In order to terminate an employment agreement which is valid until further notice, both the employer and employee must comply with notice periods. Unless otherwise agreed by the parties in the employment agreement, or provided for in a collective agreement, the employer must comply with the following notice periods set out in the Employment Contracts Act:
14 days, if the employment relationship has lasted up to 1 year
1 month, if the employment relationship has lasted 1 year or more but not exceeded 4 years
2 months, if the employment relationship has lasted 4 years or more but not exceeded 8 years
4 months, if the employment relationship has lasted 8 years or more but not exceeded 12 years
6 months, if the employment relationship has lasted 12 years or more.
If the employee terminates the employment relationship the notice periods set out in the Employment Contracts Act are:
14 days, if the employment relationship has lasted up to 5 years
1 month, if the employment relationship has lasted 5 years or more.
A notice period can differ from the periods of the Employment Contracts Act, if so agreed in a collective agreement or by the parties in the employment agreement. However, the notice period may not exceed six months. The notice period may be different for the employee and the employer, but the employee’s notice period may not be longer than the employer’s. The parties may even agree to have no notice period; then the employment relationship end the same day the notice has been given, at the end of either the work day or the working shift.
The employer must pay the employee his/her regular salary during the employee’s notice period. The employee’s working obligation also continues for that period. However, in practice it is possible to free the employee from his/her working obligation immediately after the notice has been given. This can be justified e.g. in order to keep a good working environment. The salary for the notice period must be paid regardless of if the employee is freed from his/her working obligation or not.
If the employer does not comply with the notice periods, he/she must compensate this to the employee. The compensation shall be a full salary for a time period equivalent to the notice period. The same also applies to an employee, if he/she refuses to work during the notice period.