When must an employer state a reason for terminating an employment contract?
Reasons for an employer’s termination of fixed-term and indefinite-term employment contracts with notice, and termination without notice — the scope of the obligation according to PIP.
The obligation to state a reason relates to a specific declaration by the employer, not to every way employment ends. The National Labour Inspectorate (PIP) identifies this obligation when an employer terminates a fixed-term or indefinite-term employment contract with notice, and when an employer terminates an employment contract without notice.
Termination with notice by the employer
An employer’s declaration terminating a fixed-term or indefinite-term employment contract with notice must state the reason justifying the termination. Stating a reason here is an obligation, not an optional organizational step.
This rule concerns the employer’s declaration. It should not be extended to notice given by an employee.
Termination without notice by the employer
An employer terminating an employment contract without notice must also state the reason justifying the termination. This is a separate situation from termination with notice by the employer.
This guide does not assess whether a particular reason is sufficient or provide a list of permissible reasons.
Mutual agreement and expiry of the agreed term are different situations
In its section on terminating employment contracts, PIP distinguishes, among other things:
- termination by mutual agreement;
- termination by a declaration of either party with notice;
- termination by a declaration of either party without notice;
- termination upon expiry of the term for which the contract was concluded.
Neither mutual agreement nor expiry of the agreed term should be equated with termination with notice by the employer. PIP’s rule on stating a reason applies to the specified declarations by the employer — it is not a general rule for every way employment ends.
Optional organizational checklist
To organize the information, you can note:
- Type of contract: which employment contract are you considering?
- Party making the declaration: is it the employer or the employee?
- Intended way of ending employment: termination with notice, termination without notice, mutual agreement, or expiry of the term for which the contract was concluded?
This is only an optional organizational aid, not an additional legal obligation, a legality test or a template document. This guide does not confirm the effectiveness of any particular termination.