Insights

COVID-19 | TERMINATION OF EMPLOYMENT CONTRACTS. ANYTHING GOES?

29/03/2020 Covid-19

Without prejudice to the current pandemic situation and serious financial constraints, companies cannot carry out redundancies without the necessary verification of the legally provided for procedures. The pandemic is therefore not a just cause for the termination of employment contracts immediately.

Companies must adopt duly substantiated and legal decisions in order to prevent labor disputes and the application of administrative offenses.

It is in this sense that we find it very useful to remember in which situations companies can resort to redundancy mechanisms when this is the last resort at their disposal.

One of the possibilities is to resort to collective dismissal based on (i) closing one or more sections or equivalent structures, or (ii) reducing the number of workers for market, structural or technological reasons.

The process must operate simultaneously or successively over a period of three months, covering at least two (micro or small companies) or five (medium or large companies) workers. It is subject to mandatory communications and intervention by the Authority for Working Conditions.

The dismissal process for extinction of the job, on the other hand, may be promoted when collective dismissal is not applicable, and the extinction occurs for market, structural or technological reasons, related to the company.

It will be necessary to observe the requirements for the choice of the job to be extinguished provided for in article 368 of the Labor Code, and carry out the communications and consultations legally provided for.

The compensation due to the worker covered by any of the aforementioned processes corresponds to 12 days of basic remuneration per full year of seniority. However, this rule is subject to changes depending on the age of the worker and the limits on the maximum amount of compensation provided for in the Labor Code.

Companies that resort to support measures such as the simplified lay-off should also check when they can proceed with the collective dismissal or extinction of the working post in view of the prohibitions provided for in the legislation currently in force.

Terminations of employment contracts on probationary terms or due to expiry of fixed-term contracts, as well as terminations of employment contracts by mutual agreement, also continue to be dmitted.

FAQs

1. My company does not meet all the requirements for obtaining extraordinary support. Can I fire several workers?

Yes, as long as your company complies with the legally prescribed procedures. It may, for example, proceed to a collective dismissal, covering a certain section of activity, based on the reduction of demand or the breakdown of supply chains, as well as on the eventual economic-financial imbalance of the company.

2. When can I resume collective redundancies or for the extinction of the working posts if my company is currently in lay-off under the simplified regime?

These dismissal modalities are allowed again 60 days after the end of the simplified lay-off.

3. I am a worker with an employment contract for an indefinite period and I was fired without any notice. What can I do?

If the dismissal decision was communicated without any notice and compliance with legal procedures, it is an unlawful dismissal.The worker can oppose the dismissal before the competent court, within 60 days, counted from the receipt of the notice of dismissal or the date of termination of the contract, if later. The action to contest collective dismissal must be brought within six months from the date of termination of the contract.

4. If I was fired, can I get unemployment allowance?

Yes, as long as it meets the requirements for attributing social benefits due to involuntary job loss.

5. My company is closed due to the state of emergency. Can I stop paying my workers' wages?

No. In these situations, the company must assess whether it meets the requirements to access the extraordinary support measures approved by the Government. An agreement may also be entered into to settle outstanding payments and interest on late payments.

In the event of failure to pay punctual remuneration for a period of 15 days on the due date, the worker may suspend the employment contract, by means of a written communication to the employer and the Authority for Working Conditions.

The worker may suspend the employment contract before the period of 15 days has elapsed, when the employer declares in writing that he foresees that he will not pay the outstanding remuneration until the end of that period.

 

Text prepared in accordance with the legislation in force on March 29, 2020.

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