Losing your job through dismissal, summary dismissal or similar situations is serious and can have dramatic consequences for the individual. It is therefore important to be aware of your rights should you find yourself in such a situation. For employees in the private sector as well as municipal employees, the Working Environment Act regulates issues related to the termination of employment.
Before an employer takes the step of dismissing or summary dismissing an employee, the question of dismissal must be discussed with the employee and, if applicable, their employee representative (Working Environment Act section 15-1). In this meeting, the employer must explain the background for considering dismissal. The employee must be given the opportunity to present their arguments. The employer must not make a decision on dismissal before the employee’s statements and information have been obtained and assessed.
A dismissal must be given in a specific form.
The Working Environment Act section 15-4 stipulates that a dismissal or summary dismissal from the employer must be in writing and delivered personally or sent by registered mail. The notice must include information about the employee’s right to request negotiations and to bring legal action, the right to remain in the position while the case is pending in the courts, as well as the relevant deadlines. It must also state who the employer is and who should be named as the correct defendant in the event of a dispute. Finally, the notice must inform the employee about the preferential right to re-employment if the dismissal is due to lack of work.
If the formal requirements are not met, the consequence is that no deadline for filing a lawsuit applies. If the employee brings legal action within four months of receiving a defective notice of termination, the court will generally declare the notice invalid. In practice, the employer will issue a new, correctly formatted notice as soon as they become aware of the error.
The above formal requirements do not apply when the employee resigns, but the resignation must still be given in writing.
Employer must have a valid reason for dismissal
A dismissal from the employer will either be based on circumstances related to the employee or to the organisation. In both cases, the dismissal must be objectively justified, and the employer must carry out a proper and fair process.
Dismissal due to the organisation’s circumstances
A dismissal due to the organisation’s circumstances will typically occur in situations where restructuring or rationalisation creates a need for downsizing.
When assessing whether the dismissal is objectively justified, several factors come into play. You can find more information about this here: Reorganisation and downsizing.
Preferential right to re-employment
An employee who has been terminated due to downsizing has apreferential right for a new position within the same company (Working Environment Act section 14-2). The same provision also includes a rule that came into effect on 1 January 2024, stating that the employee will also have a preferential right to a new position in companies within the same group.
The employee must be qualified for the position, but it is important to note that they do not need to be the best qualified among the applicants. The employer cannot choose to hire a better-qualified candidate over the person entitled to preferential rights.
The preferential right only applies to employees who have worked for the company for at least 12 months during the last two years. It is valid from the date of dismissal and for one year after the end of the notice period. If the employee does not accept an offer of a new position, the preferential right lapses. The deadline for accepting the offer is 14 days after receiving it.
Reassignment may require a change dismissal
It is within the employer’s managerial prerogative to reassign an employee when necessary. However, if the reassignment involves a significant change in job duties or other terms and conditions, the employer must issue what is known as a change dismissal. This means that the employee is dismissed from their current position while simultaneously being offered the new position. Such a change dismissal follows the ordinary rules for dismissal and requires a valid reason.
Other reasons for dismissal
This typically involves dismissal due to neglect of duties. Examples include unauthorised absence, disloyal behaviour, or lack of ability to cooperate. The degree of neglect is decisive for whether dismissal or summary dismissal is appropriate. In cases of material breach of the employment contract, summary dismissal may be considered, which is a far more serious measure.
When assessing whether a dismissal based on the employee’s circumstances is objectively justified, an important factor is whether the employer has given the employee an opportunity to correct their behaviour. In other words, the employer is required to provide clear feedback if they are dissatisfied with an employee.
An employee who is absent from work due to illness cannot be dismissed on this basis during the first 12 months after the incapacity for work began. It is important to note that the employee is not “protected” against dismissal on other grounds during this period. For example, the employer may terminate employment if there is a need for downsizing.
An employer is not allowed to dismiss a woman because of pregnancy. The same applies to employees who are on leave in connection with childbirth or adoption, see the Working Environment Act, Section 15-9. This also applies to civil servants.
If an employee is lawfully dismissed on other grounds, with termination taking effect at a time when the employee is on leave, the notice period will be extended by the length of the leave. If lawful dismissal is given during the leave, the notice period will not start until the employee has returned to work.
Dismissal in other employment relationships
It sometimes happens that an employer, after an employment contract has been signed but before the employee has started in the position, no longer needs the employee. This is particularly relevant when the agreed start date is set some time in the future. In the meantime, changes in the market or other circumstances may occur that make the employer no longer wish the employee to begin the job.
In such a situation, the employer is bound by the employment contract. This means that the employer must give ordinary notice and pay salary during the notice period, while the employee will have a duty to work during this period. In practice, such cases can often be resolved smoothly by the employer offering financial compensation to the employee without requiring them to start the job.
Tekna believes that the notice period does not start running until the commencement date stated in the contract. However, this is legally unclear, but the employer should in any case be willing to discuss some form of compensation. Employers should bear their share of responsibility for putting employees—particularly students—in a very difficult situation by entering into agreements long in advance and then withdrawing before commencement.
As a general rule, temporary employment contracts expire on the agreed date or when the specific assignment has been completed. The provisions of the Working Environment Act on termination of employment also apply during the contract period. This means that the employee may resign from a temporary position during the contract period, and the standard notice periods will then apply.
If the employee has been employed for more than one year, they are entitled to written notice of the termination date at least one month before the end of the temporary employment contract (Working Environment Act, Section 14-9)).
The employer may hire an employee on a probationary basis. A probationary period can last for a maximum of six months. It is important to note that the employee is permanently employed from day one, even if the parties have agreed on a probationary period.
The notice period during probation is 14 days unless otherwise agreed. Tekna recommends using a one-month notice period. Employees have somewhat weaker protection against dismissal during probation, but any dismissal must be based on the employee’s adaptation to the work, professional competence or reliability (Working Environment Act, Section 15-6).
Notice periods
The general rule is that the mutual notice period is one month unless otherwise agreed in the employment contract or a collective agreement Working Environment Act section 15-3. In practice, Tekna members usually have an individual agreement for a three-month notice period.
Private sector
- The notice period starts on the first day of the month after the employee receives the notice.
- If a longer notice period than one month is agreed, it can be stipulated that the period runs from date to date.
Municipal sector
A mutual notice period of three months applies, calculated from the date of notice.
Extended notice periods
The notice period is extended with increasing age and continuous employment.
- Employees with 5 years of continuous service have at least 2 months’ notice.
- Employees with 10 years of service have at least 3 months’ notice.
When the length of service is 10 years, the notice period increases further with age:
- 50 years – 4 months
- 55 years – 5 months
- 60 years – 6 months
However, the employee may still resign with 3 months’ notice.
Dispute regarding unfair dismissal
If a member is in doubt about whether their dismissal is legal, they should contact Tekna for a legal evaluation of their case. Because of short deadlines in these cases, members should contact us immediately after receiving notice.
Right to negotiations with the employer
An employee who receives a dismissal has the right to request negotiations with the employer (Working Environment Act section 17-3). The deadline for submitting a request for negotiations is two weeks from the date the dismissal is received. The employer is obliged to offer a negotiation meeting within two weeks after receiving the request. A lawyer from Tekna can assist members in such negotiation meetings.
Deadlines for filing a lawsuit
If the dismissal case is not resolved during the negotiation meeting with the employer, it may be relevant to file a lawsuit against the employer to have the dismissal declared invalid. A lawsuit must be filed within eight weeks after the negotiations with the employer have ended or the dismissal took place. If the employee does not wish to return to the job but only claims compensation, the deadline for filing a lawsuit is six months from the date of dismissal (Working Environment Act section 17-4).
Right to remain in the position
The employee has the right to continue in their position as long as the dismissal case is being processed in the court system.
Outcome of a legal dispute
If the court finds that the dismissal was unlawful, it shall be declared invalid. The employee will then retain their position. The employee must be compensated for any financial loss. In addition, the court may award compensation for non-economic loss (pain and suffering).
Top executives with severance agreements can waive statutory protection against dismissal
The top executive in a company may waive the employment protection provided by the Working Environment Act in exchange for severance pay ( Working Environment Act section 15-6). This means that the employee, among other things, gives up the right to file a lawsuit against the employer. In return, the employee will receive financial compensation in the form of severance pay. The top executive may also agree that disputes related to the termination of employment will be resolved through arbitration.
Litigation risk
If Tekna assists a member in a legal dispute, this support will be free of charge for the member. This also includes covering the opposing party’s legal costs if the member is ordered by the court to pay these expenses. Tekna’s legal department will assess whether there are grounds to take the case to court.
Summary dismissal
An employer may summarily dismiss an employee with immediate effect if the employee has committed gross misconduct or other serious breach of the employment contract ( Working Environment Act section 15-14). In such cases, no notice period applies. A summary dismissal is a very serious reaction from the employer, both because the employee normally has to leave the workplace immediately and because such a measure can create problems for the employee’s future career. If there is no need for immediate termination of employment, the employer should instead consider giving notice of dismissal. An example of grounds for summary dismissal is if the employee commits embezzlement.
Another example of grounds for summary dismissal is if the employee leaves without notifying the employer. This is called “desertion”. If the employer suffers financial loss as a result of the absence, the employee may also be held liable for damages.
For summary dismissal, the same rules as for ordinary dismissal mainly apply regarding formal requirements, proper case handling and procedures in the event of a dispute, but the employee does not have the right to remain in the position while the case is being processed in the court system.
Employer breach of employment contract
In the event of a material breach of the employment contract by the employer, the employee has the right to terminate the agreement without a notice period. An example of a material breach is when the employer repeatedly fails to pay wages on time. This may be due to unwillingness to pay or inability to pay.
Contractually agreed termination of employment – severance agreement
A severance agreement is an agreement between the parties that regulates the terms for ending the employment relationship. Typically, such agreements are entered into in connection with a dismissal by the employer or as an alternative to dismissal. The employer will then offer the employee compensation for leaving “voluntarily” in exchange for the employee waiving the right to bring legal action against the employer. As a general rule, benefits agreed upon with the employer are taxable. Some benefits may be tax-free, such as support for further education up to 1.5 G and the transfer of older/used equipment such as a PC or mobile phone.
Tekna recommends that any draft agreement be submitted to the legal department for review before it is signed.
Read about dismissal in the government sector.
