Bad faith compensation is an important right every worker should know about; it protects employees when their contracts are unfairly terminated by the employer. When employees are not covered by job security provisions, their employment can be wrongfully ended by the employer. In these cases, the Labor Law protects the worker’s rights through what is known as “Bad Faith Compensation.” Workers who are covered by job security rules are not entitled to bad faith compensation.
Who Is Eligible for Job Security?
To benefit from job security, an employee must work at a workplace that employs 30 or more workers and the employee must have at least six months of seniority. The employment contract must be for an indefinite duration; if the contract specifies an end date or a fixed-term period, the worker is not eligible for bad faith compensation. Workers who have completed the required period of service at workplaces with 30 or more employees can claim job security protections.
In practice, many workplaces do not reach the 30-employee threshold, and many workers are dismissed before completing six months of service. Those employees are not covered by job security. For such workers, the Labor Law provides protection through bad faith compensation. Employees should be aware of this right so they can assert their claims if they face unfair dismissal.
How Is Bad Faith Compensation Claimed?
To be eligible for bad faith compensation, the worker must not be covered by job security and must have been dismissed by the employer in breach of the employment contract. If the worker resigns voluntarily, they cannot file a bad faith claim. In other words, bad faith compensation applies when the employer terminates the contract unjustly, not when the worker ends the employment themselves.
In What Situations Does Bad Faith Compensation Apply?
There are specific circumstances in which a worker may claim bad faith compensation. Examples include situations where the employer terminates the contract after the employee has taken legal action against the employer, testified on behalf of a colleague who sued the employer, or filed complaints about the employer with social security or other institutions. If an employer dismisses an employee for one of these reasons—or for another retaliatory reason—the employee may be entitled to bad faith compensation.
How Is Bad Faith Compensation Calculated?
The amount of bad faith compensation for employees whose contracts were unfairly terminated by the employer is defined in Article 17 of Labor Law No. 4857. According to this article, the employer must pay bad faith compensation equal to three times the wage corresponding to the notice period. This provision establishes a clear basis for calculating the compensation owed when an employee has the right to bad faith payment.