Additional requirements to justify the termination of the employment contract for business reasons
Even though under the Constitution of the Republic of Slovenia the employers are guaranteed a free economic initiative, which incorporates the right to free organisation of work and free choice of the business model, in the decision VIII Ips 82/2017 of 19 December 2017 the Supreme Court noted that this right is not absolute.
In the case at hand, the employer terminated the employment contract of the worker due to the poorer performance and changes in work organisation. While the courts of first and second instances confirmed the termination was legal, the Supreme Court took the view that the employer could maintain the employment of the worker by reducing the number of the employment agency and precarious workers as well as fixed-term employees.
It is a ground-breaking view of the Supreme Court because it indicates that before the termination of the contract the employer must check whether the permanent worker may stay in employment on account of the precarious, employment agency or fixed-term employees.
The Supreme Court confirmed the view of the applicant that the dismissal is “the last resort” and that under the Recommendation No 166 of the ILO Convention No 158 other, less extreme measures are to be adopted. According to the decision, the “less extreme” measures might include restriction of hiring, natural reduction of the workforce, voluntary early retirement, internal transfers, restriction of overtime etc. If this position becomes part of the established case-law, this means that the employer will not be entirely free to organise its operations, at least not in cases where its initiatives imply a dismissal of individual employees for business reasons.
In this specific case the Supreme Court further established (and it is of importance that the employment relationship was governed by the Collective agreement for Slovenia’s trade sector (KPDTS)) that in case of the broader definition of the place of work, e.g. employer’s regional branch network, it is necessary to consider whether the employer can offer the employee a job in another branch. This means that if the employer can transfer the employee to another place without having to change the employment contract for that purpose, he is obliged to do so if the worker can thereby stay in employment. The abovementioned applies only to the places/regions which are defined in the employment contract as places of work.
In the future, the employers will, therefore, be required to check thoroughly the possibilities of maintaining the worker in employment and justify their conclusions in the termination notice.
