CMS Expert Guide to employment termination law and legislation

Global comparison

1. Dismissal of employees

1.1 Reasons for dismissal

The employer may dismiss an employee with notice for statutory reasons, including the winding-up or relocation (in case that the employee does  not agree with the relocation) of the employer or a part thereof, the redundancy of the employee, inability to perform work due to health reasons, unsatisfactory performance, or disciplinary breaches. An employer may terminate an employment relationship with immediate effect if the employee is lawfully sentenced for committing an intentional crime (a crime caused not by negligence), or has committed a serious breach of work discipline.

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

Notice must be given in writing (not by e-mail or fax), and signed by the employer’s representative in order to be valid.

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 general notice period is one month. In case of dismissal where the reasons are the winding-up or relocation of the employer  or a part thereof, redundancy of the employee, or inability to perform work due to health problems, the notice period is two months if the employment has lasted  for at least one year, and three months if it has lasted for at least five years. Where the dismissal is due to reasons other than those stated above, the notice period is two months if the employment has lasted for at least one year. If the notice is given by the employee, the notice period is two months if the employment has lasted for at least one year. If the dismissal occurs during a probationary period, a written notification (not a formal notice) should be delivered to the other party normally at least three days before the intended termination date (it is not obligatory to meet such a three-day notification period).

The statutory maximum of a probationary period is three months, and a maximum of six months in the case of managing employees. The probation period, and its length thereof, are subject to agreement between the parties.

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

Dismissal of a member of the works council is invalid without the works council’s prior approval. Employee representatives are protected against dismissal for six months following the expiry of their term of office.

In cases of termination by notice and immediate termination, the employer is obliged to consult with employee representatives before dismissing the respective employee, otherwise such a dismissal is invalid. However, the employee representatives’ consent to the particular dismissal is not a precondition for its validity.

If there are no employee representatives then the obligation of the previous consultation does not apply.

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

Dismissal of a trade union member is invalid if the trade union’s prior approval has not been obtained. Trade union officers are protected against dismissal for six months following the expiry of their term of office.

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

Obligatory for disabled employees.

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

1.7 Collective redundancies

A collective redundancy occurs when the employer dismisses more than ten employees within 30 days, if the employer employs fewer than 100 but more than 20 employees. If it employs at least 100 but fewer than 300 employees, termination of at least 10% of the workforce is considered a collective redundancy. If the employer employs at least 300 employees, then termination of 30 employees is considered a collective redundancy. At least one month prior to commencement of collective redundancies, the employer must negotiate measures to avoid or limit collective redundancies, and measures designed to mitigate the unfavorable consequences of collective redundancies with employee representatives. If there are no employee representatives, the employer must negotiate directly with the employees.

The employer must provide employee representatives, or employees directly, with all the information necessary to facilitate these negotiations in writing. A transcript of the written information must also be provided to the respective Office of Labour, Social Affairs and the Family. Following the negotiations, the Office of Labour, Social Affairs and the Family, as well as the employee representatives, or directly employees, must be provided with written information on the results of the negotiations.

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

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

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

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

1.8 Summary dismissals

Immediate termination of employment by the employer is possible only for a serious breach of work discipline by the employee or for a lawful conviction of the employee for an intentional crime.

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

The immediate termination must be done in writing and delivered to the employee, with the merits of the reason for immediate termination being specified in such a way that prevents confusion with any other reason for termination.

The employer may not immediately terminate the employment with a pregnant employee, an employee on maternity or parental leave, a lone employee taking care of a child younger than three years of age or with an employee taking care of a close person who is severely disabled. However, if there is a reason for immediate termination, the employment of the aforesaid employees (except for the employees on maternal or parental leave) may be terminated by notice for that reason.

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

Not applicable.

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

Severance pay must only be paid if the employment has been terminated  by notice of the employer or by agreement between the employer and  the employee for the reasons of winding-up or relocation of the employer or a part thereof, the redundancy of the employee, the employee’s long-term medical inability to perform work, or the inability to perform work due to accident at work, occupational disease or its threat or due to reaching the maximum exposure at work set by the public health authority.

In case that the employee is dismissed for the reasons of winding-up or relocation of the employer or a part thereof, the redundancy of the employee or the employee’s long-term medical inability to perform work, the employee is entitled to severance pay equal to the average monthly earnings of the employee if the employment lasted at least two years, two times the average monthly earnings if the employment lasted between five and ten years, three times the average monthly earnings if the employment lasted between ten and 20 years and four times the average monthly earnings if the employment lasted at least 20 years.

If the employment is terminated by agreement for the same reasons as stated in the previous paragraph, the employee is entitled to severance pay equal to the average monthly earnings of the employee if the employment lasted less than two years, two times the average monthly earnings if the employment lasted between two and five years, three times the average monthly earnings if the employment lasted between five and ten years, four times the average monthly earnings if the employment lasted between ten and 20 years and five times the average monthly earnings if the employment lasted at least 20 years.

In case that the employee is dismissed or the employment is terminated by agreement for the reason of the employee’s inability to perform work due to an accident at work, occupational disease or its threat or due to reaching the maximum exposure at work set by the public health authority, the employee is entitled to a severance pay of at least ten times the average monthly earning of the employee, unless the accident at work was caused by the employee’s breach of health and safety rules or took place while he / she was under the influence of alcohol, narcotics or psychotropic substances.

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

The employer may agree with the employee in the employment contract that following termination of the employment the employee will not perform a gainful activity competitive to the activity of the employer for a certain period of time, but no longer than one year. Conclusion of such non- competition clause is possible only if during the employment the employee is able to gain information or knowledge which is not commonly accessible and its use could cause substantial harm to the employer.

The employer is obliged to compensate the employee for complying with the non-competition clause by paying them at least 50 % of the employee’s average monthly earnings for each month of compliance with the obligation of the non-competition clause. The employer may only withdraw from a non-competition clause during the employment relationship.

The employee may terminate the non-competition clause if the employer fails to provide them with the above stated compensation for their compliance with the non-competition clause within 15 days of the compensation becoming due.

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

An employer cannot dismiss an employee within a protected period, i.e. within a period during which the employee is acknowledged to be temporarily incapable of work (during sick leave due to a disease or  an accident, during pregnancy, maternity or parental leave or, for a lone parent taking care of a child younger than three years of age, during extraordinary military service, whilst having been released to perform a public function, or if the employee is medically acknowledged to be temporarily unable to perform night shifts).

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

A company may dismiss its managing director (as a statutory body or a member of a statutory body of an entity, i.e. not as an employee) without cause.

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

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

2.2 Form

A valid shareholder resolution is required for revocation of the appointment of the managing director and for termination of any agreement setting out the terms of appointment. The managing director is to be provided with a copy of the resolution, or information regarding the dismissal.

The company has only to inform the managing director that the general meeting of shareholders has decided for the dismissal.

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

Dismissal is possible without notice, and will be valid from the date of adoption of the shareholders’ resolution.

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

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

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

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

2.4 Involvement of works council

No involvement.

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

2.5 Involvement of a union

No involvement.

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

2.6 Approval of state authorities necessary

Not necessary.

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

If no shareholders’ resolution has been adopted then the revocation of appointment will be invalid.

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

2.10 Severance pay

No statutory severance payment; severance pay is subject to negotiation.

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

Under Slovak law, a managing director is bound by a non-competition clause during the performance of his / her function. A post-contractual non-competition clause may be considered invalid if the contractual clause refers to the time after dismissal from the function, in which case the court may find it invalid.

Such clauses are common in practice, and provide the managing director with compensation. It is less likely that a contractual party will sue the other party before the court on the basis of such a clause being invalid.

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

Not applicable.

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.