In light of a judgment rendered in proceedings for the annulment of an unlawful decision terminating an employment contract upon expiry of the probationary period, a question has arisen which, from the standpoint of legal theory and the fundamental principles of labor law, arguably should not be a matter of dispute: should a termination decision issued upon the expiry of the probationary period include a statement of reasons?
The Supreme Court of Cassation, in its judgment no. Rev2 3128/20 of 3 March 2021, held that when an employment ends due to the expiry of the probationary period because the employee did not demonstrate appropriate professional or work competencies, the employer is not under a legal obligation to provide reasoning for the decision, nor to provide an evaluation of the employee’s unsatisfactory performance.
Case Background
The claimant was employed on a permanent basis, with a probationary period of six months starting from the date of commencement of employment. The employer issued a decision terminating the employment upon expiry of the probationary period, stating that the employee had not demonstrated satisfactory professional or work capabilities during that time.
The claimant challenged this decision in court, seeking annulment of the termination, reinstatement, compensation for lost wages, and reimbursement of litigation costs.
The court of first instance rejected the claim as unfounded, which was confirmed by the Court of Appeal in Belgrade. The claimant filed a revision against the final judgment, which was dismissed by the Supreme Court as unfounded.
The reasoning of the Supreme Court of Cassation is based on the position that the proper application of statutory provisions implies that the employer is obliged to state the reasons for the termination of the employment relationship – demonstrating that the employee failed to exhibit appropriate work and professional abilities, or that their performance was unsatisfactory – only in cases where the employment contract is terminated prior to the expiry of the agreed probationary period.
In view of the foregoing, the Court found that the conclusion of the lower-instance courts was well-founded, holding that the contested decision on termination of the employment contract was lawful, since in the case of termination upon expiry of the probationary period, the employer is not under an obligation to provide reasoning for its decision, including any assessment of the employee’s unsatisfactory work and professional abilities.
What Does the Law Say?
To address this issue properly, one must begin with Article 185 of the Serbian Labor Law, which stipulates that every termination of an employment contract must be issued in written form, and must contain both reasoning and instruction on legal remedies. This is a general rule that applies to all employment terminations, regardless of the legal basis.
The provisions of Article 36 of the Labor Law, which govern the probationary employment regime, stipulate that:
- The employment shall terminate on the date of expiry of the probationary period specified in the employment contract, if during that period the employee has failed to demonstrate appropriate work and professional abilities; and
- Prior to the expiry of the agreed probationary period, either the employer or the employee may terminate the employment contract, subject to a notice period of no less than five working days, in which case the employer is obliged to provide a statement of reasons for the termination.
Interpretation of the Legal Provision
The legislator has – either deliberately or inadvertently – regulated two situations of employment termination due to inadequate skills and knowledge demonstrated by the employee in a different manner, depending on the moment when the employment relationship ends, i.e., whether it ends during or upon the expiry of the probationary period. In substance, both scenarios are based on the same grounds for termination, which raises the question of whether it is justified to regulate the content of the termination decision differently in these two cases.
It is true that the provision of the law governing termination upon expiry of the probationary period does not expressly require that the decision be reasoned. However, such an obligation undeniably arises from the general provision of Article 185 of the Labor Law, regardless of the grounds for termination.
A termination decision issued upon the expiry of the probationary period cannot be deemed of lesser importance than a termination based on any other legal ground. Interpreting the provision in such a way that no reasoning is required effectively renders the probationary period meaningless as an institute, since the employee would not be presented with the reasons for the employer’s dissatisfaction with their performance.
If a decision terminating the employment were to lack a statement of reasons—i.e., specific grounds for termination – this would essentially preclude judicial review of the employer’s decision in labor disputes, thereby creating room for arbitrary employer action. Such a situation would give rise to legal uncertainty, where the employee’s employment ends without being informed why.
Given the principle of the prohibition of abuse of rights, it is indisputable that the employee has the right to know the circumstances and assessments on which the termination of the employment contract is based, particularly where it concerns the evaluation of their professional and work-related capabilities, which they were obliged to demonstrate during the probationary period.
Conclusion
The probationary period is a distinct labor law mechanism, intended to allow the employer to verify whether the employee possesses the necessary skills and abilities to perform a particular job. The short notice period applicable when termination occurs before the end of the agreed probationary period grants a degree of flexibility compared to other grounds for termination. However, the position that reasoning is not required in a decision terminating employment upon expiry of the probationary period cannot be accepted uncritically.
Although the law may lack precision in regulating these two substantively identical scenarios for termination, a purely literal interpretation is insufficient. The provisions must be interpreted teleologically, taking into account the purpose and function of the probationary period, as well as other relevant legal provisions.
Furthermore, the overly flexible approach in case law regarding this issue contradicts the rigid stance taken in recent court decisions related to termination during the probationary period, where courts increasingly require that employers follow the procedure prescribed in Article 180a of the Labor Law, applicable when an employee fails to achieve work results or lacks the required knowledge and abilities for the position, an issue previously discussed in one of our earlier articles.
This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.
By Milana Milojevic, Senior Associate, PR Legal
