CMS Expert Guide to employment termination law and legislation

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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

A claim for unfair dismissal can be made if the reason for dismissal was not one of a number of ‘fair reasons’ (e.g. conduct, capability, "some other substantial reason", statutory ban or redundancy).

Most employees need a particular length of service to bring a claim for unfair dismissal. At present this is two years’ service. However, all employees can bring a claim for unfair dismissal if the reason for dismissal is deemed to make the dismissal automatically unfair (e.g. for whistleblowing or for family reasons such as dismissals for reasons connected to pregnancy, parental leave, or requests for flexible working).

Even if the dismissal is deemed to be for a fair reason, to avoid a successful claim for unfair dismissal the employer must still follow a fair procedure and act reasonably in dismissing the employee.

If the reason for the dismissal involves discrimination against the employee (because of a protected characteristic such as sex, race, age or disability), employees may make a discrimination claim irrespective of their length of service.

Employees with two years of service have the right to request a written statement of reasons for dismissal. Employers must provide the statement within 14 days of the request.

Irrespective of length of service, employees dismissed during pregnancy or statutory maternity or adoption leave are automatically entitled to a written statement of reasons for dismissal without having to request it.

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

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.

Employees may be dismissed orally or in writing. In misconduct and capability dismissals the ACAS Code of Practice states that the employee should be invited to attend a meeting to explain their version of events. A letter should then be sent to confirm the reason for the dismissal and the date of dismissal in writing to avoid any dispute over the effective date of termination. A right of appeal should be offered. Failure by the employer to follow the Code of Practice does not give an employee a remedy for breach. However in the event that an unfair dismissal claim is successful and there has been non-compliance with the Code the tribunal has the power to increase the award of compensation by up to 25%.

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

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.

There is a statutory minimum notice period of between one and 12 weeks, dependent on length of service.

The contract of employment can provide for a longer notice period. Failure by the employer to comply with the contractual notice period can result in a claim for ‘wrongful dismissal’.

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

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

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.

No general legal requirement for involvement, but staff forums may be involved in the case of collective redundancies (see below).

No involvement.

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 normally other than in the case of collective redundancies (see below) or if the employee exercises their right to be accompanied by an appropriate trade union representative to a disciplinary meeting.

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

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.

Not necessary.

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

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

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 20 or more employees are proposed to be made redundant at one "establishment" within a period of 90 days or less, consultation with employee representatives (who may be trade union representatives) must begin at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.

Additionally, employers are obliged to notify the Secretary of State (for Business Innovation and Skills) where they are proposing to dismiss as redundant 20 or more employees within a 90-day period.

The Secretary of State must receive notification at least 30 days (or 45 days if 100 or more employees are to be made redundant) before the first dismissal takes effect.

A copy of the notification must also be provided for the employee representatives.

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

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

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

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

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.

Summary dismissal (dismissal without notice) is only lawful where the employee has committed a breach of contract that is sufficiently serious to entitle the employer to treat the employment contract as terminated with immediate effect. A typical example is where the employee has committed gross misconduct.

Does not apply.

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.

The employee may have various claims, such as an unfair dismissal claim where the primary remedy is financial compensation. However, there is also scope for the claimant to request reinstatement or re-engagement, and in very limited circumstances (e.g whistleblowing) the claimant can request interim relief, and if the tribunal grants this, then an employer must continue paying the claimant's wages until the date of the substantive hearing. Most employment-related claims in the UK are made in employment tribunals.

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

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.

The employment contract may provide for the employer to make a payment in lieu of notice, for example, equal to the salary that the employee would have earned during the notice period. If this is not provided for in the contract, the parties can agree for such a payment to be made, for example, as ‘damages’ for breach of contract.

If an employee with two years’ continuous service has been made redundant, they will be entitled to a statutory redundancy payment. The amount is calculated according to a statutory formula based on the employee’s age, length of service and weekly pay (capped at GBP 538 as at April 2020), up to a maximum of GBP 16,140 (as at April 2020). The employment contract may provide for an enhanced redundancy payment.

If the employee has been unfairly dismissed, and brings a successful claim in an employment tribunal they may be able to claim a ‘basic award’ calculated according to the same formula as the statutory redundancy payment (but employees cannot usually recover both a statutory redundancy payment and a basic award), and a ‘compensatory award’ which is capped at the lower of one year’s salary and GBP 88,519(as at April 2020). If an order for reinstatement or re-engagement is made there is scope for this cap to be lifted.

Employees who argue that they were dismissed for making a protected disclosure (whistleblowing) are not restricted by the statutory cap referred to above.

Similarly, the statutory cap does not apply where the dismissal was related to a prohibited ground under the Equality Act 2010. In these scenarios the potential awards can be significant.

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

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

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

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

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

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

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.

Restrictive covenants will be void for unlawful restraint of trade and so are unenforceable unless they protect the legitimate business interests of the employer and go no further than is necessary to provide that protection, in terms of activity, duration and geographical area. However they are widely used in senior level contracts. It is always recommended to take advice on tailoring such a clause for each individual employee and to ensure that when employees are promoted or their role changes that the restrictions are suitably updated.

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

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

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.

Employers may wish to avoid a potential dispute over a termination of employment by obtaining a waiver of rights from an employee in consideration for a termination payment. In the UK this agreement is referred to as a settlement agreement and there are a number of statutory formalities to include before such an agreement is enforceable in respect of statutory rights, including the requirement that the individual takes independent advice on the terms of the agreement. There are also risks attached to making an offer to an employee to enter into a settlement agreement and therefore legal advice should be taken before doing so. In addition, in 2019 the UK Government announced legislation on the use of non-disclosure agreements in discrimination cases which was expected to come into force in 2020, however given the pandemic, this has been delayed and no new time frame has been given. The UK statutory equality body, the Equality and Human Rights Commission issued guidance on this subject in October 2019 setting out good practice for employers to consider. 

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

2. Dismissal of managing directors

In the United Kingdom (UK), the rights and obligations of a ‘director’ are the same whether they are for a ‘managing director’ or any other type of director. However, not all directors are employees. ‘Managing directors’, for example, are employees of the company, but ‘non-executive directors’ are not employees. Normal practice is for a managing director to have a service agreement supplementing their statutory and common law obligations as a director. Often a managing director's employment contract will require them to resign any directorships when their employment terminates, so that their directorship and employment terminate simultaneously. It Is therefore often simpler (and preferable) to remove a managing director by dismissing them from their employment, and then requiring them to resign their directorship. Please see the section "Employees: United Kingdom" for information on the relevant issues when taking that approach, as well as the "Miscellaneous" section below.

This table only covers removal of the director from office as a director and does not cover termination of any contract of employment or other employment issues.

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’)).

The company may remove the director for any reason, unless the articles of association of the company or any other agreement between the director and the company provide otherwise. There is however a statutory procedure that the shareholders of any UK company can use to remove a director (see below). This procedure will apply regardless of any agreement between the company and the director, or any provision of the company's articles.

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

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.

The Companies Act 2006 gives shareholders a mandatory right to remove a director by ‘ordinary resolution’ (i.e. a simple majority of the shareholders attending and voting) at a meeting notwithstanding any other agreement between the director and the company. The resolution will be of no effect if passed in writing instead of at a meeting. At least one of the shareholders must give at least 28 clear days’ notice in writing before the meeting of an intention to move the resolution at the meeting. On receiving that notice, the company must forward the notice of the resolution to the director concerned and call a general meeting of the company to vote on the resolution. The director has the right to be heard at the meeting and to make written representations. 

The company's articles of association or shareholders' agreement may contain provisions that make it difficult in practice to remove a director or provide that they can be reinstated. The company's articles of association and shareholders' agreements should therefore be checked before considering taking this route. 

A company's articles of association may set out additional (and usually less complex or time-consuming) bases on which a director can be removed. For example, the 'Model Articles' under the Companies Act 2006 set out circumstances that trigger the automatic removal of a director, including that they are prohibited from being a director by law or a bankruptcy order is made against them. Some companies' articles of association also allow the directors to remove another director by majority vote, for example. The articles of a company should be reviewed for any such procedures if removal of a director is contemplated.

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

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.

Removal as a director is immediate unless otherwise specified in the articles of association of the company.

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

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

2.4 Involvement of works council

No.

No involvement.

No involvement.

2.5 Involvement of a union

Not applicable.

No involvement.

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

2.6 Approval of state authorities necessary

No.

Not necessary.

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

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

2.7 Collective redundancies

Not applicable.

Not applicable.

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

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

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

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

2.8 Summary dismissals

Not applicable.

No special rules apply.

Not applicable.

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).

The removal of the director is void.

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

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.

The director may be entitled to a payment under the terms of any service contract (for example a payment in lieu of notice), or as an employee under statute (for example a statutory redundancy payment). Sections 215 to 222 of the Companies Act 2006 contains special rules relating to compensation given to a director for their loss of office. Such compensation requires shareholder approval, except for certain payments that are made in good faith such as payments made in discharge of a legal obligation, or to settle a claim arising from loss of office or termination of employment.

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

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

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

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

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

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

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

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.

Restrictive covenants may be included in any service agreement. However, they will be void for unlawful restraint of trade and therefore unenforceable unless they protect the legitimate business interests of the employer and go no further than necessary to provide that protection in terms of the activities covered, duration and geographical area.

The director may also be subject to post-termination restrictions contained in other agreements such as a shareholder agreement, or (depending on the reward structure) share plans such as LTIPs (Long Term Incentive Plans).

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

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

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

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.

Regulated and listed companies should also be mindful of any obligations they may have under their regulatory rules and/or the rules applicable to their market listing. These rules are likely to limit the terms on which such companies can reimburse a director in connection with their removal from office or employment and can also subject a company to reporting obligations.

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