Distinguishing between dismissal and termination of employment

Distinguishing between dismissal and termination of employment is often clouded by significant ambiguity, which some may encounter in good faith or deliberately exploit with bad intentions to attribute the description of dismissal to several cases of termination that are often justified and based on legitimate reasons. 

To eliminate this ambiguity or confusion, we aim to shed light on the provisions for both dismissal, as stipulated in Chapter Two of Part Five of the Labor Law No. 12 of 2003, where dismissal is considered a penalty imposed on the erring worker by the competent labor court after an investigation in accordance with the prescribed legal rules and regulations, and on termination of the employment contract, as provided for in a separate and independent part, which is Part Seven of the same Labor Law, where termination occurs at the unilateral will of either party when a legitimate reason for termination is met, such as the worker committing a grave mistake as defined in Article 69 of the Labor Law without the need for an investigation or referral to the labor court, or proving incompetence where termination is not considered a penalty.

Table of contents:

Distinguishing between dismissal and termination of employment
The authority competent for dismissal and the reasons for dismissal
The legal nature of both dismissal and termination of employment
proof in cases of  dismissal and termination of employment
The employer’s right to choose between disciplinary dismissal and unilateral termination

Distinguishing between dismissal and termination of employment

1- The legal provisions governing both dismissal and termination of employment:

• Termination of the employment contract: governed by Articles 104 and subsequent articles in Part Seven of the Labor Law No. 12 of 2003.
• Dismissal from employment: governed by Articles 58 and subsequent articles in Chapter Two of Part Five of the same law.

2-The competent authority for termination or dismissal and the reasons for each:

According to the previously stated, Article 69 of the Labor Law specifies some, but not all, cases where a mistake is considered grave. These cases are listed as examples, not exhaustively.

The authority competent for terminating the employment contract and the reasons for termination:

• Termination is carried out at the unilateral will of the worker or employer without the need for referral to the labor court.
• The employer may only terminate the employment contract in two cases: first, if the worker commits a grave mistake as defined in Article 69 of the Labor Law No. 12 of 2003, which lists examples but not an exhaustive list of grave mistakes, starting with the phrase “The worker may not be dismissed unless he commits a grave mistake, and the following cases are considered grave mistakes:…etc.”, and second, if the worker’s incompetence is proven. Termination in these two cases is not considered a penalty as it is not listed among the penalties specified in Article 60 of the aforementioned law.

• The worker must base their termination on a legitimate and sufficient reason related to their health, social, or economic circumstances, and in all cases, termination must occur at an appropriate time for work conditions, as per Article 110 of the Labor Law.

The authority competent for dismissal and the reasons for dismissal:

Dismissal from employment occurs in cases where the worker commits a grave mistake, as mentioned in Article 69 of the Labor Law No. 12 of 2003.

The worker’s dismissal must not be due to their union activities.

The dismissal matter must be referred to the competent labor court as per Article 68 of the aforementioned law, as dismissal is a penalty that should only be imposed by the competent court.

• Termination of the employment contract: is a form of contract termination and a reason for its dissolution at the unilateral will of the worker or employer without the need for an investigation before doing so, in accordance with Article 110 of the Labor Law.
• Dismissal from employment: as previously mentioned, dismissal is considered a penalty and a disciplinary action listed in Article 60 of the Labor Law No. 12 of 2003. Therefore, the employer must adhere to disciplinary rules and procedures, the most important of which are notifying the worker of the referral for investigation, investigating the incident, and then referring the matter to the labor court in accordance with Articles 58 and subsequent articles of the Labor Law.

4-The application of both termination and dismissal to fixed-term and indefinite-term contracts:

• Termination in an indefinite-term contract: Either party to an indefinite-term employment contract may terminate it, provided the other party is notified in writing before termination, as per Article 110.

The worker must base their termination on a legitimate and sufficient reason related to their health, social, or economic circumstances, and termination must occur at an appropriate time for work conditions.

The employer may only terminate the contract in accordance with the conditions listed in Article 69 or by proving the worker’s incompetence according to approved regulations.

• Termination in a fixed-term contract: A fixed-term employment contract generally does not end until its term expires. However, either party may terminate the contract if the other party breaches one of its essential obligations or fails to fulfill them, whether intentionally or negligently, according to general legal principles.

• Dismissal in indefinite-term contracts: In indefinite-term contracts, dismissal is considered a penalty and a disciplinary action listed in Article 60 of the Labor Law No. 12 of 2003. The employer must adhere to disciplinary rules and procedures, such as notifying the worker of the referral for investigation, investigating, and then referring the matter to the labor court, in accordance with Articles 58 and subsequent articles of the Labor Law.

• Dismissal in fixed-term contracts: Theoretically, the employer may refer the matter to the labor court to impose the penalty of dismissal on a worker who commits a grave mistake in fixed-term contracts after adhering to the disciplinary procedures before referring the matter to the court. However, practically, the time the court may take to consider the dismissal case may exceed the term of the fixed-term employment contract in most cases. Therefore, it would be better for the employer to choose termination instead of dismissal.

5-The rights of either party to the employment contract in case of a breach of the termination or dismissal provisions by the other party:

Termination:

• If the employer terminates the employment contract without a legitimate reason, such as the worker committing a grave mistake or proving incompetence, the worker has the right to resort to the courts to request compensation within the limits specified in Article 122 of the Labor Law, the monetary compensation for the notice period, the monetary compensation for unused vacation balance, and all other entitlements from the employer, such as wages, profit shares, bonuses, incentives, a certificate of experience, and employment documents, etc.
• If the worker terminates the employment contract without a legitimate reason, such as their health, social, or economic circumstances, or terminates the contract at an inappropriate time for work conditions, the employer has the right to resort to the courts to request compensation according to general principles of contractual civil liability, proving the contractual error, damage, and causality, according to Article 157 of the Civil Code.

Dismissal:

• As a penalty, dismissal cannot be imposed except at the employer’s request. It is not conceivable that the reverse is true. Therefore, if the employer resorts to the labor court to dismiss the worker, and the court finds that the worker did not commit a grave mistake warranting dismissal, the court will order the worker to continue in their job and obligate the employer to pay all the worker’s entitlements during the case proceedings.
• If the court finds that the worker committed a grave mistake warranting dismissal, the court shall dismiss the worker, who will only be entitled to their entitlements under the employment contract without any compensation.
• If the employer dismisses the worker disciplinarily without referring the matter to the court, this will be presumed as an unjustified dismissal. If the court proves this, the worker will be entitled to compensation for the damage they suffered and other entitlements under the employment contract. If the court proves that the worker committed a grave mistake warranting dismissal, the worker will only be entitled to their entitlements under the employment contract without any compensation.

6-The burden of proof in cases of  dismissal and termination of employment

• Termination: The employer must disclose the reasons for terminating the contract. If disclosed, the employer is not required to prove the validity of the reasons for termination. The burden then shifts to the worker to prove the invalidity of the reasons cited by the employer for termination.
• Dismissal: In the case of dismissal, the employer bears the responsibility of proving that the worker committed a grave mistake warranting dismissal.

7-The employer’s right to choose between disciplinary dismissal and unilateral termination:

Given the legislator’s provision that disciplinary dismissal can only be imposed by the court and not by the employer, and the provision in Article 110 allowing the employer to unilaterally terminate an indefinite-term contract, the employer is given the option to choose between dismissal or termination. It is logical for the employer to choose termination for two reasons: first, termination is immediate at the employer’s will, avoiding the time and procedures involved in court action for dismissal. Second, the employer who seeks court dismissal faces the risk of the court rejecting the dismissal request, and not reinstating the worker constitutes unjustified termination by law.

In conclusion, it is incorrect to confuse  dismissal and termination of employment. Dismissal, as provided in Chapter Two of Part Five of the Labor Law, is a penalty imposed by the labor court on the worker after an investigation according to legal rules and procedures when the worker commits a grave mistake as defined in Article 69 of the mentioned law, and the burden of proof lies with the employer. Termination, as provided in a separate and independent part (Part Seven) of the Labor Law, is not a penalty and occurs at the unilateral will of either party (the worker or the employer) as detailed previously, with the burden of proof lying with the worker if the employer discloses the reasons and justifications for termination.