Grounds for Termination
The parties are exempt from their legal obligations in the event that termination occurs:
- by mutual consent, which we recommend executing before a notary;
- by execution of the agreement (the contract for a particular job or work ends with the work’s conclusion);
- with just cause (employers can dismiss their employees alleging one or more of the specific reasons listed in Article 88 of the Labour Code).
Dismissal for just cause requires the employer to establish that the dismissal was the result of an act (under Article 88 of the Labour Code) committed by the employee. Article 88 also requires the employer to notify the Department of Labour of the termination, with the reasons included, within 48 hours from the dismissal. If the employer does not prove just cause or does not submit the notice within the required 48 hours, it will be responsible for paying the employee’s severance. The employer’s right to base the dismissal on a specific cause, will expire 15 days after the employee has committed the act alleged as the grounds for the termination.
The employer can dismiss an employee with just cause, if the employee fails to fulfill a serious obligation. The employer has the burden to prove the cause of the dismissal. The employee can also challenge any dismissal for just cause, decided by the employer. An employment court will determine whether the employer had justifiable grounds for the termination. Labour courts are very restrictive when it comes to evaluating whether the cause of dismissal meets the legal standards and is considered justified.
An employer should only terminate employment for cause, when the offense is provided for by law and is severe enough to justify such a serious penalty. The Labour Code lists as misconduct, among others, the following:
- lack of integrity;
- criminal conviction (final instance);
- negligence in the performance of their duties;
- violation of confidentiality;
- act of disobedience or insubordination;
- abandonment of employment;
- having committed a dishonest act or acts of violence, insults or mistreatment against the employer;
- having committed a dishonest act or acts of violence, insults or mistreatment against a co-worker, that disrupts the order of the establishment;
- having been absent from work for two consecutive days, or two days in a month, without obtaining permission from the employer or his representative;
- lack of dedication to the job for which he/she has been hired or any other serious breach of the obligations imposed by the employment contract.
Justified dismissal (for cause) is one of the most common sources of labour lawsuits, as it is a unilateral decision. The employer must prove the cause for the dismissal. If it does not, the termination will be declared unacceptable, and the employer will be ordered to pay a series of fines and labour benefits.
Employers may terminate the employment contract at any time without just cause, subject to payment of severance compensation, as provided in the Labour Code.
The fixed-term employment relationship may end, precisely, on the last day of that period without any obligation of the parties.
Collective dismissals are not regulated by Dominican labour law. However, if the company ceases to operate, the employer is obliged to dismiss all workers as follows:
- terminate employment contracts under the provisions of article 75 of the Labour Code, in which case the company must comply with the payment of the corresponding compensation; or
- invoke the provisions of article 82 of the Labour Code, according to which the company only pays financial assistance to the employee (which is less than the corresponding compensation).
If the company decides to invoke the provisions of Article 82, it must submit a request for authorisation to the Ministry of Labour explaining the economic reasons for the request. In this case, the company must add the documents that justify that it is experiencing one of the grounds for the closure, specified in paragraph 4 of Article 82, which are:
- the lack of elements to continue the operation; or
- the inability to pay for the same; or
- any other similar cause.
Once the application is submitted, the Ministry of Labour will instruct an inspector to visit the company to examine and verify its conformity with the declarations presented. Subsequently, the Department of Labour will issue a resolution authorising or rejecting the cessation of its operations.
In practice, it is tough for the Ministry of Labour to approve this termination and that the employees only receive financial aid and not the corresponding compensation.
The employer can terminate the contract at any time without just cause, subject to the payment of severance compensation.
Union representatives are protected and cannot be dismissed during their term and for eight months after that. Pregnant and sick employees are also protected.
Is Severance Pay Required?
In the event of termination of employment without just cause, the employer must pay the employee his/her severance pay, as provided by law, within ten days of notification of termination, as follows:
- after continuous work of not less than three months nor more than six, a sum equal to six days of ordinary salary;
- after continuous work of not less than six months nor more than one year, a sum equal to thirteen days of ordinary salary;
- after continuous work of not less than one year nor more than five, a sum equal to twenty-one days of ordinary salary for each year of service rendered;
- after continuous work of not less than five years, a sum equal to twenty-three days of ordinary salary for each year of service rendered.
Likewise, the party that exercises the right to dismissal without cause, must give prior notice to the other, under the following rules:
- after continuous work of not less than three months nor more than six, with a minimum of seven days’ advance notice;
- after continuous work that exceeds six months and is not more than one year, with a minimum of fourteen days’ advance notice;
- after a year of continuous work, with a minimum of twenty-eight days’ advance notice.
Suppose the party exercising the dismissal without cause does not comply with this requirement. In that case, they must pay compensation in lieu of notice, for the amounts owed by way of the notification. It is common for employers to choose to pay this compensation instead of giving advance notice.
Besides, the employer must pay the employee his/her acquired rights, whatever the reason for termination. These acquired rights include:
- compensation for vacations not taken;
- the proportional amount of the thirteenth salary; and
- profit-sharing, if the employer had benefits during that fiscal year.
According to the Labour Code, the parties’ mutual consent is a cause for termination of the employment relationship, without any obligation for the parties. Therefore, this cause of termination is subject to the will of the parties.
Is a Separation Agreement required or considered best practice?
A separation agreement is not required. However, it is convenient to execute the agreement in writing and include a discharge that neither party owes anything to the other party. It is not mandatory, but it is convenient to make this agreement in front of a notary public to authenticate the parties’ signatures.
The execution of a termination agreement by mutual consent, cannot contain a waiver of the employee’s minimum rights, the salaries earned, the indemnities or any other provision derived from the services rendered.
For a separation agreement to be binding on both parties, it must have been signed after the employment relationship ended, as acquired rights cannot be waived.
What are the standard requirements of a Separation Agreement?
The standard provisions are:
- express consent of the parties to terminate the employment relationship and the date of termination; and
- total release by the employee from all labour and social security obligations in favor of the employer, subsidiaries or affiliates, predecessors, successors or assignees.
Does the age of the employee make a difference?
No, the age of the employee makes no difference.
- Are there additional provisions to consider?
In some cases, the parties agree to i) the return of all files, documents and property of the company; ii) a confidentiality clause; and iii) a direct non-compete clause for a certain period.
Remedies for Employee Seeking to Challenge Wrongful Termination
The employee can challenge the alleged wrongful termination, claiming the payment of severance, plus interest and attorneys’ fees, in which case a labour court will decide if the employee’s termination was based on just cause. The burden of proof for the cause of dismissal rests with the employer.
The employee can also claim payment of severance pay differences, arguing that the employer did not calculate the severance pay correctly. In which case, a labour court will decide whether the employer correctly paid the wages and severance pay, and whether it accurately recorded the employment relationship and the employee’s salary.
There is no specific protection for employees who alert or provide information about possible infractions of the law or good corporate governance policies, in the Dominican Republic. However, the employer can incorporate such protection in its internal code of conduct. Employers can use codes of conduct if they are part of the employment contract. Besides, the law establishes that employees should maintain appropriate behavior and strict discipline during the work shift.