Contracts and Dismissals

Written Employment Particulars

What is the relevant legislation on employment contracts (including types: oral or written, fixed-term or indefinite-term)?

According to the Decent Work Act, an employment contract can be written or oral and may be for a fixed term, an indefinite term, or executed for a specific task. Employment may be full-time, part-time, or casual, with a probationary period of up to three months.

Does the Law require written employment contracts or written employment particulars in the absence of written contracts?

Employers must provide a written contract or, for oral agreements, issue a written statement or display a workplace notice if terms are the same as those of other employees.

What are the details provided under written employment contracts or written statement of employment particulars or an appointment letter?

Contracts should include basic details such as employer and employee names, workplace location, job type and duration, termination notice period (at least 4 weeks after a year of service), salary details, employee benefits, repatriation terms for overseas jobs, and any special conditions.

Within how many days of the commencement of employment, a worker is to be provided with such a letter?

While the specific number of days for providing the written statement or contract is not stated in the law, it should be done promptly upon the commencement of employment

Does the law require an employer to provide a worker with a letter of appointment or written employment particulars with details about employment?

The employer is obliged to provide a copy of the written employment contract to the employee if the agreement is oral.

Sources: § 13.1(a, b, c, d, j, k) and 14.6 of the Decent Act, 2015

Fixed Term Contracts

What is the relevant legislation on fixed-term contracts?

Fixed-term contracts are regulated under the Decent Work Act, 2015.

Under what conditions are fixed-term contracts allowed?

Fixed-term contracts are allowed for a specific period or for the completion of a specific task. The employment contract must clearly specify the duration of employment.

What is the maximum length of a single fixed-term contract? (in months)

The law does not specify a maximum duration (in months) for a single fixed-term contract.

What is the number of renewals that are allowed for a single fixed-term contract?

The legislation does not set a limit on the number of renewals for a fixed-term contract.

What is the maximum length of a fixed-term contract, including renewals? (in months)

The total allowable duration of fixed-term contracts, including renewals, is not regulated by a maximum limit in the law.

Does the law restrict hiring fixed-term contract workers for tasks of a permanent nature (by hiring them in place of permanent workers)?

The law does not clearly prohibit the use of fixed-term contracts for tasks of a permanent nature or restrict employers from using them in place of permanent workers. However, a casual employee who has worked regularly for the same employer for six months may choose to convert to full-time or part-time employment based on their usual working hours.

Sources: § 13.2 & 13.3 (b) of the Decent Work Act, 2015

Probation Period

What is the relevant legislation on Probation/Trial Period?

The probationary period is governed by the Decent Work Act, 2015

Does the law require a probation period?

According to the Decent Work Act, a probationary period may be included in an employment contract, but it is not mandatory.

What is the maximum length of the probation period (with and without renewal/extension)?

If a probation period is included, it must not exceed three months, with a uniform duration across all job types. The Act does not have any provisions on renewal or extension of the probationary period.

Does the law provide for different probation periods for jobs of different types?

The Act does not differentiate in the length of probation periods based on job types. The same three-month maximum applies uniformly to all employment categories.

Sources: §13.1(c), 14.6(c), 14.9(a) of the Decent Work Act, 2015

Employment Termination

What are the different types of employment termination?

Employment contracts may end in several ways. Termination can occur in the following cases:

• Mutual agreement between the employer and employee;
• Expiration of a fixed-term contract at the end of its specified duration;
• Completion of a specific task, for task-based contracts;
• Legal or personal grounds, such as the death of either party, or the bankruptcy or insolvency of the employer.

Legal Grounds for Termination

1. Termination of Contracts

• A fixed-term contract may be terminated at any time for just cause.
• For indefinite contracts, termination is permitted only if valid grounds exist and proper procedures are followed.
• Wrongful or constructive dismissal is prohibited, and affected employees have the right to seek redress.

2. Just Cause and Gross Misconduct

Immediate termination is justified in cases of gross misconduct, including:

• violations of fundamental employee rights,
• sexual harassment, workplace violence or intimidation,
• intentional or negligent destruction of employer’s property,
• endangering workplace safety,
• prolonged unauthorized absence (over 10 consecutive days or 20 days within six months), or
• breach of confidentiality obligations.

What is the procedure for collective redundancies?

Redundancy occurs when an employer reduces staff due to business reorganization, transfer, closure, or economic, technological, or structural changes, including bankruptcy or dissolution.

In such cases, employers must follow specific legal procedures:

• Provide notice and pay severance, with employees entitled to four weeks of severance pay per completed year of service, in addition to other legal entitlements.
• When selecting employees for redundancy, the "first in, last out" principle applies, though qualifications and efficiency may be considered when service lengths are similar.
• Employers must notify the Ministry, affected employees, and relevant trade unions, providing details on the reasons, affected employees, and proposed employment termination dates.
• Employers must engage in good faith negotiations on alternatives, selection criteria, mitigation measures, termination conditions, and rehiring priorities.

Employers may withhold confidential or legally privileged information only if there is a valid reason. Failure to comply with these procedures can result in employee complaints and legal remedies through the Ministry. If future job openings arise, employers must prioritize rehiring redundant employees, and failure to do so constitutes a violation of the Act.

What is meant by constructive termination of employment?

An employer is considered to have terminated an employee’s employment if the employee resigns due to the employer’s conduct making it unreasonable to continue working. In cases of constructive dismissal, the Ministry or court will assess whether the employee attempted to resolve the issue before resigning and whether it was reasonable to expect such an attempt under the circumstances.

What are the prohibited grounds for termination of employment?

Employers are prohibited from terminating an employee for exercising rights under this Act. This includes termination due to the employee’s entitlement to or pursuit of legal rights.

Additionally, temporary absences due to illness or injury cannot serve as a reason for dismissal. An absence is deemed temporary if the employee is on paid sick leave under this Act or a collective agreement.

In any legal proceedings, the Ministry or court will evaluate whether the employee was entitled to certain rights and if the employer can prove that the termination was not motivated by the exercise of those rights.

What is the procedure for reviewing the termination decisions?

Employees who believe their termination was unlawful may file a complaint with the Ministry. This must be done within six months of the termination decision, though extensions may be granted for valid reasons. If the Ministry or court determines that the termination was not in compliance with this Act, it may order reinstatement, compensation, or both.

When deciding on a remedy, reinstatement is the primary option unless the employer demonstrates that restoring the employment relationship is impractical due to a loss of trust or significant changes in the business structure. If reinstatement is ordered, compensation is generally limited to wages lost from the termination date until the reinstatement order.

If reinstatement is not feasible, compensation may be awarded up to two years’ salary, based on the employee’s average earnings in the six months preceding dismissal. However, if dismissal was intended to avoid pension obligations, compensation may be increased to a maximum of five years’ salary.

In determining compensation, factors such as severance payments made by the employer, the employee’s subsequent earnings, efforts to mitigate losses, and the timing of the complaint are considered. If reinstatement is granted, the employee must return to work within one month, and their employment will be deemed continuous. The employer is required to allow the employee to resume their position.

Sources: §14.1 to 14.10 of the Decent Work Act, 2015