In a recent decision, the Court of Appeals Assembly of Civil Chambers ("Court of Appeals") held that employees in definite duration agreements are not entitled to claim severance pay if the agreement expires based on the agreed termination criteria (decision dated 30 May 2015, 2014/22-391 E., 2014/710 K.). The Court of Appeals reasoned that an agreement expiring after a definite term is not a termination reason which can be attributed to the employer. It also noted that these circumstances are not included in the legislative qualifying criteria for severance payments.

In the case at hand, the employee was dismissed from employment without receiving notice. The employee filed a re-employment lawsuit, claiming the agreement is not automatically terminated because he had been undertaking other additional work besides the specified contractual tasks and this other work had continued after termination of his employment agreement. The employee argued that it was not possible for him to be aware of the termination without receiving notice. He further claimed that the employer's failure to renew the agreement should be deemed to be termination of the contract by the employer.

The court of first instance held in favor of the employee. The lower court held that whether an agreement is concluded for a definite or indefinite term has no impact on entitlement to severance pay.

The Court of Appeal ultimately overturned the lower court and held that the case hinged on whether an employee is entitled to severance pay when a definite term employment agreement expires. The Court of Appeals based its reasoning on Article 14 of Labor Law number 1475, which remains in force despite the rest of the law being abrogated. According to Article 14, severance pay is only available where the employment agreement is:

  • At least one year old, measured from the date the employee started working.
  • Terminated in a manner stipulated under Article 14, or by the employee's death.

The Court of Appeal noted that in the case at hand the agreement expired due to the conclusion of the specified work. Therefore, the Court of Appeals held that the employer had not terminated the employment agreement. Rather, the agreement had terminated automatically, in line with the parties' initial intentions.

Article 14 clearly states when severance pay can be claimed. The Court of Appeal held that severance pay cannot be claimed in the case at hand because automatic expiry of the agreement is not a termination method mentioned in Article 14.

The Court of Appeals' recent decision is in line previous decisions on expiry of definite term decisions from 1993 and 1996.

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