The Risk of terminating an employee’s employment contract due to the expiration of benefit period

Employers often ask what is the risk of terminating an employee’s employment contract due to the expiration of the benefit period before the end of the first 3 months of receiving rehabilitation benefits. We explain this issue below.

Pursuant to Article 53 § 1(1) of the Labor Code (KP), an employer may terminate an employment contract without notice if the employee’s inability to work due to illness lasts:

• longer than 3 months—if the employee has been employed by the employer for less than 6 months,
• longer than the combined period during which the employee received wages and sick pay, as well as rehabilitation benefits, for the first 3 months—if the employee has been employed by the employer for at least 6 months or if the inability to work was caused by a work-related accident or an occupational disease.

The primary condition entitling an employer to terminate an employment relationship with an employee without notice, pursuant to Article 53 § 1(1) of the Labor Code, is the employee’s inability to work due to illness beyond the periods specified above.

It is generally accepted that the prohibition on terminating an employment contract without notice, pursuant to Article 53 § 1 of the Labor Code, as indicated above, also extends to the first 3 months during which the employee receives a rehabilitation benefit, even if the employee cannot demonstrate to the employer that they began receiving this benefit immediately following the period during which they received sick pay.

According to the rulings of the Supreme Court, an employer’s termination of an employment contract with an employee without notice, pursuant to Article 53 § 1 of the Labor Code, during the period between the exhaustion of the employee’s entitlement to sick leave and the issuance of a final decision by the social security authority regarding a rehabilitation benefit, is lawful, unless the Social Insurance Institution’s (ZUS) decision indicates that the employee was entitled to a rehabilitation benefit during that period. This position was set forth, among other places, in the Supreme Court’s judgment of March 26, 2009, case no. II PK 245/08.

In the Supreme Court’s opinion, an employer cannot be deprived of the right to terminate an employment contract after the cumulative period of receiving wages and sick pay has expired if the employee has not acquired the right to a rehabilitation benefit or has not reported to work following the cessation of the reason for the absence. It is understood that the purpose of Article 53 of the Labor Code is to enable the employer to terminate the employment contract in the event of a prolonged (long-term) illness of the employee. This provision protects the employee from termination of employment during the period covering the combined duration of receiving wages and sick pay, as well as the receipt of rehabilitation benefits for the first 3 months following the end of the benefit period.

 In the event that an employer terminates an employee’s employment under Article 53 § 1(1) of the Labor Code, the assessment of the legality of the employer’s actions in this regard will depend on the outcome of the employee’s application for a rehabilitation benefit.

If the employee is granted the right to a rehabilitation benefit starting on the first day after the expiration of sick leave, the termination of the contract would be unlawful, as the date of termination of the employment relationship would then fall within the period of protection provided for in Article 53 of the Labor Code.

Thus, if the proceedings for a rehabilitation benefit last longer than the basic benefit period, the employer assumes a certain risk of violating Article 53 of the Labor Code, as it may turn out that the employee receives further sick pay or a rehabilitation benefit, thereby extending the period of protection against termination without notice.

In such a case, upon receiving relevant information from the employee, the employer should take steps to withdraw its declaration of intent to terminate the employment relationship, as such a declaration violates labor law provisions.