CMS Expert Guide to Dismissals

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1. Dismissal of employees

1.1 Reasons for dismissal

An employee may give notice of termination without providing cause. An employer, on the other hand, is only permitted to give notice of termination for one of the reasons explicitly stated in the Labour Code, which are as follows:

  1. organisational reasons – the employer’s enterprise shuts down or relocates, or the employee is made redundant; or
  2. health reasons − the employee no longer has the capacity to carry out his present work in a satisfactory manner; this must be confirmed with a medical certificate issued by the occupational medical services provider or under a ruling of the competent administrative agency having duly reviewed the medical certificate; or
  3. an employee no longer meets the requirements outlined for the work they are carrying out; or
  4. there are reasons for immediate termination of the employment relationship − the employee has committed a gross breach of duty or has been lawfully sentenced to prison for a crime; or
  5. the employee has seriously, or less seriously but repeatedly, breached a statutory duty relating to their work performance; or
  6. the employee breaches their obligation to observe the prescribed regime of an insured person being temporarily unfit for work in the first 14 calendar days of temporary incapacity for work due to sickness in an especially gross manner.

An employer may terminate an employee's employment contract if there is a justified reason for doing so, namely:

  1. the failure to achieve the results of work determined by a collective contract, an act of the employer or a contract of employment, for a period of no less than 30 days, if the employee has previously been given instructions for work;
  2. his/her behaviour is such that he/she cannot continue working with the employer due to:
    • a breach in the regulations on occupational health and safety, thereby causing danger to their own health or that of other employees;
    • coming into work under the influence of alcohol or psychoactive substances, drinking during work hours or using psychoactive substances while refusing to submit to the appropriate test conducted by the relevant authority that would confirm these facts, in accordance with the specific regulations;
    • unjustified absence from work for 3 or more consecutive workdays, or 5 non-consecutive days during a period of 12 months;
    • a final court decision by which the employee is sentenced for a crime of abuse of authority;
    • revealing a trade secret as determined by an act of the employer:
    • abusive or insulting behaviour towards customers or other employees;
    • a crime committed at work or in relation to the work done;
    • use or disposal of the company car, machine or tool contrary to an act of the employer with which the employee was previously familiarized;
  3. at the time of hiring, or re-assignment to a different workplace, the employee provided untrue information related to their employment or performing of other duties; 
  4. he/she refuses to conclude an annex to the employment contract (in situations prescribed by the law)
  5. he/she abuses the right to absence due to temporary inability to work, especially if he/she worked elsewhere during his/her absence and if he/she does not deliver the Doctor’s findings within three days of the findings or a report on temporary inability five days after it has been issued;
  6. he/she does not return to work two days after his/her unpaid leave concludes, and 15 days after the reason ceased in the case of a stay of employment;
  7. in case of collective terminations by the employer, if he was not provided  with the option to switch his/her workplace in accordance with his qualifications, to offer training in order to change the qualifications or offer work at other employers and other measures provided for in the law;
  8. In other cases, provided for in the collective contract or employment contract;

1.2 Form

Written form is necessary; must be delivered to the other party (both employer and employee may terminate the employment relationship by notice of termination). Under certain circumstances a fiction of delivery applies (e.g. if the employee refuses to accept the notice when it is delivered personally to them or when delivered by a postal worker). Under specific and strict conditions, it is also possible to deliver the termination documents electronically.

Termination must be in written form and given to the employee in person. It must contain the reasons for termination, an elaboration of the reasons and set out the employee’s right of appeal and the time limit for submitting the employee’s response prior to terminating the employment. This decision is given in the form of a decision by the director and is final.

1.3 Notice period

The statutory minimum notice period is set at two months, the period starting on the first day of the month after the month in which the notice of termination was delivered. 

It is possible to agree upon a probationary period of a maximum of three months (six months for managerial employees) with no statutory notice period. There is no notice period in cases of immediate termination of the employment relationship (i.e. in particular if an employee has committed a gross breach of duty or has been lawfully sentenced to prison for a crime).

The notice period depends on the ground for dismissal. If the ground for termination is one of the following:

  • a breach in the regulations on occupational health and safety;
  • an unjustified absence from work for 3 or more consecutive workdays, or 5 non-consecutive days during a 12-month period;
  • the use and disposal of the company car, machine or tool contrary to an act of the employer with which the employee was previously familiarized;
  • at the time of hiring, or re-assignment to a different workplace, the employee provided untrue information which relates to their employment or performing of other duties prior to the employment;
  • if he/she does not return to work two days after his/her unpaid leave concludes, and 15 days after the reason ceased in the case of a stay of employment;

Then, the employer is obliged to warn the employee in writing of the reasons for the employment termination, give evidence of those reasons, and allow the employee at least five working days to respond to the warning.

In addition, the employee has the right and duty to remain at work for at least 30 days from the day they receive notice that their employment contract is to be terminated, i.e. a termination notice.

1.4 Involvement of works council

No involvement in termination process except in collective redundancies.

Montenegrin Labour Law does not recognize work councils. The closest institution to a work council is a trade union (see information below).

1.5 Involvement of a union

Employer must discuss in advance any notices of termination and any immediate termination of the employment relationship with the trade union. Trade union approval is only required where the employee is a trade union officer. Such approval can be substituted by a court decision if the approval was withheld and the employer cannot be justifiably required to continue employing the trade union officer.

The representative trade union must be invited to give its opinion on the redundancy programme draft if it becomes necessary to implement a redundancy programme and give its complaints to the Employment agency regarding redundancy proceedings.

1.6 Approval of state authorities necessary

Approval of the state authorities is not required. The Labour Office need only be notified of a collective redundancy or the dismissal of a disabled person or of an employee who is not a Czech citizen.

No approval from the state authority is necessary according to the Montenegrin Labour Law.

1.7 Collective redundancies

Collective redundancies are defined as dismissals within a 30-day period of:

  1. more than ten employees in an establishment of 20 − 100 employees; or
  2. 10% or more of the employees in an establishment of 101 − 300 employees; or
  3. at least 30 employees in an establishment of 300 or more employees. The total number of employees also includes those employees whose employment relationship was terminated by agreement between the employee and the employer based on the same grounds for which other employees are being dismissed, if at least 5 employees were dismissed by notice of termination.

The employer must inform the works council and trade union (or directly affected employees if there is no works council or trade union) of its intentions at least 30 days prior to giving notice of termination, and must enter into negotiations to reach a compromise or reduce the number of affected employees, etc.

The employer must simultaneously inform the Labour Office in writing:

  1. that it has discussed the collective redundancies and its implications (i.e. the later results of these discussions) with the trade union, works council or affected employees; and
  2. of the actions it has taken in cooperation with the trade union / works council in relation to the collective redundancies; and
  3. of the number, characteristics, professional qualification, etc. of the employees to be made redundant.

If, within a 90-day period, the employer plans to conduct a collective dismissal of 20 or more employees, he must:

Conduct consultations and consider the opinion of the Union, or Employee representatives if there is no union, in order to reach an agreement regarding the lack of need for those employees’ work and reach a solution. The employer must respond to these in written form and consider them in order to reach a mutually beneficial solution; the consultation must last at least 30 days. The employer must inform the employment agency about the consultation and give all relevant information regarding the consultation in writing. Employees cannot be terminated before 30 days have elapsed after the consultation conclusion is delivered to the Employment agency.

The employer must deliver to the Union or Employee representatives, in written form, and for the purpose of conducting consultations, the following:

  1. reasons the employees’ work is no longer required;
  2. number of all employees;
  3. criteria for determining which employees’ work may no longer be needed;
  4. number of employees whose work might be no longer needed and their data as well as data pertaining to their places of work and positions;
  5. criteria for calculating severance; and
  6. measures taken by the employer in order to take care of the employees whose work is no longer needed: i.e. re-assignment to other work with the same employer with their qualifications, training for a different position with the same employer, assignment to another employer or other measures dictated by the contract.

1.8 Summary dismissals

Immediate termination (without notice period) of employment by the employer is possible only if the employee has breached a statutory duty in an especially gross manner or for a lawful conviction of the employee, following the employee intentionally committing a crime which leads to unconditional imprisonment for a duration longer than one year (or six months in the case of crimes committed in connection with exercising their job).

The employer may immediately (with effect upon delivery to the employee) terminate the employment within a period of two months of learning the reason for immediate termination, but not later than one year from the date of occurrence of the respective reason for termination.

An employer cannot dismiss with immediate effect any employee who is pregnant or during the employee's maternity or parental leave.

An immediate termination must be made in writing and be delivered to the employee in accordance with the Labour Code, with the reasons for immediate termination being specified in such a way that prevents confusion with any other reason(s) for termination.

Montenegrin Labour Law does not permit dismissal without notice. Notice has to contain the reasons for dismissal, evidence indicating that the conditions for dismissal have been obtained and a deadline for responding to the notice. The deadline may not be shorter than 5 days.

1.9 Consequences if requirements are not met

Termination may be held invalid by the court and the employment relationship reinstated if the employee files a claim to the court no later than two months after the date of the purported termination of the employment relationship, and the court finds the termination to be invalid.

If a court determines during the proceedings that the employee’s employment relationship has been unlawfully terminated, the court will decide that the employee is to be reinstated and compensated for damage. The employee’s right to compensation for financial damage is to be calculated as the amount of the lost salary and all other earnings he/she would have earned at work, in accordance with the law, collective agreement and employment contract, as well as payment of contributions for mandatory social insurance.

1.10 Severance pay

Minimum statutory severance pay depends on the reason for dismissal and  /  or the length of employment, and ranges from one average monthly salary for any dismissals for organisational reasons (including collective redundancies) of employees whose employment lasted less than one year, to 12 times the average monthly salary for dismissals for health reasons. The parties may negotiate a larger severance payment, or the payment of severance pay in the case of dismissal for other reasons.

If the employment contract is terminated because a certain job becomes unnecessary, the employer must pay severance pay as set by the labour rulebook/collective agreement or employment contract.

Severance pay is given to employees who have worked for that employer longer than 18 months.

The severance pay is given as the sum of one third of the employee's average gross salaries paid over the previous six months, for each year of work with that employer, or 1/3 of the average monthly salary without taxes and contributions in Montenegro, if this is more favourable for the employee.

Severance pay cannot be lower than three average monthly salaries without taxes and contributions in the past 6 months, or three times the average monthly salary without taxes and contributions in Montenegro, if this is more favourable for the employee.

1.11 Non-competition clauses

A post-contractual non-competition clause may be agreed upon between the employer and the employee and, if agreed, it must be in written form and must not last for more than one year. The agreement may be included in the employment agreement. Monetary compensation from the employer must, as a minimum, equal half the employee’s average monthly salary (i.e. of the wage / salary that the employee had prior to termination of the employment relationship) for each month during which the employee met the obligation not to compete stated in the clause. If the agreement sets out a financial penalty for breach of the clause by the employee, the employee’s obligation not to compete is discharged upon the payment of the penalty sum. The agreement is automatically terminated if the employer fails to pay the monetary compensation to the employee when it falls due. An employer may only withdraw from the non-competition clause during the term of employment. As far as case law is concerned, the withdrawal is only effective if it has been explicitly agreed upon, and such a provision is only enforceable if it contains reasons for the withdrawal, provided, in addition, such reasons are legitimate.

Contractual non-competition clauses may contain a number of jobs which the employee cannot do in his/her own name and on his/her own behalf (i.e. not in his/her capacity as an employee of the company) or for a different entity without the approval of the employer.  If the employee violates this obligation, he/she may be terminated.

Post-contractual non-competition restrictions may last for a maximum of two years after employment is terminated. However, such restrictions are only valid if the employer undertakes to pay monetary compensation to the employee in the employment agreement.

1.12 Miscellaneous

The employer may not give notice of termination during a ‘protection period’ (i.e. where an employee is temporarily unfit for work, a night-shift employee is temporarily unfit to perform night work, an employee is conscripted or released from work to exercise a public office, or during pregnancy, maternity or parental leave), unless the termination is for organisational reasons due to the closure or relocation of the enterprise. There are several exceptions to this rule.

The employment termination resolution is void if, on the date the resolution is passed, the employer was aware of the existence of the grounds for using pregnancy leave, maternity leave, or leave for the special care of a child, or if the employee, within 30 days of termination of employment, informs the employer of the existence of these circumstances and submits the appropriate certificate from an authorized physician or other competent authority.  

Also, an employer may not terminate employment, or put an employee in a disadvantageous position in any other way, because of his/her status or activities as an employees’ representative, trade union member, or because of his/her participation in trade union activities.

As for disabled persons, the employer is obliged to make it possible for any disabled employee to perform work suited to his/her working capability. Also, the employer must find another suitable job for any employee who is compromised by his/her disability in his/her job. Only if the employee refuses to accept such a job may the employer serve an employment termination resolution. If the employer cannot provide the disabled employee with a job suitable for his/her working capability, then such an employee will be considered redundant.

2. Dismissal of managing directors

2.1 Reasons for dismissal

In the Czech Republic managing directors are not considered employees, therefore labour law protection does not apply to them. The relationship between the managing director and the company is of a commercial nature, not an employment one. An appointment as managing director (as a statutory body or a member of a statutory body of an entity, i.e. not as an employee) may be revoked without stating any reason.

An employer may terminate an employee's employment contract if there is a justified reason for doing so, namely:

  1. if a Director’s mandate has elapsed and he/she is not re-elected, or if he/she is dismissed before the end of his mandate, the contract is cancelled unless otherwise provided for by a special law, or by the employment contract.
  2. for failure to achieve the results of work determined by a collective contract, an act of the employer or a contract of employment, for a period of no less than 30 days, if the employee has previously been given instructions for work;
  3. if his/her behaviour is such that he/she cannot continue working with the employer due to:
    • a breach in the regulations on occupational health and safety, thereby causing danger to their own health or that of other employees;
    • coming into work under the influence of alcohol or psychoactive substances, drinking during work hours or using psychoactive substances while refusing to submit to the appropriate test conducted by the relevant authority that would confirm these facts, in accordance with the specific regulations;
    • unjustified absence from work for 3 or more consecutive workdays in continuation, or 5 non-consecutive days during a period of 12 months;
    • a final court decision by which the employee is sentenced for a crime of abuse of authority;
    • revealing a trade secret as determined by an act of the employer:
    • abusive or insulting behaviour towards customers or other employees;
    • a crime committed at work or in relation to the work done;
    • use or disposal of the company car, machine or tool contrary to an act of the employer with which the employee was previously familiarized;
  4. at the time of hiring, or re-assignment to a different workplace, the employee provided untrue information related to their employment or performing of other duties; 
  5. he/she refuses to conclude an annex to the employment contract (in situations prescribed by the law)
  6. he/she abuses the right to absence due to temporary inability to work, especially if he/she worked elsewhere during his/her absence and if he/she does not deliver the Doctor’s findings within three days of the findings or a report on temporary inability  five days after it has been issued;
  7. he/she does not return to work two days after his/her unpaid leave concludes, and 15 days after the reason ceased in the case of stay of employment;
  8. in case of collective terminations by the employer, if he was not provided  with the option to switch his/her workplace in accordance with his qualifications, to offer training in order to change the qualifications or offer work at other employers and other measures provided for in the law;
  9. In other cases, provided for in the collective contract or employment contract;

2.2 Form

A valid shareholder resolution at a general meeting is required. There must be a simple majority of shareholders present, unless stated otherwise in the relevant company’s statutory documents. Apart from cases when entities have a sole shareholder, revocation of an appointment as managing director must be on the programme of the invitation to the general meeting. If not, the appointment may only be revoked, if all shareholders are present and agree to change the programme to include the revocation.

Termination must be in written form and given to the employee in person. It must contain the reasons for termination, an elaboration of the reasons and set out the employee’s right of appeal and the time limit for submitting the employee’s response prior to terminating the employment. This decision is given in the form of a decision by the director and is final.

2.3 Notice period

Not applicable.

The notice period depends on the ground for dismissal. If the ground for termination is one of the following:

  • a breach in the regulations on occupational health and safety
  • an unjustified absence from work for 3 or more consecutive, or 5 non-consecutive days during a 12-month period;
  • the use and disposal of the company car, machine or tool contrary to an act of the employer with which the employee was previously familiarized;
  • at the time of hiring, or re-assignment to a different workplace, the employee provided untrue information which relates to their employment or performing of other duties prior to the employment;
  • if he/she does not return to work two days after his/her unpaid leave concludes, and 15 days after the reason ceased in the case of a stay of employment;

Then, the employer is obliged to warn the employee in writing of the reasons for the employment termination, give evidence of those reasons, and allow the employee at least five working days to respond to the warning.

 In addition, the employee has the right and duty to remain at work for at least 30 days from the day they receive notice that their employment contract is to be terminated, i.e. a termination notice.

2.4 Involvement of works council

No involvement.

Montenegrin Labour Law does not recognize work councils. The closest institution to a work council is a trade union (see information below).

2.5 Involvement of a union

No involvement.

The representative trade union must be invited to give its opinion on the redundancy programme draft if it becomes necessary to implement a redundancy programme and give its complaints to the Employment agency regarding redundancy proceedings.

2.6 Approval of state authorities necessary

Not required.

However, revocation of a managing director from his/her office must be filed in the Commercial Register without undue delay. The appropriate court managing the Commercial Register may review the revocation in order to verify whether the revocation was done in accordance with applicable laws and the relevant entity’s statutory documents.

No approval from the state authority is necessary according to the Montenegrin Labour Law.

2.7 Collective redundancies

Not applicable.

If, within a 90-day period, the employer plans to conduct a collective dismissal of 20 or more employees, he must:

Conduct consultations and consider the opinion of the Union or Employee representatives if there is no union, in order to reach an agreement regarding the lack of need for those employees’ work and reach a solution. The employer must respond to these in written form and consider them in order to reach a mutually beneficial solution; the consultation must last at least 30 days. The employer must inform the Employment agency about the consultation and give all relevant information regarding the consultation in writing. Employees cannot be terminated before 30 days have elapsed after the consultation conclusion is delivered to the Employment agency.

The employer must deliver to the Union or Employee representatives, in written form, and for the purpose of conducting consultations, the following:

  1. reasons the employees’ work is no longer required;
  2. number of all employees;
  3. criteria for determining which employees’ work may no longer be needed; and
  4. number of employees whose work might be no longer needed and their data as well as data pertaining to their places of work and positions;
  5. criteria for calculating severance;
  6. measures taken by the employer in order to take care of the employees whose work is no longer needed: i.e. re-assignment to other work with the same employer with their qualifications, training for a different position with the same employer, assignment to another employer or other measures dictated by the contract.

2.8 Summary dismissals

Not applicable.

Montenegrin Labour Law does not permit dismissal without notice. Notice has to contain the reasons for dismissal, evidence indicating that the conditions for dismissal have been obtained and a deadline for responding to the notice. The deadline may not be shorter than 5 days.

2.9 Consequences if requirements are not met

Invalidity of revocation.

If a court determines during the proceedings that the employee’s employment relationship has been unlawfully terminated, the court will decide that the employee is to be reinstated and compensated for damage. The employee’s right to compensation for financial damage is to be calculated as the amount of the lost salary and all other earnings he/she would have earned at work, in accordance with the law, collective agreement and employment contract, as well as payment of contributions for mandatory social insurance.

2.10 Severance pay

No statutory severance pay.

If the employment contract is terminated because a certain job becomes unnecessary, the employer must pay severance pay as set by the labour rulebook/collective agreement or employment contract.

Severance pay is given to employees who have worked for that employer longer than 18 months.

The severance pay is given as the sum of one third of the employee's average gross salaries paid over the previous six months, for each year of work with that employer, or 1/3 of the average monthly salary without taxes and contributions in Montenegro, if this is more favourable for the employee.

Severance pay cannot be lower than three average monthly salaries without taxes and contributions in the past 6 months, or three times the average monthly salary without taxes and contributions in Montenegro, if this is more favourable for the employee.

2.11 Non-competition clauses

May be agreed in a performance agreement usually concluded with a member of a statutory body. The requirements set out in the Labour Code do not apply to managing directors unless explicitly agreed.

Contractual non-competition clauses may contain a number of jobs which the employee cannot do in his/her own name and on his/her own behalf (i.e. not in his/her capacity as an employee of the company) or for a different entity without the approval of the employer.  If the employee violates this obligation, he/she may be terminated.

Post-contractual non-competition restrictions may last for a maximum of two years after employment is terminated. However, such restrictions are only valid if the employer undertakes to pay monetary compensation to the employee in the employment agreement.

2.12 Miscellaneous

Managing directors shall not enter into employment contracts with companies, unless the type of work performed under the employment contract is materially different from the role of managing director. Instead, they should conclude an agreement on the performance of the office of the managing director. Such an agreement will not be governed by Czech Labour Code. 

The employment termination resolution is void if, on the date the resolution is passed, the employer was aware of the existence of the grounds for using pregnancy leave, maternity leave, or leave for the special care of a child, or if the employee, within 30 days of termination of employment, informs the employer of the existence of these circumstances and submits the appropriate certificate from an authorized physician or other competent authority.  

Also, an employer may not terminate employment, or put an employee in a disadvantageous position in any other way, because of his/her status or activities as an employees’ representative, trade union member, or because of his/her participation in trade union activities.

As for disabled persons, the employer is obliged to make it possible for any disabled employee to perform work suited to his/her working capability. Also, the employer must find another suitable job for any employee who is compromised by his/her disability in his/her job. Only if the employee refuses to accept such a job may the employer serve an employment termination resolution. If the employer cannot provide the disabled employee with a job suitable for his/her working capability, then such an employee will be considered redundant.