The provision of the Labour Act allowing termination for redundancy does not distinguish between fixed-term and permanent employees. The distinction between indefinite-term and fixed-term employees is made only with respect to the obligation to pass mass redundancy programme, which is triggered if certain minimum number of indefinite-term employees is being declared redundant.
Redundancy occurs when the employer undergoes technological, economic or organizational change as a result of which a particular job is no longer needed or there is a need for reduction of the number of workers on a particular job.
According to an opinion of the Ministry of Labour, fixed-term employee cannot be declared redundant because fixed-term engagement is by its nature “for performance of a work while the necessity for such work exists”[1], i.e. because fixed-term employment agreement may only be concluded if objective circumstances justify limited duration of work (e.g. expected temporary increase of workload; replacement of an employee on maternity leave; employment with a newly formed company).
This argument is not convincing, because even work which was initially foreseen to last for a specific limited period of time may become redundant prior to the expiration of the initially foreseen term. For example, an employment agreement concluded for a fixed period of no more than 36 moths on the basis that the employer is a newly established company can become obsolete if the employer’s business does not take off as planned. Likewise, a fixed-term employment contracted because of expected increased workload may turn out to be redundant, if the increase does not occur or is reversed because of the cancellation of the customer’s order or for other reasons.
Some authors have submitted that fixed-term employees are not subject to the redundancy provisions of the Labour Act. Instead, if the reason for their fixed-term engagement disappears prior to the expiry of the term, their employment agreement can be terminated on the basis that the causa (osnov) for the agreement no longer exists.[2] However, the Labour Act does not refer at all to the possibility of termination of employment on this basis. According to the Obligations Act, the agreement which no longer makes sense for one party because of the circumstances occurring after its conclusion which could not have been foreseen or overcome can be terminated by court at the request of the party affected by the agreement (rebus sic stantibus). Redundancy under the Labour Act is a concretization of a rebus sic stantibus situation, except that the Labour Act allows the employer to terminate the agreement in such situation unilaterally, rather than through the court.
Accordingly, in the absence of explicit language in the Labour Act prohibiting redundancy of fixed-term employees, redundancy and termination on that basis should be possible even with respect to fixed-term employees. An opposite conclusion would afford fixed-term employees greater protection than what is available to indefinite-term employee, which is unlikely the intention of the Labour Act, although some authors have interpreted the law in this way.[3]
The next question is whether the protections from the Labour Act in case of redundancy equally apply to fixed-term employees and indefinite-term employees. The Labour Act does not provide a basis for different treatment other than with respect to the employer’s obligation to prepare a redundancy programme (see first paragraph above). Consequently, if the employer is decreasing the number of employees on a specific job and thus has to apply objective selection criteria to determine which employees to declare redundant, all employees working on that job should be subject to the same selection criteria, irrespective of whether they are permanent or fixed-term employees. Furthermore, the employer must offer redeployment measures to both indefinite-term and fixed-term employees. For example, if there is a vacant indefinite-term job for which both a fixed-term and an indefinite-term employee, currently working on the same job which is being either cancelled or subject to reduction of work force, are equally qualified, such alternate job should be offered to the better ranked of the two. If redeployment is not possible, a fixed-term employee is entitled to a severance, provided s/he has been employed with the employer for at least one year. In case the employer reopens the same (or similar) job within three months from the redundancy termination, the right of first refusal in favour of the employee terminated from that job for redundancy applies to fixed-term employees as well as to indefinite-term employees. If both compete for the same reopening, the better of the two should get the job back.
[1] The Ministry of Labour’s opinion no. 011-00-494/2003-02, dated 27 August .2003.
[2] Tatjana Orlović, Stručni komentar – Pravnik u privredi: Prestanak potrebe za zaposlenima usled tehnoloških, ekonomskih i organizacionih promena: Otkazna procedura i pravo zaposlenih na otpremninu, prioritetno zapošljavanje i naknadu za slučaj nezaposlenosti, Pravnik u privredi 2020 / 226, 16 December 2020.
[3] Branko Lubarda, Radno pravo – rasprava o dostojanstvu na radu i socijalnom dijalogu, treće izdanje, Beograd, 2020.
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