Termination of Employment for Reasons Unrelated to the Employee’s Personal Circumstances

Termination of employment is a sensitive issue for both parties, but it can be handled with minimal harm.

Let’s see how!

According to Article 55 of Law No. 53 of 2003 on the Labor Code (hereinafter referred to as the Labor Code), employment can legally end without a specific legal declaration from either party, by mutual agreement, or by unilateral termination by either party.

Employer termination refers to the employer’s unilateral decision to terminate the employment contract, which can be based on reasons related to the employee’s personal circumstances or reasons unrelated to the employee.

At the request of one of our readers, who feels that their employer unjustly and unlawfully terminated their employment, we will now outline the legal conditions for termination unrelated to the employee’s personal circumstances.

According to Article 65 of the Labor Code, employer termination unrelated to the employee’s personal circumstances refers to the unilateral termination of the employment contract due to the elimination of the job.

Reasons related to the employer’s operations include only those related to the employer itself, such as reorganization, structural changes affecting the entire or part of the employer’s organization, workforce reductions due to economic difficulties, the reallocation, elimination, or merging of job roles.

A legal requirement is that the elimination of the job must be genuine and based on a real and serious reason.

Genuine: The eliminated job must no longer appear in the employer’s organizational chart. According to legal practice, job elimination is not considered genuine if, shortly after termination, the job is re-advertised or remains in the organizational chart, even under a different title but with the same job description.

Real and serious reason: The reason must be true and meet objective factual standards, such as economic difficulties independent of the employer’s good or bad faith, and reorganization must be absolutely necessary to improve or optimize the employer’s operations. The justification for the termination decision must clearly state that the employee’s work is no longer needed due to the specified reasons.

According to legal practice, reorganization is not considered real if, after the termination, new hires are made or the number of jobs remains unchanged.

Experience shows that termination by mutual agreement is the best middle ground for both parties. If this is not feasible, adhering to the above legal provisions is of utmost importance, no matter which termination method the employer chooses. Careful attention and a thorough understanding of the laws can help avoid a labor dispute that, if unfavorable for the employer, may result in significant financial losses and damage to reputation.