Contract Extinction: Voluntary & Involuntary Causes

Posted on Mar 6, 2025 in Tourism

The obligation to work and the obligation to pay cease to exist upon contract extinction.

Voluntary Causes

Worker-Initiated

  • Resignation: The employee terminates the contract without needing to justify the reason, but with a prior notice requirement of 15 days. Resigning workers are not entitled to unemployment benefits or compensation.
  • Employer Breach: If the employer fails to fulfill their obligations (e.g., untimely wage payments), commits a serious breach, or engages in abuse. This also applies when the employer makes substantial changes to the contract conditions. If a judge accepts the termination of the contract for these reasons, the worker is entitled to compensation of 45 days’ salary per year worked, up to a maximum of 42 monthly payments.

Employer-Initiated (Disciplinary Dismissal)

Reasons for disciplinary dismissals include:

  • Lack of attendance and punctuality.
  • Verbal or physical violence towards the employer, their family, or other workers.
  • Violation of contractual good faith (acting in bad faith, harming the employer).
  • Habitual disobedience.
  • Habitual drunkenness or drug addiction that negatively impacts the company.
  • Racially-motivated harassment, sexual harassment, or religious harassment.

In a disciplinary dismissal, the employer must provide written notice stating the cause of dismissal and the effective date. This notice is called a letter of dismissal. If the employee disagrees with the dismissal, they can sue in court, and the judge will decide and issue a ruling.

  1. Justified Dismissal: The judge rules that the dismissal was correct. The employee is not entitled to unemployment benefits or compensation. In some cases, the judge may order the worker to pay damages to the employer.
  2. Unfair Dismissal: The judge rules in favor of the employee. The employer has five days to choose between:
    • Reinstating the worker and paying the salary for the days they were out of work.
    • Not reinstating the worker but compensating them with 45 days’ wages per year worked, up to a maximum of 42 months.
  3. Null Dismissal:
    • The dismissal violates the constitution.
    • The employer has not complied with legal requirements.
    In the second case, the employer is obligated to reinstate the worker and pay all wages that were not paid.

Involuntary Causes

Worker-Related

  • Retirement
  • Total and absolute permanent disability
  • Severe disability
  • Death

Employer-Related

  • Retirement
  • Total and absolute disability
  • Severe disability
  • Death
  • Termination of legal personality

Objective Reasons

  • Worker Inability: The worker suddenly becomes unable to perform business activities.
  • Lack of Adaptation: The worker cannot adapt to technical changes in the workplace.
  • Justified Absenteeism: Repeated and justified lack of attendance and punctuality.
  • Job Depreciation: The company invests in technology and has too many workers.
  • Budget Insufficiency: Insufficient budget to carry out planned activities or the company budget.

When a worker is dismissed for an objective reason, they are entitled to compensation of at least 20 days’ salary per year worked, up to 12 monthly installments, and are also entitled to unemployment benefits.