Termination of Employment Contract

There are two types of termination for an employment contract:

Termination with notice

Both the employee and the employer may terminate an employment contract concluded for an indefinite period based on the notice periods indicated in the above table. Should either party fail to abide by the rule to serve notice, a payment in lieu of notice (PILON) shall be due to the other party. PILON shall serve as an immediate compensation to terminate the employment contract at an amount equal to the notice period.

Premature termination of an employment contract or prior to the expiration of the notice period as set forth hereinabove, for justifiable and rightful reasons as set forth in the Labor Law

Both the employer and employee have the right to terminate an employment contract before the expiration thereof or without having to comply with the prescribed notice periods, in the following cases:

• Reasons of health

• Cases arising from immoral, dishonorable or malicious conduct or other similar behavior

• Force majeure

Severance Pay

An employee who quits satisfying the conditions indicated in the Labor Law or whose employment contract is terminated by the employer must be compensated with a severance pay to be calculated based on the employees’ years of service. This indemnity pay is calculated on the basis of the last 30 days’ gross wage per year of the employment contract from the commencement date of employment. The 30-day payment per year of employment may not exceed the upper limit determined semi-annually. However, severance pay may be agreed to be paid at an amount higher than the limit indicated above in case a provision to this effect is set out in the employment contract.

The reasons on the basis of which employees are entitled to receive severance pay are as follows:

• Termination of employment to fulfil compulsory military service obligations (for males)
  The reasons on the basis of which employees are entitled to receive severance pay are as follows:

• Retirement (in order to receive old age, retirement pension or disability allowance from the relevant insurance institutions)

• Employee’s resignation upon completing 3,600 premium days and 15 years of insurance period (in case of fulfillment of retirement conditions except the age limit and resignation with the submission of the document from the Social Security Institution indicating the fulfillment of retirement conditions, excluding the age limit, to the employer)

• Voluntary termination by female employees within one year following the date of marriage

• Death of the employee

• Termination of the employment contract in the absence of a valid reason as set forth in the Labor Law by the employer and/or for a valid reason

Job Security

Pursuant to Labor Law, in case the employment contract is terminated by the employer, it is required that the underlying reason of this termination be notified to the employee, and that termination is affected for a good cause. The employee may initiate a legal action before a Labor Court within one month from the date of notification of termination. In the forthcoming legal proceedings, the burden of proof that termination is based on a valid reason falls upon the employer. Should the employee claim that termination is due to another reason, they are obligated to prove their claim. In case the court decides that the termination is unfair and that the employee is to be reemployed, but the employee fails to apply for reemployment within ten work days from the date notice of the decision is served upon them, termination executed by the employer shall be deemed valid, and the employer shall be held responsible for the legal consequences.

Furthermore, Compulsory Intermediation has been introduced for employee-employer conflicts as of 2018. Parties to a conflict shall refer to an intermediator before a lawsuit can be filed. In the event that a lawsuit is filed without first referring to an intermediator to conclude the matter, the lawsuit may be directly declined. In the event that intermediation is terminated should either party fail to attend the first hearing without a valid excuse, the absentee party shall be held liable for all trial expenses even if the case is adjudicated, wholly or partially, in their favor. Furthermore, solicitor’s fee may not be claimed by the absentee party.