New consultation proposes changes to the grounds for termination for reasons relating to the employee

At a glance

• A consultation has been launched to seek comments on amendments to the grounds for terminating employment due to reasons relating to the employee.
• The proposal is that only proper reasons should be required – rather than proper and weighty reasons.
• One of the aims of the proposed amendments is to help clarify the required termination grounds in certain situations.
• If the proposal is accepted, it is expected to come into force on 1 January 2026.

The Ministry of Economic Affairs and Employment (Ministry) has initiated a consultation process on amendments to the grounds for terminating employment due to reasons relating to the employee.

The draft proposal is to amend the termination grounds stipulated in the Employment Contracts Act so that, in future, a termination of employment would not require both proper and weighty reasons to be established, but only proper reasons. However, termination for arbitrary, minor or discriminatory reasons would not be allowed.

The aim is to enhance recruitment opportunities for small and medium-sized employers and also to clarify termination grounds in certain situations, such as poor performance.

The draft proposal circulated for comments has been prepared in a tripartite working group. The working group was not unanimous on its provisions.

The Ministry requests comments on the working group’s report to be submitted between 24 February and 7 April 2025.  Work on the proposal will then continue.

The proposal is scheduled to be submitted to Parliament in June 2025. According to the working group’s report, if accepted, the amendments would enter into force on 1 January 2026.