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 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

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.

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 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.

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

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.

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

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

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

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.

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

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.

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

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.

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

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.

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

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.

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 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.

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

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.

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

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’)).

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 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.

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

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.

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.

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

Not applicable.

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

No.

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

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).

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

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.

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

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.

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

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.

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.