Ecuador: When Is a Justified Dismissal Appropriate?

A justified dismissal is an administrative procedure that is used to terminate an employment contract. The justified dismissal process is a procedure that allows employers to end an employment contract, without having to pay compensation, when there have been severe breaches on behalf of the employee. It can be initiated by an employer (or in rare situations by an employee) as long as the legal grounds established in the Labor Code have been met.

Grounds: The grounds for an employer to request the termination of an employment contract based on justified dismissal are the following:

1. repeated and unjustified lateness or absence or abandonment of work for a period of more than 3 days within a month (i.e., 3 days within any period of 30 days);
2. severe failure to follow legally approved internal regulations;
3. lack of probity or immoral behavior on behalf of the employee;
4. unjustified claim against the employer about social security obligations;
5. an employee’s evident ineptitude;
6. for not complying with the safety, preventive and hygiene measures that are required by law, by internal regulations, or by a competent authority; or for contradicting, without due justification, medical opinions and prescriptions; and
7. for committing workplace harassment.

Procedure: A justified dismissal process begins with a request submitted by the employer to the labor inspector that details the employee’s noncompliance with accompanying evidence. This must happen, and the employee must be notified of it, within 30 calendar days of the alleged breach. The employer may request the suspension of the employment relationship pending the outcome by depositing a month’s salary with the ministry of labor. Once the employee has been notified, he or she will have two days to answer.

The labor inspector will conduct an investigation to determine whether the employee committed the alleged breach.

Resolution: The labor inspector must issue a resolution based on the information provided by the parties, in which the inspector grants or denies a justified dismissal.

• Admission of Justified Dismissal. If the labor inspector decides to grant the justified dismissal, the employment contract is terminated. The employee has the right to be compensated for what he or she is lawfully due up until the date of the resolution. If the employment relationship suspension was requested, the month’s pay deposited with the Ministry of Labor is returned to the employer.
• Denial of Justified Dismissal. If the labor inspector refuses the justified dismissal request, the employee can continue working as usual. If the employment relationship suspension was requested, the deposited month’s pay is given to the employee to cover the lost salary while not working.

If any party is dissatisfied with the resolution, they may challenge it by filing a claim with the corresponding labor judge.

Written by Patricia Andrade of Paz Horowitz and Roger James of Ogletree Deakins

© 2019 Paz Horowitz and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.