11 March 2021

In the event of a longer leave of a worker, it is common for employers to hire a replacement worker with fixed term contract to make up for the missing workforce. When the replaced worker returns, a labour dispute may arise. In the legal case presented in our article, the Supreme Court examined how the employment relationship of the replacement employee terminates at the end of the replacement. From our article you can learn about the decision of the Supreme Court and what to look for as an employer to make the closing of the replacement smooth. (In our article, we examine the court decision published under No. BH 2021.2.51)

1. Facts of the case

The defendant company hired the applicant in 2016 to replace an employee, who was on maternity leave. The parties entered into a fixed-term employment contract for the period of absence of the replaced worker. According to the contract, "the employment relationship shall terminate on the day the replaced person returns to work after unpaid leave", which means that the end of the contract was not linked to a pre-determined calendar date, but to the occurrence of a “resolutive condition”.[1]

On 13 August 2018, the defendant informed the applicant that the replaced person is returning to work, therefore the Applicant's employment contract ended. After that, applicant filed a lawsuit against his/her former employer.

2. Applicant's action and Defendant' s defence

The applicant requested the defendant to pay compensation for loss of income corresponding to his/her 12-month absence fee on the grounds of wrongful termination of employment.

Applicant argued that the information provided by the employer was false as the replaced worker did not take up work on 13 August 2018 and did not intend to do so later as she was expecting a child. According to the applicant, the defendant readmitted the replaced worker to active employment only “on paper”, but the next day the employer sent her on leave, so the replaced worker had not returned actually. The applicant complained that the employer had abused its right, as the purpose of the measure was to avoid the termination of the fixed-term employment by dismissal.

The defendant argued that he acted lawfully. The replaced employee requested unpaid leave until 13 August 2018, after which her absence ended, which resulted in the termination of the applicant’s employment as the termination condition was fulfilled.

3. The first and the second instance decision

The court of first instance dismissed the applicant’s action. It found that the parties had entered into an employment contract with a termination clause, which was the date of expiry of the unpaid leave of the replaced person and her return to work. The unpaid leave of the replaced person lasted until 13 August 2018, so that the applicant's employment has terminated on that date.

According to the court, it had no effect on the termination of the applicant’s employment whether or not the replaced person performed work at the defendant after the end of her unpaid leave.

The second instance court amended the judgment and found that the employment was terminated by the unlawful measure of the employer. It agreed with the previous judgment that the taking of regular leave following unpaid leave is also considered as return to work, not just active employment.

However, the second instance court found that the replaced worker was still on unpaid leave on 13 August 2018, the day on which the applicant’s employment was terminated, and began her normal leave the following day. As the replaced employee had not yet started work on 13 August 2018, the termination condition had not yet occurred on that day, only the next day, so the defendant acted unlawfully and could not have taken action to terminate the employment relationship until 14 August 2018.

The employer requested the judicial review of the decision.

4. The decision of the Supreme Court

The Supreme Court found the employer's application to be well-founded, so it annulled the final decision and upheld the first-instance judgment, so the employer won lawsuit.

The Supreme Court explained that in this case, the parties agreed that the defendant employs the applicant for the duration of the unpaid leave of the replaced person, and the employment relationship for replacement terminates upon the expiration of the replaced person's unpaid leave upon her return.

The Supreme Court highlighted that a distinction should be made between the cessation and the termination of an employment. In case of cessation, the employment automatically terminates upon the occurrence of objective circumstances, without any declaration by the parties in that respect. This means that the termination (cessation) happens without any action by the parties, ie the parties do not have to make any statement to achieve the legal effect.

The court of second instance erred in its opinion when it considered the information given by the employer to the applicant about the termination as a measure for the termination of the employment, as the employer could only inform the employee about the fact of the cessation of the employment, but the termination occurred automatically upon the fulfilment of the termination condition, which was the date of expiry of the unpaid leave of the replaced person.

The Supreme Court also stated that since the termination of the employment was not caused by the action of the employer, it could not be the case that the employer abused its rights.

5. Assessment of the case, Summary

It can be deduced from the case that the fixed-term employment relationship automatically terminates upon the expiry of the period specified in the contract or upon the occurrence of the specified condition, so it does not require any action or statement by the parties. If, at the time of the conclusion of the contract, the employer clearly stipulates the expiry of the contract, the contract shall automatically cease at the occurrence of that event without further action. It is important to emphasize that in case the termination is subject to a condition subsequent, the date of termination may not depend solely on the party’s will[2].

It can be concluded that in case of a fixed-term employment, the employer shall pay special attention to settle the legal aspects properly at the time of concluding the contract. As employment requires legal knowledge, we recommend that you carry out these processes in all cases with the involvement of a labour law expert.


[1] See Section 192 (1) of the Labour Code

[2] The Supreme Court annulled the contractual term stipulating that "the employment relationship shall terminate in case of recall from abroad" (BH1995. 319.)