Proposed changes to the Labor Code - საერთაშორისო გამჭვირვალობა - საქართველო

Proposed changes to the Labor Code

11 December, 2012


On November 22, the Parliamentary committee for Healthcare and Social Issues introduced a bill concerning amendments to the Labor Code. Given the current critical position of several different social groups and international institutions with respect to the Labor Code, a brief overview of the major changes being considered may be interesting to the wider public, especially as the draft law contains some important reforms.


Termination of the Employment Agreement at the Initiative of Either Party

Special attention should be paid to Articles 37-38 of the Labor Code, under which one of the grounds for termination of employment is the termination of the employment agreement, which can be initiated by any party to the agreement without justification. The above regulation favors to the employer, as it gives him/her a legal right to invalidate the employment agreement with the employee without explanation.

It is therefore logical that the draft law proposes substantial changes to these articles. Part 3 of Article 38, which imposes no conditions on the employer for discontinuing the agreement upon his/her own initiative except for severance pay of not less than one month, has been redrafted as follows: "Termination of the employment agreement can be initiated by the employer only if valid grounds exist which make it impossible to continue employment relations. In such a case, the employer is obliged to give the employee at least 30 calendar days’ prior written notice and provide him/her with severance pay for not less than one month”.

The above article was supplemented by a clause dealing with the ban on agreement termination during maternity leave. The purpose of this addition is rather unclear, as under Article 36 of the existing Labor Code maternity leave provides grounds for the suspension of employment relations, while paragraph 6 of the same Article stipulates that "upon suspension of employment relations, employment agreement must not be terminated". Accordingly, the ban on the termination of the employment agreement during maternity leave is already provided for by the existing Labor Code and this additional clause is unnecessary.

Significant changes are also drafted into article 169 of the Criminal Code, which criminalizes violations of labor laws on the part of the employer and provides for a sentence of up to two years imprisonment. The following sentence has been added to this article: "Compulsion to leave service on his/her own initiative". This implies that an employer may not now force an employee into writing his/her own notice to leave employment.


Termination of Employment Relations when Employment Agreement Provisions are Violated

Changes have been made to article 37, part 1, paragraph C, which defines the grounds for  termination of an employment agreement when there is a breach of the agreement terms by either party. The word “essential” has been added to the clause, meaning that only a violation of “essential” agreement provisions would now provide the grounds for either party to terminate employment relations.

In addition, a third section was added to Article 37, which refers to using notice or a reprimand as a form of liability in a case where an employee infringes the employment agreement. Within one year after giving a reprimand, the employer is entitled to terminate employment relations if the agreement is violated. This procedure is completely new to Georgian employment relations, and means that an employer’s right to sever an employment agreement can only be used in more extreme cases. This is a clear improvement of the guarantees protecting employees’ labor rights. However, there remain some questions around the procedure: a clearer explanation of the difference between a notice and a reprimand should be provided, and it should also be made clearer whether they can be used as a precondition to invalidate an agreement.


Temporary Disability Terms

Another noteworthy change concerns Article 36, part 2, subparagraph I, which sets out the terms for temporary incapacity, during which the suspension of employment relations takes place and termination of an employment agreement is impermissible. According to the current Labor Code, employment relations are suspended if the duration of incapacity does not exceed 30 calendar days in succession, or a total of 50 calendar days incapacity over 6 months. According to the draft amendments, the time limits are combined and now constitute 60 days over the period of 6 months.


Employment Agreement Terms

The first part of Article 6 of the Labor Code regulates the form and terms of the employment agreement: “The employment agreement is executed in writing or verbally, for a definite or indefinite term or for the period of employment duration." Under the draft amendments an additional condition has been added: "... for a definite or indefinite term or for the period of employment duration, depending on the nature of work”. With this additional regulation, the legislator is seeking to eliminate cases where the employment relationship, by its nature, is clearly a long-term one (e.g., school teachers) but the employer, nevertheless, is offering short-term contracts. Under this change, the employer will not be able to do this.


Labor Disputes

A dispute is a disagreement that arises during employment relations. Before addressing the courts or an arbitrator, the parties can reach an agreement through amicable settlement procedures provided by the Labor Code. One party sends the other party a written notice on the commencement of the amicable procedure, spelling out his/her demands. The other party must notify the sender of his/her decision within ten calendar days of accepting this notice. Under Part 5 of Article 48 of the existing Code, if the parties fail to reach an agreement within 14 days, or if one of the parties avoids participation in the amicable settlement, the parties are entitled to appeal to arbitration or the courts.

Under the draft amendments, however, if the dispute continues into court or arbitration, the burden of proof would now rest with the party who has distanced themselves from the amicable settlement procedures. This change encourages the parties to try to resolve the dispute through mutual agreement before moving to court proceedings.

The discussed amendments are only the basic, and incomplete, elements of the possible changes which could be introduced into the Labor Code. Committee hearings of the draft amendments have not yet been held, and the draft law may still undergo significant changes before it is finally adopted.

Author: TI Georgia