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Termination of Employment Agreement: Adoption of the Broad Approach when Examining Validity of Termination Reasons

Giedrė Dailidėnaitė, partner at Primus (previous firm name – VARUL) wrote an article on termination of employment agreement. This article was written for Taylor Vinters and published in International Employment Law Update.

The employer has a right to terminate indefinite-term employment contract with an employee under Article 129 of the Labour Code only when valid reason exists. The law does not define what constitutes such “valid reason” and only refers to certain examples (such as the circumstances related to the qualification, professional skills or conduct of an employee), which have to be determined on a case-by-case basis.

In each individual case the employer would have to specify the valid reason in details, i.e. to specify all the facts which embody such circumstances, and then the court in each particular case assesses, if the circumstances indicated by the employer may be considered as a legitimate reason for termination (Supreme Court of Lithuania in the civil case No 3K-3-165/2011 dated 28/4/2011). Circumstances related to the employee’s conduct at work are considered as subjective characteristics, personal and similar features, which in absence of employee’s fault objectively occur as misconduct at work and in turn can constitute valid reasons for the termination of employment provided the employee is inappropriate for agreed job. In all cases, the appropriateness is not limited to a quality of direct duties performed by the employee, but also covers the influence of his/her conduct on the work conditions of other employees, impact on their working capacity and results, prestige of the company, etc. (Supreme Court of Lithuania in the civil case No 3K-3-346/2011 dated 19/9/2011).

In recent judgment of the Supreme Court of Lithuania adopted in the civil case No 3K-3-48/2015 dated 23/2/2015, the court further develops and interprets the scope of circumstances, which could validate termination Situations when the employee did not comply with requirements of the work process (lack of the discipline); was unable to work in the team (disagreements/conflicts with other team members); lacked efforts to comply with the work order established (lack of motivation), failure to contribute sufficient efforts to accomplish the tasks of the employee’s professional development plan; failure to purse the objectives set, to comply or change its actions in order to satisfy team’s needs; constitute a complex of facts, which altogether can be held as valid termination reasons as normal working conditions of the other employees were interfered and it caused their discomfort as well as resulted in deterioration of the quality of team work and of the operation of the company itself.

The approach adopted with such ruling quite broadly expands boundaries of interpretation of what a valid reason, related to personal traits / abilities of particular employee, encompasses as even such undefined circumstances as lack of motivation or inability to work in a team may be considered as a valid reason for the termination without fault of the employee in cases where it adversely affects work atmosphere.

Comment: This ruling broadly expands the circumstances which may give rise to a valid termination and is likely to be welcome news for employers.