Navigating employment termination in the Faroe Islands requires a thorough understanding of local laws and regulations. Faroese employment law balances the rights of both employers and employees, setting forth specific procedures for termination, including notice periods, severance pay, and grounds for dismissal. Employers must adhere strictly to these regulations to avoid potential legal challenges and ensure fair treatment of employees.
This guide provides a comprehensive overview of termination procedures and severance practices in the Faroe Islands as of 2025. It covers key aspects such as notice period requirements, severance pay calculations, permissible grounds for termination, procedural steps for lawful dismissal, and employee protections against wrongful termination. Understanding these elements is crucial for businesses operating in the Faroe Islands to ensure compliance and maintain positive employer-employee relations.
Notice Period Requirements
The required notice period in the Faroe Islands depends on the employee's tenure and employment contract. Minimum notice periods are statutory, but longer periods may be agreed upon in individual employment agreements or collective bargaining agreements.
| Employee Tenure | Employer's Notice Period | Employee's Notice Period |
|---|---|---|
| Less than 6 months | 1 month | 1 month |
| 6 months to 3 years | 2 months | 1 month |
| 3 years to 6 years | 3 months | 1 month |
| More than 6 years | 4 months | 1 month |
It's important to note that these are minimum requirements. Employers must always refer to the specific employment contract to determine if a longer notice period is stipulated.
Severance Pay Calculations and Entitlements
Severance pay in the Faroe Islands is not a statutory requirement in all cases. However, it is typically payable in cases of redundancy or termination due to business reasons, especially if outlined in the employment contract or collective agreement.
The calculation of severance pay varies depending on the agreement in place. A common formula involves multiplying the employee's monthly salary by the number of years of service. For example, an employee with 10 years of service might be entitled to 2-3 months' salary as severance.
- Contractual Agreements: Severance terms are often detailed in the employment contract.
- Collective Agreements: If a collective agreement applies, it will specify the severance pay terms.
- Negotiation: In some cases, severance pay can be negotiated between the employer and employee.
Grounds for Termination
Termination in the Faroe Islands can be either with or without cause. "Cause" refers to a serious breach of the employment contract by the employee.
Termination With Cause
Grounds for termination with cause typically include:
- Gross misconduct
- Theft or fraud
- Serious insubordination
- Repeated failure to perform job duties
In cases of termination with cause, the employer is generally not required to provide a notice period. However, the employer must be able to provide sufficient evidence to support the claim of serious misconduct.
Termination Without Cause
Termination without cause typically includes:
- Redundancy due to business reasons
- Restructuring
- Long-term illness affecting job performance
In cases of termination without cause, the employer must adhere to the statutory notice periods outlined above and may be required to pay severance.
Procedural Requirements for Lawful Termination
To ensure a lawful termination in the Faroe Islands, employers must follow specific procedural requirements:
- Written Notice: Provide the employee with a written termination notice, clearly stating the reason for termination and the effective date.
- Consultation: If terminating multiple employees due to redundancy, consult with employee representatives or unions.
- Documentation: Maintain thorough documentation of the reasons for termination, performance issues (if applicable), and the termination process.
- Final Pay: Ensure the employee receives their final salary payment, including any accrued vacation time and severance pay (if applicable), on or before their last day of employment.
- Return of Property: Arrange for the return of company property, such as laptops, mobile phones, and access cards.
Employee Protections Against Wrongful Dismissal
Faroese law provides employees with protections against wrongful dismissal. An employee may claim wrongful dismissal if:
- The termination was discriminatory (based on gender, race, religion, etc.).
- The employer did not follow the correct termination procedures.
- The termination was without just cause (if cause is required).
- The termination was in retaliation for exercising their legal rights.
If an employee believes they have been wrongfully dismissed, they can bring a claim to the Faroese courts. Remedies for wrongful dismissal may include reinstatement, compensation for lost wages, and damages for emotional distress. Employers should therefore ensure they have solid grounds for termination and have followed all required procedures to minimize the risk of a wrongful dismissal claim.
