How to terminate an employment contract?

October 2, 2023

There are several ways to terminate an employment contract, regardless of whether you are an employee or an employer. They are often confused and terms are created that do not actually exist, such as “on notice by mutual agreement”. It also happens that the expiry of an employment contract is treated on an equal footing with the termination of an employment contract, which is not true. So let’s try to organize our knowledge and take a closer look at the 4 possibilites for terminating the contract.

Ways to terminate the employment contract

In accordance with the Labour Code (art. 30), an employment contract can be terminated in one of the following four ways:

1. by mutual agreement
2. by declaration by one of the parties (by the employee or the employer) within the agreed-upon notice period (colloquially ‘on notice’)
3. by declaration by one of the parties (by the employee or the employer) without notice (colloquially ‘a disciplinary’)
4. by the passing of the agreed-upon contract period

Please note that there is also a phenomenon called the expiration of an employment contract. This is completely different from its solution.

Expiration of the employment contract

We often encounter a situation where it is colloquially common to use the phrases ‘Expiration of employment contract’ and ‘the passing of the agreed upon contract period’ interchangeably. However, using these phrases is incorrect. We deal with the expiration of an employment contract in the following circumstances:

• the death of an employee
• the death of an employee who happens to be a natural person
• the temporary detention of the employee – expiration of the employment contract occurs after the passing of 3 months of absence at work caused by their temporary detention unless the contract has been terminated by the employer before this.

The termination of an employment contract by mutual agreement

The termination of an employment contract by mutual agreement occurs in the situation where both parties of the employment relationship mutually agree to terminate the contract. Therefore they can freely choose any date for the termination of their cooperation. This happens with the mutual will of both parties, so there is no possibility of appealing to the court against the agreement. Every employment contract can be terminated in this way, including with particularly protected employees, e.g., pregnant women or people of pre-retirement age. In the agreement the parties can make additional provisions in connection with the termination of employment – regarding the use of annual leave, the payment of additional remuneration components (e.g. bonuses, commission, severance pay), and the settlement of transferred/received business equipment.

The termination of the employment contract with notice

A notice of termination can be served not only by an employee but also by an employer.

The employee terminates the employment contract with notice

In the instance of an employee, it is not required to provide a reason for termination of the contract. A notice like this can be served while at work as well as on leave/vacation, during sick leave, or during some other nonattendance at work. The parties must follow the notice periods that apply per the regulations set in art. 34 (in the instance of a contract set for a trial period) or art. 36 (in the instance of a contract set for a fixed or indefinite period).

The employer terminates the employment contract with notice

If it is the employer that wants to terminate the contract with notice, it is necessary to provide a specific and real cause of the reason that will lead to the termination of the employment contract. Only in the instance of the termination of a contract agreed upon for a trial period, can the employer not provide any reasons for their decision. The cause of the termination must be presented in a clear and understandable way for the employee. The employee can appeal the notice to the court. In this situation, it is impossible to request recognition of other causes of the termination other than the ones listed on the document informing of the contract termination.

The employer must consult with representatives of trade unions about their intention of issuing a notice of terminating the contract, this is only if these organisations exist within the given employer. In the notice period, the employer can put the employee on leave. Their consent is not required. In addition, the employer has also got the ability to exempt an employee from the obligation to work until the day of termination of their contract while retaining the right to their wage for this period. The employee has the right to collect their wage for the days spent job seeking. He is entitled to this for 2 or 3 days depending on the length of the notice period.

The employer is not able to serve a notice to the employee during the employee’s justified absence from work e.g. leave/vacation, sick leave.The employer has the ability to shorten the notice period down to one month at the most, however, the employee is entitled to compensation for the time lost.

The parties can also, after mutual consent, set a different period for the termination of the contract, but this does not change the way the contract was terminated. This only results in the shortening of the notice period by the power of mutual consent.

Termination of the employment contract without notice

A contract can be terminated in this way by either an employee or an employer.

The employee terminates the employment contract without notice

In the instance of an employee, this is possible if the employer commits a serious breach of fundamental duties towards the employee, e.g. they do not pay the employee wage on time or in full, whichever applies to them. In this situation, the employee is entitled to compensation for the notice period which would apply to them. The employee is required to inform the employer in writing of the cause of terminating the contract in this way.

Another reason for terminating an employment contract without notice by the employee may be the harmful impact of the conditions in which they perform their work, which will be taken into account in the medical certificate issued by the doctor. If the employer does not transfer the employee to another job that meets their qualifications and is suitable for their health condition, the employee may terminate the contract without notice.

The employer terminates the employment contract without notice

When an employer wishes to terminate a contract without notice, certain conditions must be met. This is possible in the following circumstances:

1. Employees fault

• The employee committed a serious violation of basic employee duties, e.g. they committed theft or attended work while under the influence of alcohol or consumed alcohol at the workplace.
• The employee committed a crime that subsequently prevents their further employment in the given position. The crime must be obvious or confirmed by a final court judgment
• The employee, because of their actions, led to the loss of the qualifications necessary to work in the held position.

The termination of the contract can occur after the passing of one month from the time that the employer was notified of the circumstances justifying the termination of the contract.

2. Without fault of the employee

• In the instance of the employee’s inability to work caused by illness, which lasts longer than three months in the situation that the employee is employed for a period shorter than 6 months.
• In the instance of the inability to work caused by illness, which lasts longer than the combined period of the wage collecting period and sickness allowance ( equal to 182 or 270 days depending on the type of illness) and also rehabilitation allowance for the first 3 months, in the situation where the employee has been employed with the given employer for a period of at least 6 months.
• In the instance of any other justified nonattendance of the employee which lasts for at least one month.

If it is possible the employer should rehire the employee if the reason, that caused the termination of the contract, has ceased, and the employee declares their return to work in a period of up to 6 months after the termination of the employment relationship.

Termination by the passing of the agreed-upon contract period

If the parties of the employment relationship agree on a trial period or a definite time period, then such a contract is terminated by law on the day provided in the contract. The employer can, but there is no obligation, inform the employee that another contract will not be agreed upon.

However, it is important to note that there is one exception to these regulations. When we are dealing with an employee – a pregnant woman, then a contract for a trial period exceeding one month as well as a contract set for a definite amount of time will not be terminated on the day specified in the contract. This date will be extended up until the day of delivery if on the day on which the contract was supposed to terminate the gestational age is at least 3 months.

Tags sposoby rozwiązania umowy o pracę, termination of the employment contract by mutual agreement, termination of the employment contract on notice, termination of the employment contract without notice