CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

1.1 Reasons for dismissal

The employer must establish a real and serious reason to dismiss an employee.

It may be:

  • a personal reason, notably a fault (disciplinary ground), poor performance, disablement of the employee when the employer is unable to relocate / redeploy him to another position or make reasonable adjustments to his post; or
  • an economic reason, such as economic difficulties, technological changes or the absolute necessity of restructuring to safeguard competitiveness. The economic reason is analysed at the level of the group’s companies established in France operating in the same business sector. The redeployment obligation for economic dismissal is limited to jobs available “in French territory in the company or in other companies of the group, the organisation, activities, and operating location of which allows mobility of some or all of the personnel“;
  • the refusal to amend the employment contract following a collective performance agreement

An employer may not dismiss an employee without a legally valid cause.

Dismissal may be based on personal grounds (e.g. disciplinary dismissal, dismissal due to professional inadequacy, dismissal due to incapacity) or economic grounds (e.g. economic difficulties, technological changes), or subject to specific conditions, without stating a specific motive.

Generally, it is difficult to terminate an employee without the employee’s consent under Ukrainian law. Valid grounds for termination may be divided into those related to the employee’s breaches of employment duties (“termination with cause on the part of the employee”) and those not related to the employee’s actions (“termination without cause”). Termination is not generally allowed while an employee is on annual or sick leave.

An employer may unilaterally terminate an employee with cause in the following cases:

  • systematic unjustified failure to fulfil employment obligations;
  • unjustified absence from work for more than three hours during one day;
  • appearance at work while under the influence of alcohol or drugs;
  • misappropriation of property;
  • a single gross violation of employment obligations;
  • actions of a company head causing delayed or reduced payment of wages;
  • immediate subordination to a related party contrary to the Ukrainian law “On Preventing Corruption”;
  • actions of an employee entrusted with company assets (cash or property) that result in the loss of the employer’s trust; or
  • immoral conduct.

Termination in most of these cases is regarded as a disciplinary sanction and must be imposed following special procedures prescribed by law. An employer may terminate an employee without cause in the following cases:

  • changes in organisation of work and production (redundancy);
  • employee unsuitability for the job or position due to lack of qualification or poor health conditions;
  • reinstatement of an employee who previously occupied the position;
  • absence from work due to sickness for more than four continuous months;
  • recruitment by the army or mobilization of an employer-natural person during a special period; or
  • the employee’s unsuitability for the job or position is discovered within his / her probation period.

Except when an employee is absent for four months due to sickness, termination without cause is only allowed if the employee cannot be transferred to another position or job.

1.2 Form

The stages in the individual dismissal procedure are as follows:

  • The employee is formally invited to a preliminary meeting.
  • At least five business days after the formal invitation, a preliminary meeting is held during which the employer explains the reasons for the contemplated dismissal and listens to the employee’s explanation.
  • The employee may be assisted by a third party (an employee of the company or an adviser of the employee mentioned on an official list prepared by the Prefect, depending on the existence of employee representative bodies in the company).
  • The dismissal letter must be sent to the employee at least two (or seven for a dismissal due to economic reasons) business days after the meeting (and within a month for a disciplinary dismissal).

The dismissal letter must be a registered letter whose receipt must be acknowledged by the employee, signed by either a legal representative of the firm or a person duly empowered by a legal representative, and who must belong to the company.

Applicable collective bargaining agreements can provide for a more favourable timeframe and / or procedure.

The letter must explicitly mention the grounds for dismissal. There are other mandatory provisions such as the possibility of choosing to benefit temporarily the supplementary health care scheme in force in the company, etc.

The grounds set out in the dismissal letter may be specified by the employer or at the employee’s request after the letter has been sent. If the employee does not make such a request, the letter’s lack of an adequate explanation will not in itself support a finding that the dismissal lacks real and serious cause, but will merely entitle the employee to compensation of no more than one month’s salary.

A special procedure (possible involvement of the works council, see below,
meeting and notification of the dismissal) applies in the case of a dismissal for economic reasons or when the dismissal concerns a ‘protected employee’ (e.g. members of the social and economic council, and trade union delegates notably).

A specific procedure prior to the dismissal exists for employees who have been recognised as physically incapable of performing their work by a labour doctor (redeployment obligation, possible involvement of the social and economic council, etc.).

For a dismissal based on a disciplinary reason, the employer should move rapidly as the procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovery of the facts.

The employee must be notified of the dismissal in writing.

In all cases, a decision regarding dismissal must be conveyed in the form of a written order and signed by a duly authorised representative of the employer. The employee is to be provided with a copy of the dismissal order on the last day of his / her employment.

1.3 Notice period

The notice period is set by the applicable collective bargaining agreement and the Labour Code, and generally lasts between one and three months. The contract may be terminated without notice in the event of gross misconduct or intentional misconduct.

In the event of dismissal, the law provides that an employee is entitled to a notice of a duration which varies depending on his seniority as follows:

  • Length of service of less than six months: no notice period applicable;
  • Length of service between six months and less than two years: one month;
  • Length of service of at least two years: two months.

For any dismissal, the employer may choose whether the employee works during the notice period.

In either case, employee is entitled to receive the same salary, including any benefits.

This depends on the grounds for dismissal.

The statutory minimum notice period is two months if the case involves redundancy.

In certain cases (e.g. where there has been a single gross violation of employment duties), notification is not required.

1.4 Involvement of works council

The social and economic council must be informed and consulted (with an advisory but formal vote of its members) when a mass redundancy is planned, or for the planned dismissal of a protected employee or physically disabled employee.

Works councils do not exist in Monaco. A staff representative (if established) must be properly informed prior to a collective redundancies.

Not applicable unless provided for by a collective bargaining agreement or the internal policies of the employing company.

1.5 Involvement of a union

When a company employs more than 50 workers, trade unions may be involved in a mass redundancy procedure to negotiate an ‘employment saving plan’.

No involvement for dismissals.

In cases involving redundancies, the employer must notify and consult with the trade union at company level (if such a union operates at the employing company). In some cases, moreover, the employer is required to obtain prior consent from the trade union at company level (if one operates) to terminate the employment of trade union members. Such cases can include redundancy (unless the redundancy is caused by the liquidation of the employing company).

1.6 Approval of state authorities necessary

This is required when dismissing ‘protected employees’ and now the validation or homologation of the employment saving plan is also required for mass redundancy procedures.

Mandatory for employees with legal protection because of their private life or their mandate.

This protection applies to staff representatives, union delegates, pregnant women, employees taking maternity leave, paternity leave, adoption leave or family support leave, members of the Labour Court, harassment referents.

The relevant Labour Authority has to be informed of projected collective redundancies prior to their dismissal, and grant prior approval.

Not applicable.

1.7 Collective redundancies

Different procedures apply according to the company’s workforce and the number of employees concerned (the procedures are ‘lighter’ in small companies that dismiss fewer than ten employees).

The main principles are the same:

  • The employer has a duty to inform and consult the staff representative bodies;
  • All documentation related to the collective redundancy must be sent to the state authorities

In case of mass redundancies (more than ten employees in a company employing at least 50 employees):

  • The employer has a duty to inform and consult the social and economic council, involving at least two meetings (the social and economic council may be assisted by an accountant in some cases). Please note that, with the new law, the duration of the consultation has been regulated.
  • An ‘employment saving plan’ (a social plan providing real alternatives and social measures accompanying the redundancy, such as redeployment, redeployment leave, training, etc.) should be drafted. There are two options for drafting it: either through a collective agreement negotiated with trade unions or unilaterally by the employer (only in the absence of trade unions in the company or if no agreement is found and then only after consultation with the social and economic council).
  • This employment saving plan should then be sent to the state authorities that will either validate it (if agreed with trade unions) or homologate it (if unilaterally drafted by the employer). If the state authorities do not agree with the plan, the employer may present another draft after consulting the social and economic council.

The implementation of collective redundancies is mainly regulated by law and the National Collective Bargaining Agreement, which imposes some procedural steps prior to implementing any such decision.

Three main issues must be considered regarding the preparation and implementation of a collective social plan:

  • Drafting an information document containing all essential elements

regarding the decision to restructure, its motivation, its implementation and the measures taken by the employer to minimise any adverse impacts on employees;

  • Circulating the information to staff representatives, discussing it with them and collecting their comments and choices about measures taken to implement the restructuring (i.e., the measures adopted to minimise the number of dismissals); and
  • Implementing the restructuring plan, by obtaining the required authorisations as the case may be, notifying employees of their terminations and paying termination indemnities.

Currently there are no specific rules for collective redundancies in Ukraine, i.e. the redundancy procedure is the same irrespective of the number of people being made redundant.

In cases of redundancy, the employer must comply with the following notification and consultation requirements:

  • it must inform the trade union at company level (if one such operates within the company) about the redundancies being considered.The notice must be given within three months of the decision on the redundancies being taken, but no later than three months before the redundancies are expected to take place. Given these time requirements, it is advisable to notify the trade union promptly after the decision on redundancies has been taken;
  • it must notify the employees of the redundancy two months in advance;
  • in case of collective redundancy (see definition below), it must notify the State Employment Centre (in this text, the ‘Agency’) of any redundancies being considered, two months in advance;

The applicable law defines “collective redundancy” as a one-time dismissal

or series of dismissals following a decision by the employer made within

i. one month, if

  • ten or more employees have been dismissed from a company employing 20 to 100 individuals; or
  • 10% or more of the workforce have been dismissed from a company employing 101 to 300 individuals; or

ii. three months, if

  • 20% or more of the workforce have been dismissed, irrespective of the total number of staff.

1.8 Summary dismissals

The term ‘summary dismissals’ has no real meaning in France. Dismissal without a notice period is only possible where there has been a serious breach, but even in that case, the form described above for dismissal procedure, including the preliminary meeting and registered letter, must still be applied. In case of dismissal without notice, the employee has no dismissal indemnity or notice period indemnity, because there is no notice period. Such dismissed employees are still entitled to unemployment insurance benefits, however. The dismissal procedure must begin within a few weeks of the employer becoming aware of the reason for dismissal and no more than two months after the discovering of the facts.

Dismissal without notice is only possible in case of gross misconduct. In such a case, the employee receives no dismissal indemnity or notice period indemnity. The employee is still entitled to unemployment insurance benefits.

Generally, dismissal without notice by an employer is only possible with respect to certain categories of employees (i.e. the general management of the company) in cases where there has been a serious breach of duty. Also, dismissal without cause and without notice is possible for employees qualifying as company officials (e.g. director) if their corporate mandate is terminated.

1.9 Consequences if requirements are not met

The amount of damages depends on the actual loss suffered by the employee. For dismissals notified on or after 24 September 2017, the ordonnance n° 2017-1387 provides that the damages have a preset minimum and a maximum amount depending on the employee’s length of service. The ordonnance also stipulates specific lower minimum amounts for companies that usually employ fewer than 11 employees, but the maximum remains identical.

In some circumstances, the dismissal will be void, allowing the employee to request reinstatement. (These circumstances may include collective redundancies without a social plan, dismissal after an occupational injury or in discriminatory dismissals, or dismissal of a protected employee without state authority authorisation). In such a case, the compensation cannot be less than six months’ salary.

Should the employer dismiss an employee on personal or economic grounds without a valid cause, the employer would have to pay a dismissal indemnity.

In addition, the employee could claim damages for injuries suffered due to his / her wrongful dismissal.

Employees are reinstated, and / or awarded continued payment of salary.

1.10 Severance pay

Dismissal indemnity is payable unless the dismissal is due to gross misconduct or intentional misconduct. The amount payable is mainly set by the collective bargaining agreement but must not be less than 1 / 4 of the monthly salary per year of service for the first ten years of service, plus 1 / 3 of the monthly salary for each year of service after ten years. Indemnity is also payable for unused accrued holiday entitlement and for the notice period if the employer chooses to release the employee from performing it.

Dismissal indemnity is payable unless the dismissal is for gross misconduct. The amount payable is mainly set by the collective bargaining agreement, but must not be less than the French legal dismissal indemnity (since 27 September 2017: 25% of the monthly gross salary until ten years of seniority and one third of the monthly salary as of the tenth‘s year). A higher indemnity is payable in case of dismissal without a stated motive. Indemnity is also payable for unused accrued paid holidays and for the notice period if the employer chooses to release the employee from performing it.

A statutory severance payment of one average monthly salary is only required if the decision regarding the dismissal has been taken by the employer on the following grounds:

  • changes in organisation of work and production (redundancy); or
  • employee unsuitability for the job or position; or
  • reinstatement of an employee who previously occupied the position.

When dismissing a company official in connection with the termination of his / her corporate mandate, a statutory severance payment of six times the employee’s average monthly salary must be paid.

In all cases of dismissal, an employer must pay a terminated employee all payments due under his / her employment agreement (e.g. salary and compensation for any of the employee’s annual vacation accumulated but unused during his / her whole term of employment with the employing company). Voluntary severance payments are also subject to negotiations between employer and employee. These are especially common if the justification for a dismissal may be doubtful.

1.11 Non-competition clauses

A non-competition clause is only valid if provided in the work contract, and if:

  • The employer demonstrates that this clause is necessary to safeguard his interests and proportionate (e.g. the lower is the position the less the clause is justified);
  • Its scope is limited to a reasonable area, a reasonable period of time, and precise activities; and
  • The employee receives a monthly indemnity during the term of the clause (the indemnity amount is set by the work contract or collective bargaining agreement, but is generally between 20% and 50% of the employee’s monthly salary).

This clause can be waived by the employer in the letter of dismissal or according to the provision of the applicable collective bargaining agreement and / or employment contract.

The examination of the terms of the applicable collective bargaining agreement is key on this matter.

Non-competition clauses are enforceable in Monaco provided they are appropriately restricted.

A non-competition clause must comply with five cumulative conditions:

  • it must be essential to protect the employer’s legitimate interests;
  • it must be limited to a specific time period;
  • it must be limited to a geographical area;
  • it must take the characteristics of the employee’s job into account; and
  • most importantly, it must provide for a financial counterpart.

Independent consideration is required for a non-competition clause.

Post-contractual non-competition covenants are not enforceable in Ukraine.

1.12 Miscellaneous

Specific and restrictive rules and procedures apply in the case of pregnant women, women on and returning from maternity leave, young fathers, and employees recovering after a work-related accident or suffering from a work-related illness. Women on maternity leave cannot be dismissed during this period.

Since 2008, a new means of termination has been introduced, namely “by mutual agreement”. This new possibility is called ‘rupture conventionnelle’ (mutual termination of the employment contract). The termination is agreed by both employer and employee and there is no cause or reason to demonstrate.

The employee is entitled to unemployment insurance benefits and dismissal indemnity provided by law or the applicable collective bargaining agreement (or more if agreed).

A strict procedure including preliminary meetings and consideration periods should be followed (both parties have the benefit of 15 calendar days to retract, from the date on which the form is signed); a specific form must be filled in and signed by both parties.

The specific form must be sent to the state authorities for agreement. The state authorities have a 15-open day period to review the form. Within these 15 days, the state authorities can agree to the termination, disagree or stay silent (silence amounts to agreement). However, the state authorities must expressly agree for protected employees. Otherwise the termination is void.

Since September 2017 it has been possible for the employer to negotiate a collective agreement through a ‘rupture conventionnelle collective’ (mass mutual termination of the employment contract) with trade unions. Such an agreement can only implement voluntary departures and thus excludes any dismissals designed to eliminate jobs. This new method of terminating contracts is entirely excluded from the rules governing economic dismissals. The labour administration is informed as soon as negotiations to conclude such an agreement start and reviews the agreement’s contents before validating it.

Not applicable.

Certain categories of employees cannot be dismissed by an employer without their prior consent. These “protected” employees include:

  • pregnant women; and
  • women with children under the age of three, or under the age of six if a registered medical practitioner certifies that home care is necessary; and
  • single parents or the legal guardians of a child under the age of 14 or a handicapped child.

The law only allows “protected” employees to be dismissed if the employer is liquidated without legal succession. Under these circumstances, the law requires that they be paid their average salaries for three months following the termination.

2. Dismissal of managing directors

The legal requirements applicable to dismissing managing directors of Ukrainian companies are the same as for all other employees, except for the special terms of dismissal applicable to them if their corporate mandate is terminated. Ukrainian law allows a company to enter into an employment contract with the managing director. An employment contract is a specific form of employment agreement which, unlike a regular employment agreement, may provide additional grounds for dismissal comparable to those available under the law. As a result, a managing director may also be dismissed on grounds and subject to procedures provided by his / her employment contract (if such is concluded). In June 2018 the new Law of Ukraine on Limited and Additional Liability Companies (New LLC Law) came into effect presenting certain innovations for regulating the formation of a company management body (including general managers). Although the New LLC Law leaves open the theoretical possibility of appointing someone to head such a management body based on either an employment or a civil law contract, and presents additional grounds for termination of employment, the wording of the current version of the New LLC Law is vaguely drafted in this respect.

Therefore, we may only speculate on these innovations until the relevant court practice becomes available and brings more certainty.

2.1 Reasons for dismissal

The company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. However, a fair reason is legally required in certain forms of companies (e. g. the civil form or commercial forms such as certain limited companies (‘SA’) or limited liability companies (‘SARL’)).

A company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. This is particularly the case for limited companies (‘SA‘). However, a just cause is legally required in limited liability companies (‘SARL’) when revoking a managing director who is also a shareholder of the company. In any event, revocation must follow mandatory steps to be declared valid.

The main reason for dismissal of a managing director is a termination of his / her corporate mandate. Additional grounds for dismissal of a managing director are described below. Such grounds may be divided into those related to the managing director’s breaches of employment duties (“termination with cause”) and those not related to the managing director’s actions (“termination without cause”). Termination is not generally allowed while a managing director is on annual or sick leave.

An employer may unilaterally dismiss a managing director with cause in the following cases:

  • systematic unjustified failure to fulfil employment obligations;
  • unjustified absence from work for more than three hours during one day;
  • appearance at work while under the influence of alcohol or drugs;
  • misappropriation of property;
  • a single gross violation of employment obligations;
  • actions of a managing director causing delayed or reduced payment of wages;
  • immediate subordination to a related party contrary to the Ukrainian law ‘On Preventing Corruption’;
  • actions of a managing director entrusted with company assets (cash or property) that result in the loss of the employer’s trust (if applicable); or
  • immoral conduct.

Termination in most of these cases is regarded as a disciplinary sanction and must be imposed following special procedures prescribed by law.

An employer may terminate a managing director without cause in the following cases:

  • termination of a corporate mandate of a managing director;
  • termination on grounds provided in the managing director’s employment contract;
  • additional general grounds for termination as described below:
    • changes in organisation of work and production (redundancy);
    • managing director’s unsuitability for the job or position due to lack of qualifications or poor health;
    • reinstatement of an employee who previously occupied the position;
    • recruitment by the army or mobilisation of an employer-natural person during a special period;
    • managing director’s unsuitability for the job or position discovered within his / her probation period;
    • absence from work due to sickness for more than four continuous months.

Termination without cause (except when a managing director is absent for four months due to sickness) is only allowed if a managing director cannot be transferred to another position or job.

2.2 Form

A resolution taken by the shareholders or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be notified in writing of the revocation, and the change of managing director must be published in a public Corporate Register.

A resolution is taken by the shareholders and / or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be given the opportunity to explain himself or herself and the revocation must not be made vexatiously.

In all cases, a decision regarding dismissal of a managing director must be conveyed in written form and approved by the highest governing body of the employer (e.g. by means of shareholder's/supervisory board’s resolution for joint-stock companies or resolution of participants for limited liability companies). The managing director is to be provided with a copy of the dismissal decision on the last day of his / her employment.

2.3 Notice period

There is no notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.

No notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.

This depends on the grounds for dismissal.

The statutory minimum notice period is two months if the case involves redundancy.

In certain cases (e.g. where there has been a single gross violation of employment duties or the mandate of a managing director is terminated), notification is not required.

2.4 Involvement of works council

No.

No involvement.

No involvement.

2.5 Involvement of a union

Not applicable.

No involvement.

In cases involving redundancies, the employer must notify and consult with the trade union at company level (if such a union operates at the employing company). In some cases, moreover, the employer is required to obtain prior consent from the trade union at company level (if one operates) to terminate the employment of trade union members. Such cases can include redundancy (unless the redundancy is caused by the liquidation of the employing company).

2.6 Approval of state authorities necessary

No.

For limited liability companies (‘SARL’), appointment of a new director is subject to government approval. For all companies, the change of director must be registered in the Monaco Companies Register.

Not necessary.

2.7 Collective redundancies

Not applicable.

Not applicable.

Not applicable.

2.8 Summary dismissals

Not applicable.

Not applicable.

Dismissal without notice by an employer is only possible with respect to the general management level of the company in cases where there has been a serious breach of duty. Also, dismissal without cause and without notice is possible in respect to a managing director (as he / she qualifies as a company official) if his / her corporate mandate is terminated.

2.9 Consequences if requirements are not met

Damages may mainly be claimed:

  • for lack of fair reason in companies where such a reason is legally required to revoke a representative; or
  • if the revocation is notified under hurtful circumstances (e.g. is very sudden and unexpected, or is publicly announced before the director is informed), or if the managing director has not been granted a reasonable opportunity to make his point before the decision to revoke him is made (absence of due process).

Damages may be claimed, mainly:

  • for the lack of a just cause, in the event that such reason is legally required to revoke a legal representative; or
  • if the revocation is notified under hurtful circumstances (e.g. is very sudden and unexpected, or is publicly announced before the director is informed), or if the managing director has not been granted a reasonable opportunity to make his / her point before the board’s / shareholders’ decision to revoke him / her (absence of due process). However, the managing director cannot be reinstated.

The managing director is reinstated, and / or awarded continued payment of salary.

2.10 Severance pay

There is no mandatory severance pay for the capacity as director, unless stated otherwise in the by-laws of the company or in the resolution of appointment of the managing director.

Not applicable.

If a managing director is dismissed in connection with the forcible termination of his / her corporate mandate, a statutory severance payment of six times the managing director’s average monthly salary must be paid.

In turn, a statutory severance payment of one average monthly salary is required if the decision regarding the dismissal has been taken by the employer on the following grounds:

  • changes in the organisation of work and production (redundancy); or
  • managing director’s unsuitability for the job or position; or
  • reinstatement of an employee who previously occupied the position.

In all cases of dismissal, an employer must pay the managing director all payments due under his / her employment contract / agreement (e.g. salary and compensation for any of the managing director’s annual vacation accumulated but unused during his / her whole term of employment with the employing company). Voluntary severance payments are also subject to negotiations between the employer and managing director. These are especially common if the justification for a dismissal is in doubt.

2.11 Non-competition clauses

The terms of any non-competition clause must be agreed between the parties. If the scope of the clause is too wide (according to its geographic area, its length, or the activities it concerns), its validity may be challenged.

Non competition clauses are only valid insofar as they specify a restricted application in time and space. They also have to include financial compensation in order to compensate the director for the loss of revenue they cause him or her. If the clause does not include those elements, it is null and void. In that case, the director may still be held liable for unfair competition towards the company if it is demonstrated that the director resorted to fraudulent practices intended to disturb the company’s activity such as denigrating it or employing key members of its staff.

Post-contractual non-competition covenants are not generally enforceable in Ukraine.

On the other hand, the New LLC Law provides a set of limited non-competition clauses in relation to a managing director. For instance, a managing director may not conduct business activities as an individual entrepreneur within a field of activity of his / her employer without a consent from the highest governing body of the employer.

2.12 Miscellaneous

The director may also be an employee. In this case, a proper dismissal process will have to be implemented in addition to the revocation process and corresponding dismissal indemnities paid.

Not applicable.

Not applicable.