model’).

 The old severance pay model requires the employer to pay a sum based on the employee’s length of service at the end of the employment relationship unless it is the employee who terminates the contract or if the employee is dismissed without notice for good cause (i.e. summary dismissal). If the employment relationship is terminated after three years employment, the employee is entitled to severance pay of two months salary. After 25 years, the employee is entitled to twelve months salary.

The new severance pay scheme requires the employer to pay a sum of 1.53 % of every monthly salary into an employee severance fund (‘Betriebliche Vorsorgekasse’). At the end of any given employment, the employee may then either request disbursement of the collected amount or to leave it in the fund for further investment.

2.11 Non-competition clauses

Employees are entitled to work for other employers outside their working hours unless it is otherwise stated in their employment contract (e.g. an exclusivity clause).

Post-termination restrictive covenants may be considered void in accordance with Colombian Labour Law and constitutional principles. However, under commercial and civil law, the former employer may enforce legal actions against a former employee, even after the termination of the contract, under the following circumstances: 

  1. Use of private databases that belong to the former employer, including worker databases and client databases.
  2. Use of confidential information and industrial, industrial secrets or intellectual property from the prior employer.
  3. In the case of former employees, it is their legal duty to guard and protect the commercial and industrial reserves of an enterprise, such as the know-how of the business or any trade or industrial secrets. They also have a legal duty that forbids them from using any privileged information of their previous employer for their own benefit.
  4. Lastly, anti-competitive conduct is also forbidden by Colombian Law, such as acts of client deviation or acts that disrupt the internal organisation of an enterprise.

The managing director, as a member of the management board, is prohibited from doing the following without the approval of the supervisory board (or the shareholders, if the company does not have a supervisory board):

  1. being a member of the supervisory board or management board of another company with the same business activities; or
  2. performing business activities equal to those of the company for his or somebody else’s account; or
  3. using the company’s premises for performing business for his own or somebody else’s profit. The company is entitled to compensation for any damage caused.

Non-competition clauses are only valid insofar as they are concluded for the duration of no more than one year after the termination of employment, are restricted to the employer’s line of business and if the employee’s monthly income is above a certain threshold at the end of the employment relationship (e.g. for 2020, EUR 3,580 for contracts concluded after the 29th December 2015) Also, contractual penalties are limited by law to an amount of six net monthly remunerations (without taking into account the 13th and 14th annual salary). If the parties agree on such a contractual penalty, the right to observe the non-competition clause or the compensation of any further damage is excluded.

A non-competition clause may not represent an undue hardship on the employee’s career when weighed against the employer’s justified business interests. Judges may limit the scope of a clause, or the contractual penalty to be paid when violating the law. Non-competition clauses are generally rendered void when employers are responsible for dismissals.

2.12 Miscellaneous

Other than dismissals, the non-renewal of fixed-term contracts and termination based on the conclusion of a specific task or project determined in a contract, employment contracts may be terminated through resignation or the death of an employee or by the mutual agreement of the parties.

Not applicable.

Not applicable.