Pursuant to Section 2118 of the Civil Code, and except in
certain cases (ie, in the event of termination for cause or during
a probationary period), employers and employees are entitled to
terminate a permanent employment agreement provided that they
comply with the obligation to give the counterparty adequate
The duration of the notice period is usually determined by the
applicable national collective agreement for the sector in
question, based on the classification of the employee and his or
her seniority in the company. An individual employment agreement
can derogate from the collective agreement only in favour of the
employee (ie, by providing for a longer notice period).
In the event of dismissal or resignation, indemnity may be paid
in lieu of notice. Such indemnity must be equal to the
employee's salary for the entirety of the notice period, which
must be specified in the dismissal letter. The rationale of this
provision is to prevent the immediate termination of the employment
agreement by one party from being prejudicial to the counterparty,
which would otherwise be left without an employee or without a job,
and uncompensated for the fact.
Suggested strategy for dismissals
From the employer's standpoint, it is advisable to consider
asking the employee to stop work immediately and paying him or her
the relevant indemnity in lieu of notice.
An employee who has been dismissed is likely to be much less
motivated to perform his or her professional activities during the
notice period. As a result, he or she is more likely to make
mistakes, commit disciplinary violations or even perpetrate
In order to postpone the effects of dismissal, an employee may
also decide to take tactical advantage of factors which legally
suspend and extend a notice period, such as illness, pregnancy and
injury. Apart from the implications for the timing of the
dismissal, such an approach can have serious economic consequences
for the employer that should not be underestimated. In such cases a
proportion of an employee's monthly salary is covered by the
national public institutions, but in the event of a manager's
absence through illness, the employer must pay his or her full
salary for up to 12 months.
Recent case law
In Decision 22443, issued on November 4 2010, the Labour Section
of the Supreme Court went so far as to state that during the notice
period, an employer may not dismiss an employee even if it has
cause to do so.
This decision further confirms that employers should strongly
consider indemnity in lieu of notice. If an employee is working his
or her notice period, even if he or she commits an irreparable
breach of the obligation of trust between employer and employee,
the employer cannot terminate the employment relationship, but must
wait until the notice period ends.
Thus, in cases of dismissal it is preferable to pay the
indemnity due in lieu of notice – this ensures that the
dismissal will take effect immediately, according to the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
April 2015 saw the reshaping of family-friendly leave with the birth of Shared Parental Leave (SPL). Can employers offer enhanced contractual pay to mothers/primary adopters but not to fathers/partners?
In an eagerly awaited decision, the Court of Appeal ruled earlier today that creditors cannot access a bankrupt's pension benefits which have not come in payment.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).