Navigating employment termination in any country requires a thorough understanding of local labor laws to ensure compliance and avoid potential disputes. In Mongolia, the Labor Law governs the relationship between employers and employees, including the procedures and entitlements related to ending an employment contract. Both employers and employees have specific rights and obligations that must be respected during the termination process.
Properly managing terminations is crucial for businesses operating in Mongolia. Failure to adhere to the legal requirements can lead to significant financial penalties, legal challenges, and reputational damage. Understanding the nuances of notice periods, severance pay, valid grounds for dismissal, and procedural steps is essential for a smooth and lawful separation.
Notice Period Requirements
The required notice period for terminating an employment contract in Mongolia varies depending on the reason for termination and the party initiating it. The Labor Law specifies minimum notice periods that must be observed.
| Initiating Party | Reason for Termination | Minimum Notice Period |
|---|---|---|
| Employer | Termination without cause (e.g., redundancy) | 30 days |
| Employer | Termination due to employee's long-term disability | 30 days |
| Employer | Termination due to employee's inability to perform work | 30 days |
| Employer | Termination due to employee's misconduct (with cause) | No specific notice required, but process must be followed |
| Employee | Resignation | 30 days |
| Employee | Resignation due to employer's breach of contract | No specific notice required, but process must be followed |
It is important to note that the employment contract or a collective bargaining agreement may stipulate longer notice periods than the statutory minimums. In such cases, the longer period applies.
Severance Pay
Severance pay is a mandatory entitlement for employees whose contracts are terminated under specific circumstances in Mongolia. The calculation of severance pay is based on the employee's average wage and their length of service.
Severance pay is generally required when the employer terminates the contract without cause, such as due to redundancy, or in cases where the employee is unable to continue working due to long-term disability or inability to perform the required tasks.
The standard severance pay calculation is based on the employee's average monthly wage. The amount typically corresponds to one month's average wage for each year of service, up to a certain limit or based on specific formulas outlined in the Labor Law. The exact formula and maximum entitlement can depend on the specific ground for termination and the employee's tenure. For instance, termination due to redundancy often triggers a specific severance calculation based on years of service.
Severance pay is generally not required when an employee resigns voluntarily or when the employer terminates the contract for cause due to the employee's serious misconduct or breach of contract.
Grounds for Termination
Employment contracts in Mongolia can be terminated based on various grounds, which are broadly categorized as termination with cause and termination without cause.
Termination With Cause
Termination with cause occurs when the employee's actions or inactions provide a valid legal reason for dismissal. Grounds for termination with cause typically include:
- Serious breach of labor discipline or internal company rules.
- Repeated minor breaches of labor discipline after receiving warnings.
- Gross negligence or willful misconduct causing significant damage to the employer.
- Absence from work without valid reason for a specified period.
- Disclosure of confidential information.
- Criminal conviction affecting the ability to perform duties.
When terminating for cause, the employer must be able to prove the employee's misconduct and demonstrate that the correct disciplinary procedures were followed prior to termination.
Termination Without Cause
Termination without cause occurs for reasons not directly related to the employee's performance or conduct. Common grounds for termination without cause include:
- Redundancy or workforce reduction due to economic, technological, or organizational changes.
- Closure or liquidation of the employer's entity.
- Employee's long-term inability to perform work due to health reasons (certified by a medical professional).
- Employee's inability to perform work due to lack of required qualifications or skills, provided the employer has offered retraining or alternative positions where possible.
Terminations without cause typically require the employer to provide the statutory notice period and pay severance compensation.
Procedural Requirements
Lawful termination in Mongolia requires strict adherence to specific procedural steps to ensure fairness and compliance with the Labor Law. The exact procedure can vary slightly depending on the ground for termination.
Key procedural requirements often include:
- Written Notice: Providing the employee with a formal written notice of termination, clearly stating the reason for termination and the effective date.
- Consultation/Explanation: In certain cases, particularly for termination with cause, the employer may need to conduct an investigation and provide the employee with an opportunity to explain their actions. For redundancy, consultation with employee representatives or the trade union may be required.
- Documentation: Maintaining thorough documentation throughout the process, including records of performance issues, warnings, investigation findings, and the termination notice itself.
- Payment of Final Dues: Ensuring all outstanding wages, accrued unused annual leave, severance pay (if applicable), and other entitlements are calculated and paid to the employee on their final day or shortly thereafter.
- Issuance of Employment Book/Certificate: Providing the employee with their employment book (if applicable) and a certificate of employment detailing their position, period of employment, and salary.
Failure to follow the correct procedure, even if a valid ground for termination exists, can render the dismissal unlawful.
Employee Protections Against Wrongful Dismissal
Mongolian labor law provides employees with significant protections against wrongful dismissal. An employee who believes their termination was unlawful can challenge it through internal company procedures, labor dispute resolution bodies, or the courts.
Grounds for challenging a termination often include:
- Lack of a valid legal ground for termination.
- Failure to follow the correct procedural requirements (e.g., insufficient notice, lack of proper documentation, failure to consult).
- Termination based on discriminatory reasons (e.g., gender, age, disability, union membership).
- Termination during periods of protected leave (e.g., maternity leave, sick leave).
If a termination is found to be wrongful, the employer may be ordered to reinstate the employee to their previous position and pay back wages for the period of unemployment. Alternatively, the court may order the employer to pay additional compensation to the employee. Employers must therefore exercise caution and ensure full compliance with the Labor Law when terminating employment contracts to mitigate the risk of wrongful dismissal claims.
