Termination of an employment contract at the will of the employer

The Supreme Court of Lithuania (LAT) on June 25 this year has adopted a ruling on the interpretation and application of Article 59 of the Labour Code of the Republic of Lithuania (DK, Labour Code) “Termination of an Employment Contract at the Will of the Employer”.

DK cites the termination of the employment contract at the will of the employer as one of the grounds for termination of the employment contract, which, following the adoption of the new Labour Code, gave employers a wider discretion to decide on the termination of employment contracts compared to the previous legislation.

Since the above-mentioned ground for termination of employment contract, the employer has the right to terminate the employment contract with the employee when all the following conditions are met:

there is a legitimate, sufficient reason for the employer to terminate the employment contract with a particular employee;
this reason is not specified in Article 57 (1) of the Labour Code, i. y. the reason for terminating the employment contract with the employee on the basis of Article 59 of the Labour Code may not be the employees job function performed by the employee has become superfluous due to changes in work organisation or other reasons related to the employer’s activities, the employee is not achieving the agreed performance outcome according to the performance improvement plan, the employee refuses to work under changed indispensable or supplementary employment contract terms or to change the type of working-time arrangements or place of work, the employee does not agree to continuity of employment relations in the case that the business or part thereof is transferred or a court or body of the employer has taken a decision ending the employer;
the employee must be given 3 working days’ notice of termination of the employment contract;
the employment contract may not be terminated for the reasons specified in Article 59 (2) of the Labour Code (furnishing of information about a violation in accordance with the procedure laid down by the Law of the Republic of Lithuania on the Protection of Whistle-blowers, participation in a case against an employer accused of violations of law or due to application to administrative bodies regarding discrimination based on gender, sexual orientation, race, nationality, language, origin, citizenship and social status, faith, marital and family status, intention to have a child/children, convictions or views, political affiliation, age, or other discriminative grounds).

Reason for termination of employment contract

LAT explained that:

the reason for terminating the employment contract on the grounds set out in Article 59 (1) of the Labour Code may be related to the employee’s person, his behaviour at work, qualifications, position of the employer, etc.;
the choice of the reason in a particular case is at the discretion of the employer;
the reason must be real (i.e. not supposed or fictitious), lawful, sufficient to justify termination of the employment contract.

In the event of an employment dispute, the burden of proving the reason for the termination of the employment contract lies with the employer. It is assessed that there was a sufficient reason to terminate the employment contract according to the benchmark of bonus pater familias (prudent and caring person).

Notice of termination of the employment contract

The employee must be given a notice of termination of the employment contract at least 3 working days in advance. The notice must be given in writing.

The notice of termination of employment must state:

specific reason for termination of the employment contract with a particular employee;
provision of the law that specifies the grounds for termination;
date of termination of employment contract;
reasons for termination of employment contract.

It should be noted that the employer may not subsequently justify the termination of the employment contract for a reason other than that specified in the notice. An employer wishing to terminate an employment contract for a reason other than that specified in the notice must re-notify the employee and state a new reason.

Execution of termination of employment contract

The employer’s decision to terminate the employment contract must be expressed in writing and must specify:

grounds for termination of the employment contract;
the provision of the law which specifies the grounds for termination of the employment contract;
the date of termination of the employment relationship.

It is important to note that the employer no longer has to state the reason for the termination in the decision to terminate the employment contract, as it is already indicated in the notice of termination of the employment contract.

Severance pay

An employee must be paid a severance pay equal to at least 6 months’ average salary.

ECOVIS ProventusLaw lawyers are ready to provide prompt assistance in the event of termination or other employment law issues, so please feel free to contact us.

Prepared by: Attorney at law Loreta Andziulytė, Head of the labour law practice group, and Assistant attorney at law Lina Bulovienė, Labour law expert.