The Threshold For Dismissal Is Lowered: What Should Be Taken Into Account In Practice?

On 1 January 2026, an amendment to the Employment Contracts Act entered into force, lowering the threshold for dismissal on personal grounds. The purpose of the amendment is to facilitate employers' employment opportunities and to remove barriers to recruitment, especially in situations where an employee violates or neglects their obligations related to an employment relationship. Previously, dismissal on personal grounds required both a proper and weighty reason; under the amendment, a proper reason will suffice.

The aim of the amendment is to ease the situation of small enterprises, which have considered the legal risks associated with dismissal to be a significant hindrance to employment. However, it is important to note that the reform applies to enterprises of all sizes. The change thus also lowers the threshold for dismissal in larger enterprises.

Fulfilment of a proper reason required to dismiss an employee's employment relationship

In future, only a proper reason will be required to dismiss an employee's employment relationship, whereas previously a proper and weighty reason was required. But how does this requirement differ in practice from the "proper and weighty reason" previously stipulated in the law?

The meaning of the two terms is not distinguished in the current act, and in case law, the requirements of a proper and weighty reason have mainly been evaluated jointly. The challenge is compounded by the fact that in case law, the requirements of a proper and weighty reason have generally been assessed as a whole when evaluating the grounds for dismissal. The content of a proper reason cannot be defined exhaustively in advance – presumably, these new legislative amendments will only be clarified through case law.

However, the requirement of validity must be assessed from two perspectives:

• Properness related to the nature of the reason: the grounds for dismissal should be of a nature that justifies dismissal. In other words, the grounds for dismissal cannot, for example, be contrary to good social practice or arbitrary. Any reprehensible behaviour or inadequate work performance is therefore not sufficient grounds for dismissal.
• Relevance in terms of the seriousness of the reason: When dismissing an employee, the key consideration is whether the dismissal of the employment relationship is a reasonable consequence of the employee's conduct.

The employee's conduct must be such that the dismissal of the employment relationship can be considered an understandable and proportionate consequence of the employee's conduct or the deterioration of their working conditions. A proper cause is considered to be a significant change in the employee's personal working conditions that prevents the employee from performing their duties. However, the grounds for dismissal must not be discriminatory.

A list of valid reasons has been added to the Employment Contracts Act, which provides examples of some of the more common violations or negligence that may constitute grounds for dismissal. The list is not exhaustive, but the following, at least, may be considered proper reasons:

• Failure to comply with instructions given by the employer within the limits of their right to supervise work
• Neglect of work
• Unjustified absence
• Inappropriate behaviour
• Carelessness at work
• Substantial change in the employee's working conditions

Previously, an employee could be dismissed if they violated or neglected obligations that had a "serious" and "essential" impact on the employment relationship. The new law removed the requirements of "seriousness" and "essentiality" from the legislation. In practice, this means that an employee can be dismissed for a less serious breach than before, even though the types of acts that justify dismissal remain the same.

Overall assessment is of great importance

The fulfilment of the grounds for dismissal will continue to be based on an overall assessment that takes into account all the circumstances of the employer and the employee. Following the amendment to the law, the factors to be considered in the overall assessment are now clearer in the law.

The overall assessment must take into account:

1. The employee's position and the nature of their duties: For example, those in managerial positions may be expected to demonstrate a higher level of responsibility.
2. Other actions by the employee that violate their employment obligations: Is it a single slip or a recurring pattern of behaviour?
3. The employer's actions to fulfil its own obligations: As the overall assessment now takes into account the importance of employee guidance at the legislative level, employers should continue to ensure that employees are provided with sufficient support and guidance to perform their work.
4. Number of employees working for the employer: The size of the enterprise affects the resources available to the employer.
5. The overall circumstances of the employer and employee

With the removal of the weighty reason criterion from the law, it may in some situations enable the dismissal of an employee in circumstances where this was not previously possible. The assessment between these factors will be determined on a case-by-case basis, and the courts' interpretation of the new law will eventually determine how high the threshold for dismissal will be in the future.

Other planned amendments and remarks

With the amendment to the law, the employer's obligation to re-assign an employee was limited to cases where the employee's working conditions had changed. In practice, this means that it will no longer be necessary to find new work for an employee who is neglecting their duties, but the obligation to re-assign employees who are unable to continue in their previous work due to, for example, long-term illness will remain.

The warning procedure remains unchanged – an employee may not be dismissed until they have been given a warning and an opportunity to amend their behaviour, except in cases of particularly serious misconduct where the employee should have understood the reprehensible nature of their behaviour without a warning.

Before applying the new lower threshold for dismissal, it is necessary to determine whether the applicable collective agreement contains stricter provisions on the grounds for dismissal. Collective agreements may include a requirement under the previous law for a proper and weighty reason, which is binding on the employer regardless of the change in the law. The fulfilment of the grounds for dismissal may therefore continue to require a proper and weighty reason if the collective agreement so provides. The warning practice may also be regulated in more detail in the collective agreement.

With regard to transitional provisions, it should be noted that the previous legislation will continue to apply if the employee's conduct giving rise to the dismissal took place in its entirety by 31 December 2025 at the latest. The new legislation will apply to the dismissal if the employee's conduct that is the basis for the dismissal began before the amendment came into force and continues after it entered into force.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.