Ending an Employment Contract in Georgia: Grounds, Notice and Severance

An employer in Georgia cannot end an employment contract simply because it has decided to. The Labour Code of Georgia lists the grounds, and a termination on any other ground is inadmissible. For four of those grounds the employer chooses between 30 calendar days of written notice with at least one month's pay as severance, and 3 calendar days with at least two months' pay. The employee can demand the reasons in writing and has 30 calendar days to go to court, where the remedies include reinstatement and pay for the whole period of the dispute. This is the country of Georgia, and every figure below is the one in the consolidated Code at the time of writing.

The Labour Code lists the grounds for termination

The list covers business reasons, reasons in the person of the employee, breach, the natural end of the contract and a small number of external events, and it closes with a general clause: other objective circumstances that justify termination. That last clause is not a shortcut. An employer who relies on it has to set out the objective circumstance in the written notice itself, and a court will test it.

• Business reasons: economic circumstances, or technological or organisational changes, that require a reduction of staff.
• The person, without fault: qualifications or skills that do not fit the position, and long-term incapacity for work, which the Code sets, unless the contract provides otherwise, at more than 40 consecutive calendar days or more than 60 calendar days within six months, with the employee's leave already used.
• Breach: a gross violation of the contract, a collective agreement or the internal regulations, or an ordinary violation where a disciplinary measure was already applied within the last year. Internal regulations count only if the contract makes them part of it.
• The contract's own end: expiry of the term, completion of the agreed work, a written agreement of the parties, or the employee's written resignation.
• External events: a court decision that makes the work impossible, a final decision declaring a strike illegal, the death of the employee or of an employer who is a natural person, and the start of liquidation of an employer that is a legal person.
• Other objective circumstances that justify termination, substantiated in the notice.

Notice and severance depend on the ground

The two notice options are the employer's choice, and they apply to the same four grounds: downsizing, unsuitable qualifications, long-term incapacity and the general clause. The amounts are minimums: a contract or a collective agreement can add to them and cannot go below. For a gross or repeated breach the Code sets no notice period and no severance, which is why those grounds attract the closest scrutiny of the evidence.

The employee can demand written reasons and go to court within 30 days

1. 1

   The employer serves the written notice. Keep proof of the date it was received, because every later deadline runs from a receipt.

2. 2

   Within 30 calendar days of receiving the notice the employee may ask, in writing, for a written substantiation of the ground.

3. 3

   The employer has 7 calendar days from the request to give the reasons in writing. Silence shifts the burden of proving the facts onto the employer.

4. 4

   The employee has 30 calendar days from receiving the reasons to file a claim in court. If no reasons arrive, the 30 days are read as running from the end of the 7-day period; if the employee never asked, from receipt of the notice.

5. 5

   If the court declares the termination void, it orders reinstatement, or an equivalent job, or compensation in an amount the court determines. The employee may also claim lost earnings from the termination date until the final decision is enforced, with any severance already paid taken into account.

Probation and fixed-term contracts end on different rules

A trial period can be agreed once with the same person, for no more than six months, and only in writing. During it the employer may end the contract at any time, and the notice and severance procedure does not apply unless the contract says it does; the employee is paid for the time worked. The ban on discrimination still applies.

Expiry of the term ends a fixed-term contract only if the term was valid. A term shorter than one year needs one of the reasons the Code lists, such as a specific volume of work, seasonal work, a temporary increase in work or the replacement of an absent employee; without one, the contract is treated as open-ended. A contract longer than 30 months, or a chain of consecutive fixed-term contracts that passes 30 months, is also treated as open-ended, and contracts count as consecutive when one is extended or the next is signed within 60 days. The Code relaxes these limits for a company in its first 48 months after registration, subject to any further conditions the Government sets, provided each fixed term is at least three months; after those 48 months such a contract is treated as open-ended unless it rests on a listed reason.

Final pay is settled within seven calendar days

• The deadline: the final settlement is made within 7 calendar days of the end of the contract, unless the contract or a law sets another term. A late payment carries 0.07% of the delayed sum for each day, a rule that does not apply to court-awarded lost earnings.
• What it contains: salary to the last day, severance where the ground carries it, and compensation for unused paid leave in proportion to the time worked where the contract ended on the employer's initiative. The statutory minimum of paid leave is 24 working days a year.
• Payroll: the final amounts go through payroll like any other payment. Confirm the withholding on severance and leave compensation with the accountant first; our article on hiring a first employee describes the monthly cycle.
• After the contract: a clause that stops the employee from using their knowledge and skills for a competitor can run for up to six months after termination, and only if the employer keeps paying at least the remuneration the employee had at the end; it cannot be imposed on employees in education, science or culture.

Collective redundancies, protected periods and the Labour Inspection Service

• Collective redundancy: within 30 calendar days, for reasons unrelated to the employee's person or conduct or to expiry, the termination of at least 10 contracts in an organisation with more than 20 and fewer than 100 employees, or of at least 10% in one with more than 100. The employer consults the employees' representatives and notifies the Minister responsible for labour and the affected employees in writing at least 45 calendar days ahead; the dismissals take effect only after those 45 days.
• Protected periods: from the day an employee notifies her pregnancy and through maternity, parental and adoption leave, and during military or reserve service and jury service, termination is allowed only on a narrower set of grounds such as expiry, resignation, agreement or breach.
• Discrimination and retaliation: termination on a discriminatory ground, or because the employee complained about discrimination, is prohibited, and once the employee shows facts that suggest discrimination the employer carries the burden of proof.
• Sale of the business: a transfer of the undertaking is not in itself a ground, and the employment contracts pass to the new owner.
• The Labour Inspection Service inspects on a complaint or on its own initiative and can warn, fine or suspend work. The Code's general sanction, a warning or a fine from GEL 200 to GEL 1,000 per violation depending on the employer's category at the time of writing, expressly leaves out the termination provisions: whether a dismissal was lawful is for a court. The inspector still checks what surrounds it: written contracts, working-time records, pay, discrimination.

Directors and contractors are outside these rules, until they are not

A company director works under a service agreement that the Law on Entrepreneurs places outside labour law, and the partners can remove a director at any time without stating a reason; our article on a director's duties covers that relationship. A contractor has no Labour Code protection either, but only if the person really is a contractor. Where the relationship is employment in substance, ending the contractor's agreement is a dismissal, and everything above applies.

What this article does not answer

It does not cover the public service, collective agreements, strikes or occupational safety, and it does not replace reading the contract and the internal regulations, which can add to every minimum above. It cannot say what protects an employee who works for a Georgian company from another country: that person's local law may apply. We draft employment documents and prepare terminations, and payroll runs through the accounting plan.