The Senate Changes Case Law: An Employee Dismissed During an Probation Period Cannot Seek Reinstatement

1. About the Case

The employee entered an employment contract for the position of property manager, which included a probationary period and specified August 1, 2023, as the start date of the employment relationship. However, on the very day the employment relationship was to begin, the employer informed the employee that he did not need to report to work and that the employment contract would be terminated during the probationary period. Later, the employee received written termination notice, which was based on the provisions of the Labor Law regarding the termination of an employment contract during the probationary period.

The employee filed a lawsuit seeking to have the termination declared invalid, to be reinstated, to recover compensation for the period of forced absence from work, and to receive compensation for emotional distress. In his view, the employer had misused the probationary period contrary to its purpose, as he was not given the opportunity to even begin work and demonstrate his suitability for the position.

The court of first instance dismissed the claim, while the appellate court partially granted the claim, declared the termination invalid, and reinstated the employee. The employer filed a cassation appeal against this ruling, and the case was heard by an expanded panel of the Senate.

2. The Court's Findings

The Senate ruled that an employee does not have the right to demand that the termination of an employment contract, which occurred during the probationary period, be declared invalid and that the employee be reinstated. Likewise, the employee is not entitled to compensation for the period of forced absence from work, as this claim is closely linked to the right to reinstatement.

In support of its conclusion, the Senate emphasized that the probationary period is a special institution of labor law, the purpose of which is to allow both parties to assess their mutual suitability and trust. The legislature has provided for a simplified procedure for terminating an employment contract during this period, including the provision that the employer is not required to state a reason for termination. In the Senate’s view, this means that the legislature has deliberately not granted the employee the same guarantees as in the case of termination of a standard employment contract.

At the same time, the Senate clearly stated that the employer does not have absolute freedom to act arbitrarily. If the termination of an employment contract during the probationary period is related to a violation of the prohibition against differential treatment or causes adverse consequences for the employee, the employee may file a claim for compensation for the harm suffered. In such a situation, the employer must be able to explain and justify the reasons for the termination to prove that no discrimination or other prohibited violation has occurred.

Of particular significance is the Senate’s ruling regarding the termination of an employment contract even before the employee has begun work. The Senate explained that the purpose of the probation periods is not limited solely to assessing the employee’s actual work performance. After the employment contract is concluded, the employer may also obtain other information about the employee that indicates the employee’s unsuitability for the position, such as information regarding the employee’s reputation, qualifications, or other relevant circumstances. Therefore, the employer is entitled to terminate the employment contract during the probationary period, even before the employee has begun performing their job duties, if the information obtained reasonably indicates unsuitability for the work to be performed.

In this ruling, the Senate simultaneously departed from several previously established principles of case law. Henceforth, in cases where an employer has violated the prohibition against differential treatment or the prohibition against causing adverse consequences during the probationary period, the employee will have the right to claim compensation for damages but will not have the right to demand reinstatement.

3. Practical Significance

This ruling has a significant impact on labor law practice in Latvia. Previous case law had, in certain cases, allowed for the reinstatement of employees even if their employment contract had been terminated during the probationary period. The Senate has now clearly stated that there is no legal basis for such claims.

For employees, this means that in disputes over termination during the probationary period, they must choose the appropriate legal remedy. If there are suspicions of discrimination or adverse consequences, the focus should be on a claim for damages rather than a claim to reinstate the employment relationship.

For employers, on the other hand, the ruling provides greater clarity regarding the application of the probationary period. However, this does not relieve employers of their obligation to act in good faith and to observe the principle of equal treatment. Even if the notice of termination does not need to specify a reason, in the event of a dispute, the employer must be able to prove that the decision was not based on discriminatory or other prohibited considerations.

If you have received notice of termination of your employment contract during the probationary period or have questions regarding the termination of your employment relationship, you can contact our law firm. We will help you assess the situation, determine the most appropriate legal remedy, and defend your interests.