In this second part of the interview with our partner Carlos Barco, an expert in labor litigation and leader of the training area of Álvarez Liévano Laserna. Carlos Barco, expert in labor litigation and leader of the training area of Álvarez Liévano Laserna, we continue analyzing labor contracts and specifying concepts of utmost importance for human resources areas: the termination of a labor contract. We invite you to continue with this detailed analysis by our partner.
Learn more: If you haven't read the first part of the interview, click on this link.
¿Cow is an employment contract terminated and what is the difference between termination and suspension?
To begin with, there are different types of termination: a pure and simple termination of the contract is not the same as a dismissal, a very common term used in labor law. In addition, dismissal may be with or without just cause and this is only one of the various types of termination of contracts.
The suspension of the contract, on the other hand, is a legal phenomenon that occurs in the employment contract as in any other type of contract. What is different in the case of an employment contract is that the reasons for which it may be suspended are expressly stated in the law in article 51 of the Substantive Labor Code. article 51 of the Substantive Labor Code:
1. Force majeure or fortuitous event that temporarily prevents its execution. And these elements are also legal concepts that are already well defined.
Force majeure or fortuitous event, which are unforeseen events that cannot be resisted, i.e., they are untimely, exceptional, surprising and impossible to avoid. They are events that cannot be counteracted and that exceed any force or any capacity of action of the employer or the workers. In the employment contract it occurs when there is a material impossibility to perform a certain activity.
Examples are natural disasters or the act of authority of a public official.
There has been much discussion in recent times about, for example, whether the pandemic in itself was a force majeure event that automatically implied the suspension of contracts, under the understanding that it is a pandemic that took the entire humanity by surprise and that implies many biosecurity restrictions and other factors. However, in this particular case it is neither a force majeure nor a fortuitous event in itself, because what could truly be a fortuitous event or a force majeure would be the consequences brought by the pandemic in each particular case.
For example, when quarantine closures were ordered by the authorities, the companies that could not carry out their work because people were confined or their activity was restricted by order of an official, were facing a force majeure event: precisely the order of this authority, but not those who were able to adjust to the restrictive measures and continue working.
All this results in contracts being suspended: the contract cannot be executed temporarily.
2. Death or disqualification of the employer when the employer is a natural person and when this results in the necessary and direct consequence of the temporary suspension of work.
If a worker is working for a natural person and dies, the contract is suspended when this means that the person can no longer provide the service normally.
Here there is an important precision and it is that, if the worker dies, the employment contract is terminated but if the one who dies is the employer who is a natural person, the contract is not terminated but it is suspended until the conditions under which the service can be rendered are resumed or it is terminated for some other reason. And who would assume the position of the employer who dies? The heirs or the representative of the succession that is opened to liquidate the debts of that employer, within which will be the worker's current rights.
3. Suspension of activities or temporary closure of the company.
In whole or in part, for technical, economic or other reasons beyond the employer's control, with the prior authorization of the Ministry of Labor and Social Security.
4. By leave of absence or temporary leave granted by the employer to the employee or by disciplinary suspension.
This is the most common cause, because this temporary leave or disciplinary suspension suspends the contract. This is not exotic within the companies, it is completely daily. Why? Because here are all paid or unpaid leaves, paid or unpaid leaves granted by the employer and disciplinary suspensions imposed by the employer.
If a worker fails to comply with any of his duties and is penalized, the contract is active and suspended, i.e., the worker is not obliged to pay the service and the employer is not obliged to pay the salary. This time can be deducted to calculate vacations and severance payments.
5. For having been called to military service.
In this case, the employer is obliged to keep the employee's position for up to 30 days after the end of the service and, within this term, the employee may return to work when he/she considers it convenient and the employer is obliged to admit him/her as soon as his/her return to work is arranged.
6. For preventive detention of the employee or for correctional arrest that does not exceed eight days for a cause that does not justify the termination of the contract.
This wording is no longer in use because the figure of "correctional arrest" no longer exists. However, preventive detention is still in use, so as long as there is a preventive detention the contract cannot be terminated, since it is not a cause for termination of the contract.
7. By strike declared in the manner provided for by law.
When there is a strike declared by the workers and it is legal, it has the effect of suspending contracts. While there is a strike, workers cannot work, since the effect of the strike is an economic pressure on the employer who is negotiating labor conditions with the unions.
Now, what are the effects of the suspension of the employment contract? According to Article 53 of the Substantive Labor Code, the suspension has the effect that, during the period of suspension for any of the above causes, the obligation of the employee to render the promised service is interrupted and the obligation of the employer to pay salaries for the periods of such suspension is interrupted. However, while the suspension is in force, all the obligations of the employer in the payment of contributions to the Social Security System remain in force and the periods that are suspended may be discounted from the calculation of vacations and severance payments.
With respect to the Social Security System, it has been admitted that in the suspension, the payment of contributions is maintained in order to guarantee the health care of the workers and since the contribution form does not facilitate the division of the payments of the contributions to the Social Security System, what some employers sometimes do is to pay their part and that of the worker and then compensate the worker himself so that the full contribution is maintained.
What is the termination process?
When we talk about the termination of the contract itself, we rely on Article 61 of the Substantive Labor Code, which establishes several ways to terminate it:
1. Due to death of the worker.
It is important to understand why the Substantive Labor Code states that the death of the worker terminates the contract. This has a direct connection with what we talked about in the first session. first sessionThere we said that the three elements that give rise to the employment contract are the personal rendering of the service, the remuneration and the subordination.
Then, that service provided by a person "in the flesh and blood" is a service that can only be provided by this person with a proper name. This is what labor law defends. Labor law protects the service of the person under the assumption that the person himself is being protected. Therefore, if the worker dies, this constitutive element of the labor contract, which is the personal rendering of the service, disappears.
This is different from when the employer dies as a natural person, since the employer can be replaced by others for various reasons and does not necessarily have his own name.
2. Mutual consent.
There is a well-known legal phrase: "in law things are undone as they are done". This means that if the parties agreed to the contract, they can also agree to terminate the employment contract.
3. Upon expiration of the agreed fixed term.
This has to do with one of the work modalities that we saw in the previous session: the fixed-term contract, of course, has a defined term; when that term ends, the contract is terminated.
4. The contract may be terminated upon completion of the work or labor contracted.
If there is a contract that lasts as long as the contracted work or labor is in force, the contract can easily be terminated when it ends. It is worth clarifying that if the work is extended, the contract is extended with it, which does not imply an extension.
5. Liquidation or definitive closure of the company or establishment.
If the company is terminated, if the company is liquidated, there is no longer, by subtraction of material, to whom to render the service and, if there is no one to whom to render the service, the service itself is terminated and with it, the contract. Once again we would be facing a scenario in which a constituent element of the employment contract is missing.
6. Suspension of activities by the employer for more than 120 days. 120 days.
7. By executed sentence.
In general, the contract can be terminated if a judge so determines. The causes may be varied, in particular, this may happen when there are workers who have special protection, for example, workers who have union privilege, in which the contract cannot be terminated by the employer's autonomous will, but it is necessary to request permission from a judge and demonstrate that the worker incurred in a just cause so that the judge, through a judicial sentence, declares that the contract is terminated.
8. By unilateral decision in the cases of articles 7 of Decree-Law 2351 of 1965, and 6 of this law.
What this paragraph "h" refers to is that the contract is also terminated by unilateral decision of the employee or the employer with or without just cause. Here we are talking about dismissals and resignations. This can be with just cause or without just cause or motivated resignation or pure and simple.
9. When the employee does not return to his or her job after the causes for the suspension of the contract have disappeared.
Article 52 stipulates that "after the causes of the suspension have disappeared, the employer must give notice to the workers to return to work within the following 3 days". Article 61 paragraph "H" states that the contract may be terminated when the worker after the suspension of work does not return to work.
It must be understood that there are legal causes for the termination of the contract and these legal causes are mentioned in this way, to differentiate them from just causes.
When we talk about just causes we are talking about a unilateral decision of the employer or employee (dismissal or resignation) that he/she considers justified based on the Substantive Labor Code. Then, we are talking about a hypothesis different from the legal causes for termination of the contract. For example, the death of the worker is a legal cause to terminate the contract and not a just cause. But if the worker failed to comply with his obligations, we are talking about a just cause even though it is a cause provided by law. It seems like a play on words or a simple semantic distinction, but it makes a lot of sense and depth.
For your company: Everything you need to know about termination of employment contracts.
And what about just causes?
Before developing the just causes, it is necessary to understand literal "h" of the first numeral of Article 61 of the Substantive Labor Code, which states that the contract may be terminated by unilateral decision of the employer or the employee.
Basically, when we speak of a unilateral decision on the part of the employer, we speak of a dismissal. When we speak of a unilateral decision on the part of the employee, we speak of a resignation. But there is a particularity: for both dismissal and resignation there can be just causes or decisions without just cause. That is to say, there can be a dismissal with or without just cause and there can also be a resignation with or without just cause.
Let's first talk about dismissals: that unilateral decision of the employer to terminate a contract with or without just cause.
If it is not with just cause, it means that the employer has no legal justification to terminate the contract, then, the consequence is that he has to pay an indemnity. This indemnity is what is provided for in the law, if the worker can demonstrate that this dismissal causes him/her greater damages than what is provided for in the law, he/she can claim more money.
However, when there is just cause, what is being said is that the employee incurred in a prohibited situation sanctioned by law and, because of this, the termination of the contract is the employee's fault.
Just causes are behaviors, situations or hypotheses that are described in the law that are the reasons for which an employer could justly terminate an employee's contract. What is the effect of the termination of the contract being just? The employer does not have to pay compensation and may even claim damages from the employee, through the courts, if applicable.
What are the just causes? Those that are in the law, there cannot be a different just cause. They cannot be invented.
Article 62 of the Substantive Labor Code states that the employer has just cause to terminate the contract:
1. Having suffered deceit on the part of the worker, by means of the presentation of false certificates for admission or tending to obtain an undue advantage. This is the classic example of a worker who falsifies a university diploma to gain access to a position.
2. Any act of violence, insult, ill-treatment or serious indiscipline committed by the employee in the course of his work against the employer, members of his family, management personnel or co-workers.
3. Any serious act of violence, insult or ill-treatment incurred by the employee outside the service against the employer, members of his family, or his representatives and partners, workshop managers, watchmen or guards.
Here a worker at the end of his working day does not cease to be a worker, he stops performing his function because he rests, but he does not cease to be a worker. Therefore, the fact that he/she incurs in bad treatment, violence, etc., outside the service, is still a reason for dismissal for just cause because the labor relationship is still in force.
4. Any material damage intentionally caused to buildings, works, machinery and raw materials, instruments and other objects related to the work, and any gross negligence that endangers the safety of persons or things.
5. Any immoral or criminal act that the worker commits in the workshop, establishment or place of work or in the performance of his duties.
This numeral can be problematic due to the fact that qualifying an act as immoral can be very subjective and complex, but, in general terms, in a work environment it is possible to identify what is reasonably permitted and what is not, the same as a criminal act, which implies that, if there is a crime committed by the same worker, in his work, regardless of whether it is investigated and judged by a criminal judge, the fact of having committed a criminal act implies that the contract can be terminated by the employer.
Here the jurisprudence of the Supreme Court of Justice has clarified that a criminal decision against the employee is not necessary to make use of the cause for criminal acts.
6. Any serious violation of the obligations or special prohibitions incumbent upon the employee in accordance with Articles 58 and 60 of the Substantive Labor Code.
This is a special cause since it is the one that, due to its volume and generality, is the most present in contractual terminations. Article 58 of the Substantive Labor Code sets forth the catalog of special obligations of the employee. Article 60 of the same Code states which are the prohibitions of the workers.
What this just cause says is that if a worker fails to comply with or seriously violates the obligations of Articles 58 and 60, the employer may dismiss him/her. For that, obviously, the employer must prove that the worker incurred in such violation and that it was serious.
But then comes the second part of this same paragraph: "[...] any serious misconduct qualified as such in collective bargaining agreements or conventions, arbitration rulings, individual contracts or regulations".
This is a second hypothesis within this article 62. This means that, if there is a serious misconduct in the employment contract or in an internal work regulation, it is sufficient for the employee to incur in such misconduct for the contract to be terminated.
This is where it should be clarified that the parties, the employee and the employer, cannot invent just causes, but they can agree on serious misconduct and, if an employee incurs in serious misconduct, he/she can be dismissed.
For example, nowhere in the Substantive Labor Code does it say that being late is a just cause to terminate the contract, but there are other rules, such as the special obligations of the worker, which say that the worker must comply with the schedule, must comply with the working day, etc. However, there are companies, businesses or economic sectors where being late can be very serious. In others, even if it is an irregularity, it is not so serious.
The fact that this is so variable means that the companies themselves have the freedom to say what is serious for them, and in the event that the worker incurs in a behavior previously qualified as serious misconduct, he may be dismissed for it, without the judge being able to evaluate how serious it was or was not, because this qualification should have been made by the parties.
Is this stated in the contract?
This could be in the contract, in the internal regulations, in a collective bargaining agreement or in an arbitration award, etc. A company can say that it is a serious offense to be late, even if it is the first time or five minutes. And this is previously stated as such. In this case, without it being a just cause, if this serious misconduct is already created and the employee incurs in it, he/she can be dismissed with just cause, not because it is legally so, but because he/she incurred in the serious misconduct as it is stated in the second part of paragraph 6 of article 62.
Continuing with just causes...
7. The preventive detention of the employee for more than thirty days, unless subsequently acquitted; or the correctional arrest that exceeds eight days, or even for a shorter period, when the cause of the sanction is sufficient by itself to justify the termination of the contract.
Nowadays, I insist, this no longer has a practical application because "correctional arrest" no longer exists, but there is still a possibility of dismissing a worker when he is preventively detained for more than 30 days, but if he is acquitted, the just cause ceases and the dismissal would become unjust.
8. That the employee reveals technical or commercial secrets or discloses matters of a reserved nature, to the detriment of the company.
9. Deficient work performance in relation to the worker's capacity and to the average performance in similar jobs, when it is not corrected within a reasonable period of time despite the employer's request.
This requires following a procedure that is also in the Law, to objectively prove that this is the case and eliminate the employer's arbitrariness.
10. The systematic non-performance, without valid reasons, by the employee, of conventional or legal obligations.
11. Any vice of the worker that disturbs the discipline of the establishment. This can be any kind of vice, whether social or individual, for example, kleptomania or gambling; vices that are of the worker and that threaten the discipline of the establishment. This, as long as they do not in themselves imply a hypothesis of reinforced labor stability.
12. The systematic reluctance of the worker to accept the preventive, prophylactic or curative measures prescribed by the employer's doctor or by the authorities to avoid illnesses or accidents.
This is a cause that can be very common at this time, because it is the reluctance to accept preventive biosafety measures. However, it should be noted that for this same event there is a rule in Decree 1295 of 1994 that requires prior permission from the Ministry of Labor. There are currently intense debates about mandatory vaccination.
13. The worker's inability to perform the work entrusted. This wording is original of the Code and, this Code is 70 years old, there are many terms and expressions that are already in disuse, but they are still in force. A worker can be dismissed with just cause for inability to perform the work assigned; however, it is not an automatic process. Before that, there must be a training work, a training work, a measurement of activities and results.
14. The recognition to the worker of the retirement or disability pension while in the service of the company. When he/she reaches an old age or disability pension, as long as there is no solution of continuity between the labor income of the salary and the pension, i.e., he/she can be dismissed the day after the person starts receiving a pension. There can be no solution of continuity of service.
15. The contagious or chronic illness of the worker, which is not of an occupational nature, as well as any other illness or injury that incapacitates him/her for work, the cure of which has not been possible for 180 days. In this case, the dismissal for this cause may not be made until the expiration of such period and when there is a prior authorization by the Ministry of Labor, and does not exempt the employer from the legal and conventional benefits and indemnities derived from the disease.
This article ends by stating that in the cases of paragraphs 9 to 15 of this article, for the termination of the contract, the employer must give the employee at least fifteen days' notice.
This is followed by just cause on the part of the employee, i.e., the reasons for which an employee may unilaterally terminate the contract.
It is important to clarify that when we speak of a unilateral decision by the employee, we are referring to a resignation, but this resignation can be with or without just cause.
This, in practical and colloquial terms, means that if the employee decides to terminate the contract, it will be called resignation. But, if what happens is that there is some reason that leads the employee to resign, we will be talking about a resignation with just cause, a resignation that is not free, that is motivated by something.
When in labor terms we refer to a motivated resignation, we are talking about a resignation with just cause, that is, we are talking about the unilateral decision of the employee to terminate the contract with just cause.
The consequence of the existence of just causes on the part of the employee to resign is that the employer will have to compensate him/her as if he/she were dismissing him/her. That is why it is called motivated resignation or resignation with just cause. But, of course, this is not decided by the worker. This requires a debate and a judicial decision unless the employer himself is the one who consents to it.
The just causes with which an employee may terminate an employment contract are in the law, he/she cannot invent them, just as the employer cannot do so with respect to the employee. These just causes are found in literal B of the same article 62 of the substantive code.
1. Having suffered deception on the part of the employer, with respect to working conditions. The worker can say that the promised working conditions are different from the ones he/she has.
2. Any act of violence, ill-treatment or serious threats inflicted by the employer against the employee or members of his family, in or outside the service, or inflicted within the service by the employer's relatives, representatives or dependents with the employer's consent or tolerance.
3. Any act of the employer or his representatives that induces the employee to commit an unlawful act or an act contrary to his political or religious convictions.
4. All circumstances that the employee could not foresee when concluding the contract, and that endanger his safety or health, and that the employer does not agree to modify.
5. Any injury caused maliciously by the employer to the employee in the provision of the service.
6. Systematic non-compliance without valid reasons by the employer of its contractual or legal obligations. For example, failure to comply with payments, delaying payments.
7. The employer's demand, without valid reasons, for the rendering of a differentservice, or in different places from the one for which he/she was hired.
8. Any serious violation of the obligations or prohibitions incumbent upon the employer, in accordance with Articles 57 and 59 of the Substantive Labor Code, or any serious misconduct qualified as such in collective bargaining agreements or conventions, arbitration rulings, individual contracts or regulations.
In addition, it must be taken into account that the party that unilaterally terminates the employment contract must state to the other party, at the time of termination, the cause or reason for such determination. Subsequently, different grounds or motives cannot be validly alleged.
Does the employee have to give notice to the employer?
There is a very big discussion because, in principle, a very old obligation is still in force in the Substantive Labor Code, which establishes that the employee must give a notice, within a period of at least 30 days, to the employer when he/she resigns.
Previously, an article stated that if the employee did not give 30 days' notice, the employer could deduct one month's salary from the employee's pay. However, with a labor reform in 2002, the consequence of deducting that month of work disappeared.
Today, although there is a generic obligation to give 30 days' notice, there is no obligation associated with that or a penalty for failure to do so. This means that in practice this is the same as nothing.
Effective management: Discover the keys to Just Cause termination.
For contract terminators, what is the key?
It is always best for the employer to be very clear about what he wants to do and how he wants to do it.
When talking about what you want to do is: if you want to terminate the contract, suspend it, if you have a unilateral decision that you want to make of your own free will or if the conditions of the service or the contract are objectively exhausted or if there is an improper behavior or an undesirable situation of the employee that gives rise to the termination of the contract.
That is, identify very well in what position the employer is in to make the decision to terminate the contract. Once the objective or subjective motivation to terminate the contract is well identified, then, next, describe in detail what is the next step that needs to be implemented, whether it is a termination without just cause that then forces the employer to recognize a compensation that has to be calculated or it is a hypothesis of just cause that implies a disciplinary investigation, calling the employee to give his defense or his right of defense on the facts that are imputed to him or if it is an objective situation that has to be demonstrated in order to terminate the contract for legal cause.
Once the path has been identified, create the documents proper to each case: whether it is the justification by which the elements of the contract are objectively exhausted or whether it is a situation attributable to the employee or whether it is simply an unjustified unilateral decision on the part of the employer.
Keep learning: Part 3 on contracts in Colombia