Open-Ended Employment Contract

An open-ended employment contract offers significantly greater protection and rights compared with a fixed-term contract. The most important difference is job security – with an open-ended contract the employer must have a justified reason for termination and must follow the procedure prescribed by law. You are entitled to a notice period which increases with years of service and can amount to a month or more. You acquire the right to severance pay after a certain length of service if you are dismissed for reasons that are not your fault. Protection against dismissal is particularly strong for certain categories of employees such as pregnant women, employees on sick leave or trade union representatives. With a fixed-term contract, the employment relationship ends when the term expires, with no need for notice and with no right to severance pay. Employees on open-ended contracts also have a better position when it comes to access to benefits such as a company car or supplementary health insurance.

The employer may terminate an open-ended employment contract, but only by observing the statutory conditions and procedure. The grounds for termination may be personal (inability to work), business-related (abolition of the job position) or based on the employee’s conduct (breach of obligations). The employer must state the reason for the termination in writing. You are entitled to a notice period ranging from two weeks to a month depending on your years of service. You acquire the right to severance pay if you have two or more years of service and are dismissed for reasons that are not your fault – it amounts to one third of the average salary for each completed year of service. If you consider the dismissal unlawful, you may bring an employment dispute before the court within 15 days. Certain categories of employees enjoy special protection against dismissal under the law.

An open-ended employment contract must contain the mandatory particulars prescribed by the Labour Act (Zakon o radu). The details of the contracting parties include the name and registered office of the employer and the name, surname and residence of the employee. The place of work determines where the employee will perform the work – it may be more than one location. The job title and a short description of the duties define what the employee will do. The start date marks the day of taking up the job. The duration of the contract must state that it is concluded for an indefinite term. Salary and salary supplements include the basic amount, supplements and payment deadlines. The duration of annual leave is at least four weeks per year. Weekly working hours are usually 40 hours. Notice periods follow the law or the collective agreement. The contract must be in writing and signed by both parties. Our template contains all the mandatory elements aligned with the legislation in force.

The notice period under an open-ended employment contract depends on the years of service with the employer and differs for the employee and the employer. For an employee giving notice, the minimum notice period is two weeks for service of up to one year and increases with years of service up to a maximum of one month. For an employer terminating the contract, the periods are longer in order to protect the employee: two weeks for service of up to one year, one month for service of 1 to 2 years, one month and two weeks for service of 2 to 5 years, two months for service of 5 to 10 years, two months and two weeks for service of 10 to 20 years, and three months for service of over 20 years. A collective agreement or the employment contract may provide for longer periods, but not shorter than the statutory ones. During the notice period the employee is entitled to salary and is obliged to work unless the parties agree otherwise.