A European Union (EU) directive and a decision by the Supreme Court of Poland may mean that, in the future, employers will require justification when terminating fixed-term contracts.
Employers often struggle to comply with the rules governing the termination of employment contracts and, in particular, to justify the reason for termination. Currently in Poland, only open-ended employment contracts terminated with the observance of a notice period, as well as all types of employment contracts terminated without notice (i.e., with immediate effect), require a reason justifying the employer’s decision. For this reason, an employer’s ability to terminate fixed-term contracts, without the need to provide any justification, has been seen as one of the major advantages of using fixed-term contracts. The employer is protected by the legal burden being placed on the worker if he or she wants to challenge the termination. A fixed-term worker may contest only the noncompliance of the termination procedure, not the reason for the termination.
The law to date has been in line with a Polish Constitutional Tribunal ruling in 2008 that the provision of the Polish Labor Code stipulating that only the termination of an open-ended contract with notice required justification was consistent with the Polish Constitution. The Constitutional Tribunal held that the different treatment of fixed-term contracts results from their different functions and economic purposes.
However, doubts regarding the compliance of this provision with EU law have been raised by the Supreme Court and the Ministry of Family, Labor and Social Policy.
According to the principle of nondiscrimination determined in clause 4 of Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP in respect of employment conditions, fixed-term workers may not be treated in a less favorable manner than comparable permanent workers solely because they have fixed-term contracts, unless different treatment is justified on objective grounds. The Court of Justice of the European Union ruled in the case C‑38/13 (Nierodzik) that different treatment with regard to employment conditions when comparing fixed-term workers and permanent workers cannot be justified on the basis of a criterion based on the term of the employment. Similar doubts regarding compliance of the provision of the Labor Code with EU law were expressed by the Supreme Court in a ruling dated May 8, 2019.
Furthermore, Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union states that workers who believe that they have been dismissed because they exercised the rights provided for in this directive (e.g., regarding working conditions) may request the employer to provide duly substantiated grounds for the dismissal. The employer is then required to provide those grounds in writing. This directive should become law by August 1, 2022.
Because of the above, the provision in question of the Labor Code, allowing for easier termination of fixed-term contracts, needs to be adjusted to comply with EU law. Employers may want to ascertain whether the rules in Poland governing the termination of fixed-term contracts have already changed before entering into or terminating fixed-term contracts.
Written by Agnieszka Nowak-Błaszczak of Wolf Theiss and Rebecca L. Marks of Ogletree Deakins
© 2019 Wolf Theiss and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.