Employment contract termination is one of the most important legal actions in relation to an employer – employee, as it terminates the legal relationship binding them. An employer must diligently prepare for termination of an employment contract. Any error on his part may result in the need to pay compensation to an employee or even to reinstate the employee at work on previous terms.
An employer declaration of employment contract termination must meet a series of requirements. In the case of an indefinite employment contract, particular weight is accorded to proper formulation of reason for termination.
The law merely stipulates that the reason for employment contract termination justifies such termination and its manner. The Supreme Court has in numerous rulings nevertheless specified requirements that must be met when terminating an employment contract. They must be real, actual and specific (written in a clear and complete manner) and important enough to justify employment contract termination.
Assessment of the reasons for termination takes place individually from the employee perspective. It is important for:
- the reason for termination to be clear to an employee
- the employee to be actually aware of the charge raised and
- for the employee to consciously assess whether he agrees.
The reason for termination nevertheless does not have to be clear to a court upon first reading. It may arise that, in light of specific employee duties, stated reasons will be incomprehensible to someone from outside a sector, or even to persons within it who do not perform the same tasks as a subject employee. Statements of the parties submitted during proceedings help a court understand and assess the reasons for termination (especially in a reply to a lawsuit) together with court review of evidence.
Moreover, an employer cannot independently modify reasons for termination that have already been formulated and communicated to an employee. The Supreme Court has, however, allowed for the ability to specify reasons for termination beyond those stipulated in a termination notice. Such supplementation must nevertheless fall within the framework of reasons indicated in an employer notice and serve to more fully clarify and justify it. It cannot lead to a different reason. Employer formulation of a different or new reason for termination would signify that the reason indicated in a termination notice is false or non-existent and, therefore, that termination lacks justification. Equally important, specification or supplementation of reasons for termination should take place at the latest on the date of termination notice handed to an employee. The reason for termination must be known to an employee at the latest at the time of receiving an employer notice terminating an employment contract.
This fact was learned by an employer, who sought to change erroneous reasons listed in a termination notice as an “obvious error.” The matter concerns an employee hired as a maritime freight sales specialist. She received an annual sales plan at the start of each year assuming turnover from sales to existing and new clients. The employee’s superior on a monthly basis evaluated the degree to which she fulfilled the plan. She received general monthly information from the superior about her weaker sales performance, but the superior did not indicate specific amounts. After several months of weaker performance, the employer concluded that the employee’s fulfilment of the sales plan by the end of the year was not possible and terminated her employment contract.
The employer stated in the termination notice that the reason for employment contract termination was failure to meet the planned budget regarding sales to new clients. In the termination notice the employer cited assumed levels in a given sales plan period for existing and new clients and the actual level of sales. The amounts indicated by the employer in the notice were nevertheless unclear to the employee. Several days after the notice the employee raised her doubts to the superior over the amounts indicated as reasons for termination. The superior conceded an error and, as a consequence, the employer, already after the employee appealed in court, sent the employee a letter with corrected amounts from the previous notice. As well the employer explained the reason for the difference between the previous and actual amount of sales attained by the employee. However, he did not clarify why an erroneous sales plan amount was indicated in the notice.
Both the first and second instance courts sided with the employee who stated that the amount indicated in the employment contract termination notice was wrong and that the employer could not independently correct the termination notice delivered to the employee. Furthermore, the courts stated that it was irrelevant that the employee was aware that she had failed to meet the sales plans. The employer did not provide the employee specific data on her actual performance, which may have led the employee to be uncertain about the propriety of charges raised against her.
The matter reached the Supreme Court after the employer filed a final appeal. In a ruling dated 25 April 2019 (I PK 19/18), the Supreme Court dismissed the appeal.
The Supreme Court stated that these case circumstances the employer could not unilaterally modify false data cited in the termination notice by sending they employee a letter and stating an “obvious error”. In the view of the court, the procedural institution of correcting an obvious error in a court judgment that is stipulated for a court cannot apply toward parties’ statements concerning legal relations, as noted in art. 350 k.p.c. Secondly, the Supreme Court stated that the difference between data indicated by the employer in the initial statement and subsequent corrections was too great (more than 9-times in relation to sales plan levels) in order to cite an obvious error.
In the view of the court, the only manner of the employer correcting the fact of citing an erroneous amount in the termination notice was therefore employer withdrawal with employee consent of the employment contract termination notice and renewed termination notice with proper amounts indicated.
The Supreme Court also stated that an employer cannot withdraw from an erroneous reason for termination indicated in a notice on the basis of art. 84 k.c. This article offers the ability to only withdraw from the effects of a legal action (thus, from a declaration of will leading to contract termination), and not from a listed reason for termination that in itself is a declaration of knowledge, and not will.
The Supreme Court underscored that an employer is not released from liability for erroneously formulated termination reasons by the fact that its preparation was assigned to appropriate services (e.g. staff). An employer is obligated to check whether the reason for termination was properly formulated.
The conclusion can nevertheless be drawn from the Supreme Court ruling justification that minor errors or obvious typographical mistakes, however not subject to correction, do not necessarily have to encumber the employer if they are irrelevant to the legality or propriety of termination.
In seeking to avoid litigation with employees, employers should always exercise diligence to properly formulate the reason for termination and subsequently, in the event of proceedings, to demonstrate the existence of such a reasoned with appropriate evidence.
Agnieszka Godusławska
