Failure to settle with employees upon dismissal is one of the most common violations: Ombudsman

In 2020, the most common issue raised in complaints to the Human Rights Defender of the Republic of Armenia was the failure to make a final settlement with an employee upon dismissal or incomplete settlement. The Ombudsman constantly addresses this issue in the annual reports summarizing his activities.

According to the Labor Code of the Republic of Armenia, when an employment contract is terminated, the employer is obliged to make a full final settlement with the employee on the day of the contract's termination, unless otherwise provided by the same code, law, or by mutual agreement of the employer and employee regarding the settlement process. The Human Rights Defender reaffirms its position formed as a result of the analysis of the mentioned norm, according to which making a final settlement with an employee upon termination of the employment contract is not the employer's right but an obligation. The possibility of establishing a different procedure for the final settlement by mutual agreement relates not to the discretion of the parties on whether to conduct the final settlement or not but rather to the procedure for its implementation, for instance, the deadline.

It should be clearly stated that the employer has no right to restrict the employee's right to be settled after dismissal. A specific manifestation of this issue is when the final settlement with the employee is not conducted at all upon dismissal, is conducted incompletely, or is executed with a violation of the deadlines established by law.

During 2020, one of the citizens who sought assistance from the Human Rights Defender reported that he wished to terminate the employment contract, but the employer threatened not to make a final settlement should the contract be unilaterally terminated. In connection with such manifestations of the issue, it should be noted that labor legislation does not provide any legal grounds for employers to make the absolute, imperative legislative requirement for final settlement conditional, especially by restricting the employee's right to terminate employment relations.

In one of the complaints addressed to the Defender, the citizen reported that his wife was dismissed based on her application. However, the employer refuses to make part of the final settlement, particularly refusing to provide monetary compensation for all unused vacation days. The specific case was resolved with the support of the Human Rights Defender.

According to Article 130, Part 2 of the Labor Code of the Republic of Armenia, the employer is obliged to pay the employee's salary and other payments equal to it on the day of the final settlement. If this obligation cannot be fulfilled due to reasons independent of the employer, then the employee's salary and equalized payments are made within five working days after the employee presents such a request.

The joint decree of the Minister of Finance, the Minister of Labor and Social Affairs, and the Chairman of the State Revenue Committee dated September 10, 2018, defines the list of salaries and other payments equal to it, which also includes compensation for unused leave (minimum, extended, additional) for the entire year.

Regarding the provision of compensation for all vacation days, it is necessary to reference the decision of the Supreme Court No. ԵԿԴ/3516/02/08, in which the Supreme Court clarified that compensation must be paid for all unused leave. Based on this, monetary compensation for unused leave constitutes part of the final settlement, moreover, compensation for all unused leave is included in the final settlement.

Thus, according to the Human Rights Defender's position, it is necessary to always comply with the legislative requirement to conduct a final settlement with the employee being dismissed in accordance with the procedures and deadlines stipulated by labor legislation.