Penalty for Early Termination of Employment Contract

Premature termination of the employment contract occurs when an employment contract is terminated before the expiry of the period specified in the contract.3 min read What constitutes termination for a valid reason may vary in detail. It is usually the subject of intensive negotiations on what constitutes the “cause”, whether this “cause” requires adequate notice and whether there is a chance of remedying the disease caused before the termination of pregnancy. Complying with the early termination of a fixed-term contract can be difficult for any lawyer, especially during a global expansion. Velocity Global`s International PEO (Professional Employer Organization) solution enables us to act as the employer of record and helps you secure compliant employment contracts for your global operations – and you can operate in new international markets in just 48 hours. Are you ready to conquer the global market? We are ready when you are. In the other dissenting opinions, it was briefly stated that the opinions of the 9th Chamber and the 22nd Chamber are erroneous. The 9th Chamber is of the opinion that the penalty clause attached to a specified duration is invalid if the fixed-term employment contract is considered to be of indefinite duration in the absence of objective conditions; Meanwhile, the 22nd Chamber takes the opposite view on the same treaties. The dissenting opinion states that such a penalty clause should apply only to the employer. The reasons for such an opinion are as follows: this issue must be assessed separately for the employee and the employer. The application of the penalty clause for both parties is directed only against the employee, since the amount specified in the penalty clause cannot be considered as a significant amount for an economically powerful employer. However, this amount can have a significant impact on a laid-off employee. Moreover, a reduction in the penalty clause decided by the judge does not alter such a situation.

In such a case, the assertion to the contrary of the employment contract, which is always prepared by the employer, is contrary to the principle of good faith. From the employee`s point of view, given article 11 of the Labour Code, which aims to protect the employee, it is fair and equitable to hold him or her liable under the penalty clause. The employee may exercise his rights at will under a fixed-term contract or a contract of indefinite duration. Therefore, the penalty clause attached to a clause binds the employer, but not the employee. It is possible that an employment contract contains a requirement that the employee pay damages to the employer if the employee terminates the employment relationship prematurely. Sometimes the payment is related to relocation costs, training or education costs, or other benefits that the employer has “invested” in the employee – and the employer wants to make sure they get a return on that investment. Some contracts stipulate that employees must pay penalties if they terminate their contract prematurely. If your contract states that you must pay a fine if you terminate your contract prematurely, you will likely have to pay that amount. Often, companies take this amount from your last cheque instead of asking you to pay it directly. In many cases, this final amount is intended to cover the cost of hiring and training a new employee, although there is no legal limit to the fine employers can impose. It is advisable to carefully research a penal provision before signing an employment contract so as not to be subject to an excessively severe fine if you resign. Or, essentially, no reason for termination could include a reason that is not considered “with good reason.” This gives the employer an advantage in many ways, but for the employee, it means that they receive the full value of their contract, not just the value until their termination date.

Thus, if the employee is on a long-term or particularly lucrative contract, the employer may not be willing to dismiss “for no reason” unless it is the most onerous offence or the lowest benefit. A fixed-term contract is then essentially equivalent to severance pay. An employee can take advantage of this by negotiating a lump sum payment at the time of termination. The legality of garden leave is a bit grey and very often depends on the facts of a particular job and the corresponding employment contract. .

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