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Termination clauses at work in (and for) companies: is it possible?

By 20 Março, 2022Março 31st, 2022No Comments

On last 18.03.2022, a critical article was published on the Portuguese newspaper “Jornal Expresso”, regarding the limitation of the freedom to work, questioning the applicability of termination clauses, characteristic of the football context, to the remaining business reality (see here the article on the newspaper).

In short, it points out the difficulty that persists in retaining talent in certain areas, or professional sectors (e.g., technological, or digital work). Particularly with the advent of the “telework era”, which has conferred a greater bargaining power to (tele)workers. A better example, of this reality, is the episode described, across borders, of workers who submitted their resignation before Google, since they did not intend to abandon remote work (see Employees Are Quitting Instead of Giving Up Working From Home ) as opposed to the employer-imposed regime of face-to-face work.

The departure of employees is thus seen as a loss of assets: (i) to competitors; (ii) or even to establish one’s own business. In this sense, to avoid the loss of employees through termination of the employment contract, it is suggested that termination clauses be imposed as a pecuniary guarantee of compensation.

In response, to the same newspaper article, several specialists expressed their strong arguments regarding a possible structure: (i) the restriction of the freedom to work beyond the cases in which the labor law admits such limitation; (ii) the existence of proper means aiming to protect the employer’s interest (for example, compliance with prior and extended notice, typical ancillary clauses, such as standby pacts and non-competition obligations); (iii) pointing out, furthermore, as Pedro da Quitéria Faria does well, that even the mechanisms currently in force, limiting the freedom of the worker, may suffer restrictions – in this case, for the benefit of the worker: the scenario of the worker being able to reimburse the company for expenses, in order to lift the standby obligation (pay/buy the way out).

Since the hypothesis of “enclosing” the worker with termination clauses, typical of the football world and of this (sometimes) millionaire market, is not viable, it is up to us to analyze other experiences and hypotheses beyond our borders. On the North American side, it is common to establish goals in labor relations. Retention awards are the payment of a premium for the employee’s “stay”, i.e., the payment of a monetary amount for the fact that the employee reaches a certain period in the company; materially producing the desired effect with the wording of a permanence pact, without the associated formal constraints.

This will certainly be a topic for study in the very short future.

Tiago Sequeira Mousinho @ DCM | Littler