The Court of Cassation has ruled that a dismissed employee who has signed a settlement agreement with their employer can contest the termination of their contract more than a year after the agreement was signed, as the agreement may suspend the time limit for filing a claim with the labor court. The highest court reiterated that, according to the Labor Code, legal action related to the termination of an employment contract is generally subject to a twelve-month time limit from the date of notification of dismissal.
The case concerned a former branch manager of a financial institution, dismissed for serious misconduct in February 2018. A settlement agreement had been signed in March 2018, in exchange for a payment of €10.000. The employee filed a claim with the labor court in April 2019 to have the agreement annulled and to contest her dismissal.
The lower court judges overturned the settlement agreement and ruled the dismissal to be without just cause. The employer appealed, arguing that the statute of limitations had expired. The Court of Appeal held that the signing of the settlement agreement prevented the employee from taking action, thus suspending the time limit, based on the Civil Code which provides for suspension when an impediment arises from law or agreement.
The Court of Cassation, seized by the institution, upheld this analysis. The Court of Appeal set the total compensation at nearly €108.000 and ordered the former employee to reimburse the sum received under the settlement.
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