The application of employment regulations by employers raises an important question: where is the boundary between an employer’s autonomy in decision-making and the court’s authority to review such decisions? Mandatory provisions must undoubtedly be applied in day-to-day practice, as well as when deciding on employees’ rights, duties and responsibilities. At the same time, however, the Labor Law allows employers freedom to independently decide on the organization of work, in accordance with the type of entity, the activity they perform, their needs, the number of employees and other relevant circumstances.

What does Employer Autonomy Mean?

 Employer autonomy is reflected, among other things, in the employer’s right to independently decide on business model, the manner in which business processes are organized and the internal organization of work. One aspect of this autonomy is the adoption of a rule book on organization and systematization of jobs, which establishes the employer’s organizational units, the names and descriptions of jobs, the type and level of required qualifications or education, as well as other special requirements for work in those jobs.

On the other hand, depending on its needs, financial capacity, size and other circumstances, each employer regulates numerous matters by a bylaw, such as working hours and their schedule, salary, the amount of reimbursement of expenses for food during work, subsidy for the use of annual leave, per diems, various employment-related rights and benefits, additional payments, a greater number of days of paid leave and a broader range of grounds for using such leave, a broader circle of family members for the exercise of certain rights, as well as the number of annual leave days, naturally subject to compliance with the limitations prescribed by law.

The issue of the limits of employer autonomy becomes particularly relevant when an employment contract is terminated because of technological, economic or organizational changes, the need to perform a particular job ceases or the workload is reduced.

The procedure for determining employee redundancy is one of the most complex procedures in the field of labor law, particularly when carried out within large business systems and organizations employing a significant number of employees. Its complexity arises not only from the employer’s obligation to comply with the procedure prescribed by law, but also from the fact that the employer’s business autonomy and the need to protect employees’ rights intersect within this procedure.

In practice, questions may arise as to whether the abolition of a particular job position was justified from a business perspective, whether the work process could have been organized differently, whether a more rational or appropriate business solution existed, how many employees were required to perform the relevant work, and whether those duties should have been allocated to other employees or organized in a different manner. These are only some of the questions that may arise during this process and that, at the same time, raise the issue of how far judicial review of an employer’s business decisions may extend.

Judicial Review Is Limited to Assessing the Lawfulness of the Employer’s Decision

 The court is authorized to examine whether a decision was made in accordance with the law, but not to assess its expediency, that is, whether the employer could have chosen a more rational, efficient or advantageous solution. The assessment of expediency belongs exclusively to the employer and forms part of its autonomy and discretionary decision-making.

This does not, however, mean that judicial review is reduced to mere formalism. The court examines whether there was a statutory ground for termination, whether the changes actually resulted in the cessation of the need to perform certain jobs or in a decrease in workload, whether the prescribed procedure was followed, whether severance pay was paid in a timely manner, and whether the decision contains specific and verifiable reasons.

The distinction between lawfulness and expediency has also been consistently confirmed in case law.

In Supreme Court Judgment Rev2 3981/23 of 12 February 2025, the Court took the position that the court is not authorized to review the occurrence of technological, economic or organizational changes that resulted in the cessation of the need for employees’ work. The occurrence of such changes, the organization of business operations and the structure of employees required for successful business operations, as well as the structure of employees whose work is no longer required, constitute the employer’s economic policy, which cannot be subject to assessment in court proceedings for the protection of the rights of employees whose work is no longer required, nor are reasons concerning expediency considered in the dispute at hand, but rather the court reviews only the lawfulness of the procedure conducted for determining employee redundancy and the adoption of the decision on that basis.

Also, in Supreme Court of Cassation Judgment Rev2 2617/21 of 10 November 2021, the Court took the position that a court is not authorized to assess the justification and expediency of the employer’s organizational decisions, and that the implementation of organizational, economic and technological changes falls within the autonomous and independent sphere of activity of the defendant as an employer. Specifically, the Court stated that an employer’s decision to abolish a particular job position and to organize the relevant work so that it is performed to a different extent and within other job positions constitutes a discretionary right of the employer, and that the court is not authorized to assess such a decision, but only whether the termination of the employment contract was lawful.

Employer autonomy is also significant in the conduct of disciplinary proceedings and the imposition of appropriate measures.

The question of whether a less severe measure should have been imposed instead of termination of the employment contract, as well as which measure would have been the most appropriate in the event of a breach of work duty or non-compliance with work discipline, also falls within the employer’s discretionary assessment. The court is not authorized to review the expediency of the employer’s choice of measure, but only its lawfulness.

In Supreme Court of Cassation Judgment Rev2 3356/21 of 23 February 2022, the Court took the position that, when assessing the lawfulness of a decision on termination of an employment contract and termination of the employee’s employment relationship, the court is required to determine whether the grounds for termination of employment existed, which is the case when the employee committed a breach of work duty and/or work discipline attributed to the employee in the challenged decision, and which is prescribed by the Labor Law, the employer’s bylaw or the employment contract as grounds for termination of the employee’s employment contract by the employer, as well as whether the employee is responsible for committing the described act. The type and severity of the disciplinary measure imposed are within the employer’s discretionary authority, and therefore the court is not authorized to assess the expediency of the disciplinary measure imposed on the employee in terms of whether the measure imposed constitutes an adequate sanction for the committed breach of work discipline or work duty, or whether this is not the case.

The Boundary Between Business Autonomy and Judicial Review

 The employer’s freedom entails the right to independently regulate its business operations and organization of work and to make business decisions it considers expedient. The court may not assess such business judgment, nor may it determine which solution would have been more rational or advantageous. However, the employer’s discretionary authority is not unlimited. Any decision to terminate an employee’s employment contract or imposing a less severe measure must be made in accordance with the law and must contain a clear, specific and verifiable statement of the reasons for which the decision is based. It is precisely such reasoning that enables the court to examine the lawfulness of the decision and the employee to effectively protect their rights.

Accordingly, the boundary is very clear – the employer decides on expediency, while the court reviews whether that decision was made lawfully and based on reasons that actually existed.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.