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Small businesses to have a lower threshold for terminations as of July 2019


The Employment Contracts Act will be amended from the beginning of July 2019 with the intention of encouraging small businesses to provide employment – this time by lowering their threshold to terminate employments on grounds relating to the employee’s person. The amendment is part of the government's employment law reforms aimed at increasing SMEs’ willingness to provide further employment. Earlier reforms include extending probation period, shortening re-employment period, and allowing a fixed-term contract to be concluded with a long-term unemployed without a need for a justified reason.

After the new amendment, not only the circumstances of the employer and the employee altogether but also the number of employees employed by the employer will be considered in the overall assessment of properness and weightiness of the personal termination ground. The termination ground remains otherwise the same, so a serious breach or neglect of employee’s obligations or an essential weakening in his condition to work continues to be required in the future. Also, the employer’s obligation to give a warning and provide other work will remain a part of the ground for dismissal as before.

The purpose of the amendment is to put more weight on the employer’s small size in the overall consideration of the termination ground when the employee’s malpractice or weakened capability to work has a significant impact on the employer due to its small-scale activities. A small employer often has weaker chances to endure the employee’s malpractice or the consequences of weakened working conditions. For example, troubles in the work community, financial losses, or lack of trust between the employer and the employee may affect a small employer more seriously than a larger one. The practical effects of the amendment will remain to be seen in future case law.

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