Dismissal with immediate effect is upheld, but the employee is still entitled to compensation. The employee’s legal arsenal in the case of dismissal with immediate effect.

In this blog, I discuss the legal arsenal of defenses available to the employee's attorney when challenging a dismissal with immediate effect. I also address the phenomenon where a dismissal with immediate effect stands, but the court still grants compensation to the employee. In my practice (I typically represent employers), I often encounter confusion about this. So, it's time to briefly touch on this topic in this blog, using a case I recently handled as an example.

Dismissal with Immediate Effect: No Settlement, Then Litigation

Recently, I assisted an employer who had dismissed an employee with immediate effect. These cases are often suitable for a settlement. The employer may have an interest in avoiding the risk of the court overturning the dismissal with immediate effect, which would have significant consequences, such as the retroactive payment of wages, often accompanied by a penalty for late payment (the so-called ‘statutory increase’). However, the employee typically also has an interest in settling the matter, as they risk the court confirming the dismissal with immediate effect, leaving them without income. The settlement usually involves the employer and employee entering into a settlement agreement, where the dismissal with immediate effect is converted into a mutual termination of the employment contract. This allows the employer to end the relationship while the employee has a good chance of securing unemployment benefits. But if the parties cannot agree, and the employee does not accept the dismissal with immediate effect, going to court becomes inevitable. This was the case in the matter I was handling on behalf of the employer.

An employee who disagrees with their dismissal with immediate effect must submit a petition to the court within two months of the dismissal. This is a strict deadline, and the law refers to it as a "limitation period." Missing this deadline by even one day means the dismissal with immediate effect remains valid, even if it was clear the court would have overturned it.

The Employee's Legal Arsenal

In my case, the employee's attorney brought out the full legal arsenal. They started by requesting a provisional measure to require the employer to continue paying the employee's salary from the date of the dismissal with immediate effect during the legal proceedings. In the main case, the employee's attorney asked the court to primarily annul the dismissal with immediate effect, reinstate the employee to their job (under threat of a penalty), and definitively order the employer to pay the salary from the date of dismissal. Alternatively, the employee's attorney requested the court to order my client to pay the employee a fair compensation, a payment for not observing the notice period, and the payment of a transition payment. Furthermore, in the event the court decided the dismissal with immediate effect was legally valid, they requested payment of only the transition payment. In the meantime, an additional claim was introduced regarding the employer's violation of the prohibition on dismissal during sickness, as the employee was dismissed while on sick leave. Naturally, this all included the request to have my client pay for the legal costs. It was quite a challenge for the employer's lawyer.

Annulment or Fair Compensation

As I mentioned earlier, the employee who disagrees with their dismissal with immediate effect must submit a petition to the court within two months. In this petition, the employee can request the court to either annul the dismissal or grant fair compensation. In the latter case, the employee essentially acknowledges that reinstatement is not possible but seeks financial compensation for what they perceive to be an unjust dismissal with immediate effect. In such cases, they may be entitled to three types of compensation: a transition payment, compensation for the failure of the employer to observe the notice period, and fair compensation (the order of these compensations, as chosen by the employee's attorney, was indeed better). In my case, there was also the matter of the dismissal prohibition during sickness.

The request (or more accurately, the possibility) to annul the dismissal or grant fair compensation requires the employee to choose either one (annulment) or the other (fair compensation). Both requests cannot exist alongside each other, even in the primary and secondary forms as requested by the employee's attorney in my case. The court agreed with me that this was problematic. However, the decision for either annulment or fair compensation can, in principle, be postponed until the oral hearing of the case. The employee’s attorney cleverly took advantage of this and withdrew the primary request and the provisional measure, focusing on the fair compensation, the payment for failure to observe the notice period, and the transition payment.

The Legal Standard Remains the Same

Although the employee presented three different requests with different legal justifications, the standard of judgment the court had to apply remained the same: the urgent reason the employer cited for the dismissal with immediate effect. The court had to assess whether the employer had a valid urgent reason for terminating the employment contract at the time of dismissal. If the court’s judgment were negative for my client, it would mean that although the employment contract ended definitively on the date of dismissal with immediate effect, the employer would still be liable for damages to the employee. In practice, this could have meant awarding the employee fair compensation, payment for the failure to observe the notice period, and the transition payment. Fortunately, the court decided in my case that the immediate termination of the employment contract stood. The court agreed that my client had a valid urgent reason for terminating the employment contract without delay.

Transition Payment in Case of Dismissal with Immediate Effect?

However, it was still uncertain whether the employee would be entitled to a transition payment. It may seem odd that an employee who was lawfully dismissed with immediate effect might still be entitled to a transition payment, but the transition payment is not a penalty or fair compensation; it is simply a payment that is generally owed to the employee when the employer terminates the employment contract. And dismissal with immediate effect is also considered a termination of the employment contract. There is no dispute about this. It is often forgotten that a transition payment may still be owed in cases of dismissal with immediate effect. The transition payment is only not owed if the employee’s conduct is deemed to be seriously blameworthy. Serious blameworthiness cannot be assumed solely because there was an urgent reason for dismissal with immediate effect. In my case, I argued that the employee had acted in a seriously blameworthy manner, and that withholding the transition payment was not unreasonable under the circumstances. The court agreed with this reasoning and dismissed all the employee's claims.