On March 31, 2020, General Jurisdiction Court of Yerevan partly upheld the claim made by J.Gh.’s representative, HCA Vanadzor lawyer Arayik Zalyan.
A.Zalyan claimed that the Court recognize invalid the employer's order to dismiss the citizen, reinstate the former in his job and levy an average salary for the whole time period of enforced idleness, and in case of not reinstating the citizen, levy a compensation in the amount of 12-fold of the average salary.
The Court upheld the claim by only obliging to levy the average salary for the whole time period of enforced idleness and a compensation of 1 month average salary for not reinstating J.Gh. in the job.
J.Gh. started working in “Service for the Protection of Historical Environment and Cultural Museum Reservations” state non-commercial organization as a senior accountant in 2006. In 2018, J.Gh. faced the issue of being transferred to another job and then also losing the job.
In 2018, by the employer’s suggestion and based on a mutual agreement, J.Gh was transferred to another division. The SNCO’s director signed with J.Gh. a contract of indefinite time limit, according to which the latter was transferred to the financial-economic division of the organization as an accountant with salary of AMD 140,000.
Months later, in 2018, the structure and staff list of the SNCO were approved and according to it, in the financial-economic division there were 3 accountant positions, 2 of which with AMD 140,000 and 1 with AMD 100,000 salary rates.
On July 12, 2019, the management notified J.Gh. that according to Article 113 (1) point 2, there had been changes in the organization conditions and according to production needs, the employment contract of indefinite time limit signed in 2018 would be rescinded on October 1, 2019.
As a result of the structural changes made in the organization on September 25, 2019, 2 accountant positions with AMD 140,000 salary rate were envisaged for the financial-economic, accountancy and purchase organization departments and besides, 2 positions of financial experts were added with the same salary rates.
A day later, J.Gh. was notified that due to the reduction of the number of employees and staff positions, her employment contract would be terminated on October 1 and this happened according to Article 112 (1) point 2 of the RA Labor Code.
Having been dismissed, J.Gh., exercising her right provided by Article 51 (2) of the RA Constitution (Every worker shall have the right to protection against unjustified dismissal from work. The grounds for dismissal from work shall be prescribed by law.), applied to HCA Vanadzor and expressed her wish to resolve this problematic situation in Court. HCA Vanadzor lawyer Arayik Zalyan undertook the protection of J.Gh.’s interests and made a claim to Yerevan Court of General Jurisdiction to reinstate the citizen in her former job, recognize invalid the employer’s order to dismiss J.Gh. and compensate for the whole time period of enforced idleness.
Arayik Zalyan draws the Court’s attention to a number of important provisions of the RA Labor Code by invoking the RA Court of Cassation judgments․
Lawyer A.Zalyan substantiated the claim by Article 113 (1) point 2 of the RA Labor Code, according to which, “The employer shall have the right to rescind the employment contract concluded with the employee for an indefinite time limit, as well as the employment contract concluded for a fixed time limit before the end of the validity period, if: (2) the number of employees and/or staff positions is reduced due to the changes in volumes of production and/or economic and/or technological and/or work organisation conditions and/or by production needs’’.
In his further substantiations Zalyan presents in detail that J.Gh.’s position was not reduced due to the structural changes that took place in the SNCO. In 2019, as a result of reorganization of the SNCO, instead of the existing 3 positions of accountant, 2 positions were established. It is noteworthy that before the reorganization, the structure had 2 accountant positions with AMD 140,000 salary and 1 accountant position with AMD 100,000. As a result of the changes in 2019, 1 accountant position with AMD 100,000 salary was cut.
Invoking the RA Cassation Court precedent decisions that refer to Article 113 (1) point 2, HCA Vanadzor lawyer notices, “A number of conditions should simultaneously be in place for the employer to be able to rescind the employment contract on his/her initiative: the contract must be signed with definite or indefinite time limit; its rescission must be preconditioned by changes in the volume of production, economic and technological conditions and conditions of organization of work, as well as by production needs; there must be cuts in the number of employees and positions; the employer, taking into consideration the professional competence, qualification, health state of the employee, must have offered the employee to be transferred to another work and the employee must have rejected it; there must be no possibility for the employer to offer another job relevant for the employee’s professional competence, qualification and health state.
Whereas, the added 2 positions of financial experts after the reorganization of the SNCO indicate that it is reasonable to substantiate that the reorganization had not led to cuts in the number of employees or positions.
It turns out that structural changes in the SNCO did not lead to the reduction of J.Gh.’s job position. On the contrary, by rescinding the employment contract, the employer did not fulfill the requirements of Article 113 (1) point 2 regarding the rescission of indefinite-term employment contract, i.e. the number of employees and/or staff positions was not reduced due to the changes in volumes of production and/or economic and/or technological and/or work organisation conditions and/or by production needs. Thus, the employer rescinded the contract without legal grounds.
According to A. Zalyan, rescission of the employment contract based on the reduction of the number of employees or staff positions is illegal, since at that time, the SNCO had a different job position appropriate for J.Gh., while the employer did not offer her the relevant position and thus allowed for a violation of law. Article 113 (3) of the RA Labor Code establishes, “The employer shall have the right to rescind the employment contract based on the grounds provided for by points 2, 3 and 4 of part 1 of this Article, where the employer, within his or her possibilities, has offered the employee another job corresponding to his or her professional competence, qualification, health state, and where the employee has rejected it’’.
Referring to RA Cassation Court judgments in similar cases, Zalyan noticed that the positions added as a result of the reorganization of the SNCO were not offered to J.Gh.
Nevertheless, having examined and assessed the proofs of the case, the Court upheld the claim in part by presenting their reasoning.
The Court took into account the SNCO’s reasoning that the accountant position, previously held by J.Gh., was cut after the order, and she did not have education of a financial expert, which was required for the positions envisaged. Thus, not having a position appropriate for her, the employer considered it legal to rescind the contract without offering her another work.
Alongside, however, the employer did not present proofs to establish that the financial expert position, which was added to the staff list after the reorganization, was not appropriate for J.Gh.’s qualification and was not offered to her on that basis.
The Court came to the conclusion that as a result of staff position reductions and reunifications of the divisions, J.Gh.’s position was reduced, and the added positions of financial experts were not offered to her as she did not have the required qualification.
The Court also took into account Court of Cassation positions in previous similar situations: does the Court have the power to reinstate a former worker in his/her position, if the employer does not have a position held by the employee previously? Based on Article 265 (2) of the RA Labor Code, (“In case there is a ground for not reinstating the employee in his/her position, the Court may not impose on the company an obligation, the actual fulfillment of which is objectively impossible. In such cases, non-application of the above-mentioned Article by the Court will entail an additional obligation for the employer to establish a new structural unit, a new position. Whereas, establishment of such an obligation will lead to restriction of rights and RA Constitution safeguard norms applicable for legal entities.”) the Court of Cassation reaffirmed its positions regarding the rescission of an employment contract on the employer’s initiative based on Article 113 (1) point 2 and recorded that changing working conditions or rescission of an employment contract without legal grounds or by way of violating the procedure prescribed by legislation may not always be a ground to reinstate a worker in his/her former position”.
Considering it impossible to establish J.Gh.’s former position and reinstate her in the former position, the Court upheld the claim in part, by obliging “Service for the Protection of Historical Environment and Cultural Museum Reservations” SNCO to pay compensation for the entire period of forced idleness in the amount of the average salary, prior to entry into force of the court judgement, and pay compensation in the amount of 1-month average salary for non reinstatement of the employee .