Termination of an employment agreement is one of the key issues in labor law. Improper regulation of this field may undermine all protection standards set by the law for employees. Therefore, it is crucial that
the preconditions for termination of an employment contract are clearly and unambiguously defined by law.
The Labor Code of Georgia (Labor Code) directly defines the grounds for termination of an employment agreement. However, the list of these grounds is not exhaustive, since, in addition to specific circumstances (for example, “written agreement between parties”), the grounds for terminating an employment agreement may also be “other objective circumstances”. Such grounds for the termination of an employment agreement may raise some questions. What can be regarded as an “other objective circumstance” may not be fully clear to either employer or employee.
The stated ground serves to give flexibility to the employer, when the employer has a legitimate reason to terminate the employment agreement, even though the Labor Code could not foresee this specific case as a potential ground for termination. For this purpose, a number of jurisdictions, including the United Kingdom, Germany, France, Austria, Switzerland and others, also envisage “just and objective reason” as a ground for terminating an employment agreement.
GENERAL STANDARD SET BY THE GEORGIAN COURTS
The Georgian courts have established a standard that must be met when relying on “objective circumstances” as a ground for termination. According to the court practice, the general character of this ground cannot be used to justify dismissal that is contrary to the principle of good faith. Terminating an employment agreement with improper motive (for instance, desire for revenge) cannot be covered by the “objective circumstances”. It is necessary that the “objective circumstance,” in its essence, is a “respectable reason”.
The Supreme Court of Georgia (Supreme Court) has established the following preconditions to assess whether the termination of a contract based on “objective circumstances” is lawful:
• The grounds for terminating the employment agreement must be different from the specific grounds established by the Labor Code. i.e. if there is any other ground for the contract termination, the contract should be terminated with reference to the latter rather than with reference to “other objective circumstances”;
• Termination should not depend on the subjective will of the employer;
• Relevant factual circumstances must be capable of confirmation or denial;
• The situation should provide sufficient reason for terminating the employment agreement from a neutral observer’s point of view;
• The consequence of the termination should take precedence over the consequences of extension of the contract.
WHAT MAY OR MAY NOT BE AN OBJECTIVE CIRCUMSTANCE FOR CONTRACT TERMINATION – INSTRUCTIONS AND ASSESSMENTS
According to the established case law, the legitimacy of a contract termination is examined only with respect to those grounds that are indicated in the notice of termination by the employer. Accordingly, if the contract was terminated with reference to the “other objective circumstances”, but there was in fact another ground for termination, the court will deem the termination unlawful.
According to the Supreme Court, if the employee is a “special contractor”, the objective circumstance for termination may be personal incompatibility. However, it is essential that the complicated relationship between the employee and the employer makes the continuation of the employment relationship intolerable. Positions such as assistant, personal secretary, personal advisor, and the like are considered as “special contracts”. Similarly, the above standard is relevant in this case too.
Accordingly, the grounds for termination must be different from the other grounds established by law. If the incompatibility (including mistrust) is caused by the employee’s breach of contractual obligations, the termination should be based on the violation of the obligations rather than incompatibility, as an objective circumstance. Failure to comply with this standard may result in the court judgment noting that the contract has been terminated unlawfully.
Refusal of Contract Amendments
According to the court, the objective circumstance for the contract termination cannot be an employee’s refusal to amend the employment agreement on terms offered by the employer. Pursuant to one case, an employer offered to change the terms of the contract. Later, the employer named the rejection of this offer as the objective circumstance for terminating the contract. The court ruled that such dismissal was unlawful.
According to the Supreme Court, the objective reason for termination of an employment agreement cannot be an employee’s conviction if the convicted person was not declared incompatible with the job at the time of the vacancy announcement. Allowing convicted persons to participate in the selection process creates a presumption that if the candidate meets the conditions of the selection, the employer will provide them with a job, regardless of the conviction.
In summary, it can be said that Georgian case law is rather scarce in terms of identifying objective circumstances of termination of employment agreements. As of April 2021, of the cases reviewed and published by the Supreme Court, it was considered that the termination of an employment contract with reference to “other objective circumstances” was lawful only in two cases. The reason for this is partly due to the fact that employers often use “other objective circumstances” as the most general basis to cover unjustified dismissals. However, the general standard set by the court for assessing contract termination based on “other objective circumstances” compensates this scarcity to some extent. The preconditions set by a court for finding termination lawful should give employers better clarity about the expected consequences of their decisions.