Termination of Employment Contract – End of Employment

The termination of the employment contract represents the termination of the employment relationship that was previously established between the employer and the employee. It is the right of both the employee and the employer, determined by law.

The termination of the contract and dismissal of the employee may occur for numerous reasons in a legal manner. All the facts, ways and conditions that lead to termination of work employment have been detailed and explained below.

How can the employment relationship be terminated, that is, dismissal?

All rights and obligations related to dismissal are defined by the Labor Law, and we have written in detail about this topic.

An employee’s employment relationship can be terminated in several ways, and all conditions, reasons or motives for terminating the employment contract are defined by the Labor Law. They are:

• when the term on which it is based expires;
• due to the acquisition of conditions for retirement;
• consensual termination of the employment relationship between the employee and the employer;
• termination of the employment contract by the employer;
• termination of the employment contract by the employee;
• termination of employment at the request of a parent or guardian of an employee who is under 18 years of age;
• if the employee dies;
• other cases defined by the Labor Law.

Termination of the employment relationship at the end of the term on which it was based

Termination of the employment relationship due to the expiration of the term on which it is based means that the contract is terminated when the time period for which the employment contract was concluded expires. Most often, it is about employment for a certain period of time.

According to the Labor Law, when an employment contract is concluded for a certain period of time, its duration is predetermined and defined by objective reasons, which are justified either by the deadline or by the performance of a certain job or the occurrence of a certain event, for the duration of those needs.

Termination of employment due to the acquisition of the right to an old-age pension

When an employee reaches the age of 65 and has at least 15 years of insurance experience, his employment relationship is terminated, unless otherwise agreed with the employer. When the stated condition is met, the employee acquires the right to go to old-age pension, with the fact that the right to pension is not realized automatically. It is necessary to submit a request to the PIO fund for recognition of the right to an old-age pension.

However, even when conditions are created for the termination of the employment relationship due to the right to an old-age pension, the law allows for an agreement to be reached between the employer and the employee. Thus, in such a case, the employment relationship does not have to be terminated when the conditions for retirement are created.

Practically, an employee can continue to be employed by the same employer, and can also work for another. In order to continue/extend that employment relationship, there must be consent from both parties, both the employer and the employee. If it does not exist, the employment relationship ends.

If the conditions from the Law are not met, for example the worker is 65 years old and has 13 years of service, the conditions for retirement are not met and the employment relationship cannot be terminated. In that case, the employee will receive the termination of the employment contract only after two years, when he reaches the age of 67 and has 15 years of service.

Agreed termination of the employment relationship

Consensual termination of the employment relationship is actually a termination based on an agreement between the employee and the employer. It is practically an agreement between the company and the employee to terminate the employment relationship. The employee does not receive a decision on dismissal, but a written agreement is drawn up between the employer and the employee on the termination of the employment contract.

Based on the written agreement, both the employer and the employee have certain obligations from the employment relationship:

• the employer/company has the obligation to inform the employee in writing about the consequences of signing the agreement, which refers to exercising rights in case of unemployment (when an agreed termination of employment is signed, the employee does not exercise the right to unemployment compensation);
• the employee has the right to the salary calculation (to receive the salary for the last month of work), but the employee also has the obligation to respect the notice period defined either by the employer’s general act or the employment contract.

Termination by the employee

An employee has the right to resign from the company where he is employed. It is his independent decision to terminate the employment relationship with the employer. He must inform the employer of his decision in writing.

Verbal resignation has no legal effect (not valid). Only a written statement of termination can have legal effect from the day it is delivered to the company. The form of termination must be in writing, more precisely, the declaration of intent to terminate the employment contract must be written and signed by the employee.

In addition to the written statement, the employee has a legal obligation to comply with the notice period (this is an obligation arising from the employment relationship). The deadline for submitting the decision, i.e. the statement of termination, is at least 15 days before the date specified as the date of termination of the employment relationship.

The notice period can be 15 days or more, but that period cannot be longer than 30 days. It is defined either by a general act or through an employment contract. During the notice period, the employee’s salary for the last month of work is calculated.

Termination of employment by dismissal by the employer

An employee can be dismissed by the employer if there are justified reasons for it. They concern the working capacity of the employee, as well as the behavior of the worker at work. The employer is obliged to calculate his salary.

Before terminating an employee, the employer has the obligation to issue a warning in writing about the existence of a reason for terminating the employment contract. The grounds for termination, facts, and evidence indicating that the conditions for termination have been met must be stated. Also, it is necessary to give the employee a time limit of at least 8 days, starting from the day of delivery of the warning, in order for him to express himself, i.e. gave his answer.

Reasons for dismissal by the employer are:

• if the employee does not achieve work results or if he does not have the necessary skills;
• if he does not have the necessary knowledge and skills to perform the tasks he is working on;
• if he has been legally convicted of a criminal offense at work or in connection with work;
• if he does not return to work for the employer within 15 days from the date of expiry of the period of rest of the employment relationship or unpaid leave;
• if there is a violation of work discipline;
• if work discipline is not respected;
• justified reasons of the employer.

If the employee does not achieve work results or if he does not have the necessary skills

The company can terminate the employment of an employee who does not achieve results at work, i.e. if he does not achieve the tasks and goals related to the position he is employed in. Also, the consequence of dismissal may be the lack of appropriate skills, i.e. if he does not have the necessary knowledge and abilities to perform the tasks he is engaged in, which are key to the efficient performance of those work tasks.

Dismissal due to violation of work discipline

If the employee violates his work obligation through his own fault, the employer can fire him. The following is considered a breach of work obligation:

• negligent or negligent performance of work duties;
• abuse of position or abuse of authority; – inappropriate and irresponsible use of labor resources;
• if the employee does not use the provided means or equipment for personal protection at work, or if he uses it inappropriately;
• if there is another violation of the work obligation previously defined by the general act of the company or the employment contract.

Dismissal due to non-compliance with work discipline

The employer may dismiss the employee if he does not respect work discipline, and in the following cases:

• if he unjustifiably refuses to perform tasks or execute orders;
• if he does not submit a certificate of temporary incapacity for work;
• if he abuses the right to leave due to temporary inability to work;
• if he comes to work under the influence of alcohol or other intoxicants;
• if he uses alcohol or other intoxicants during working hours, which has or may have an impact on the performance of work;
• if the employee provided incorrect data that was decisive for the establishment of the employment relationship;
• if the employee refuses to be subjected to a medical fitness assessment, and it refers to work for jobs with increased risk, in which one of the conditions for working in that position is determined to have a special medical fitness;
• if the work discipline prescribed by the employer’s act is not observed;
• if the employee’s behavior is such that he cannot continue working in the company where he is employed.

Dismissal due to justified reasons of the employer

The employer can give notice to the employee and terminate the employment relationship if there are justified reasons for doing so related to the needs of the employer. In this case, the reasons for termination are:

• technological redundancy;
• refusal to conclude an annex to the employment contract.

Dismissal as technological redundancy – termination of employment as technological redundancy means that due to technological, economic or organizational changes, the need to perform a certain job has ceased or there has been a reduction in the scope of work.

An annex to the employment contract occurs when the defined working conditions are changed:

• moving to another job, due to the needs of the process and organization of work;
• transfers to another workplace with the same employer;
• referral to a suitable job at another employer;
• if the employer has enabled the employee, who is redundant, to be transferred to other jobs, work for another employer, retraining or additional training, part-time work or employment measures;
• when there is a change in the elements for determining the basic salary, work performance, salary compensation, increased salary and other income of the employee contained in the employment contract.

Dismissal at the request of a parent or guardian of an employee who is under 18 years old

A person who is younger than 18 years of age can establish an employment relationship with the written consent of parents, adoptive parents or guardians, only if such work does not endanger health, morals, education and if the work is not prohibited by law. If the parents withdraw their consent, the employment relationship is terminated.

Termination of employment in other cases

There are cases when an employee’s employment can be terminated, and it does not depend on either the will of the employer or the will of the employee. These are the following situations:

• if it is established that the employee has lost his ability to work;
• if the employee is prohibited from performing certain tasks according to a legally binding decision of a court or other authority, and cannot be provided with the performance of others;
• if he has to be absent from work for more than six months due to serving a prison sentence;
• if the employee has been imposed a security, educational or protective measure for more than six months, and therefore must be absent from work;
• if the employer stops performing activities (termination of the employer’s work).

It is important to establish the reasons for the termination of the employment relationship in time, as well as to comply with the legal procedure in terms of formality, so that mistakes do not occur. For any additional information regarding the termination of the employment contract or defining the provisions of the general act, please contact us. The accounting agency HLB TM DOO from Belgrade can provide you with complete professional assistance, which also refers to support regarding the provision of payroll salary calculation services in case of termination of employment with employees.