After any given person has been working in a company for a certain period, it may be possible that such employment relationship comes to an end for different reasons, whether as a result of direct dismissal, termination by mutual consent of the parties, employee resignation, or any other fair causes set forth in Article 111 of the Honduran Labor Code.

However, what is the difference among the different types of mechanisms mentioned in the foregoing paragraph in order to terminate the employment relationship between the employer and the employee?

We must begin by analyzing direct dismissals; this mechanism takes place when the employer decides to end its relationship with the employee. This type of termination may be classified into: (1) dismissal with cause (2) wrongful dismissal.

A dismissal with cause takes place when the employee incurs in severe misconduct, e.g. violent action during his/her work shift, breach of contract, or any of the situations set forth in Article 112 of the Labor Code.

In case of this type of dismissal the employee will not be paid his/her termination benefits, as the employment contract has been terminated for reasons attributable to the employee; in this scenario, the employer will only be required to pay the employee the amounts for the employee's vested rights, including vacation pay, the thirteenth month bonus (commonly known as Christmas Bonus), and the fourteenth month bonus.-

Termination of contract on grounds of direct dismissal will be effective from the moment the employer has informed the employee, but the employee is still entitled to subpoena the employer to appear in labor court before expiration of the 2-month statute of limitation period following termination of the contract or as from the date in which corrections were instructed, for purposes of requiring the employer to produce evidence in support of the fair cause that led to the employee's dismissal.

If the employer fails to prove the alleged cause for dismissal, the employer must pay the employee the relevant compensation amounts for damages and losses set forth under the Honduran Labor Code, as well as any unpaid wages accrued following termination of contract through the date on which the judgment for the plaintiff has become final and definitive according to the procedural provisions of said Code.

Alternatively, the employee may file a claim against his/her employer for contract enforcement and, therefore, request the employee's reinstatement to his/her former position. The employee's right to enforce the contract is regulated as follows:

  1. This right may be alternatively exercised in relation to the right to claim the compensation as referred to under the first section of Article 113 of the Labor Code; and,
  2. If the court rules in favor of the reinstatement requested by the employee, the employee will not be entitled to be paid the relevant amounts for wrongful dismissal, but he/she will be entitled to receive any unpaid wages accrued from the termination through the date of reinstatement. Furthermore, if the employer refuses to comply with the court's judgement, the employee will be entitled to demand enforcement through expedite collection proceedings (via de apremio).

On the other hand, wrongful dismissal occurs when the employment contract is terminated by the employer's decision without a fair cause that may be attributable to the employee.

In this case, and in addition to pay the employee the full amount for termination benefits and vested rights, the employer is also exposed to the risk that the employee may subpoena the employer to appear in court in order to prove that a wrongful dismissal took place, requesting the employee's reinstatement to his former job plus any unpaid wages.

If the competent court orders the employer to reinstate the employee, the employer will not be forced to pay any amounts for termination benefits and vested rights, but only the unpaid wages accrued over the course of the trial.

For purposes of avoiding any negative consequences arising from the wrongful dismissal, however, employers are advised to resort to termination on mutual consent, according to Article 111 (2) of the Labor Code.

This mechanism should be handled with the assistance of an expert counsel, as its wrongful application may result in adverse consequences to the employer's interests.

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.