In any stable employment relationship, it is not enough to simply affirm the "permissibility of contract termination" or "the protection of job security." A balanced principle is needed that prevents arbitrary termination while simultaneously preventing the contract from becoming an inescapable constraint. This is where Article (77) of the Labor Law comes in, offering a practical formulation: termination is possible, but wrongful termination entails calculated compensation
The most important feature of Article (77) is that it begins with a clear principle: The default is what the parties agree upon. The system allows for the inclusion in the contract of a specific compensation for wrongful termination, as deemed appropriate by both parties. This ensures prior clarity and reduces the potential for future disputes. This reflects an understanding of the nature of the labor market: prior agreement increases certainty, aligns expectations, and minimizes surprises in the event of a dispute
But if no such agreement exists, the article does not leave the injured party without a standard; rather, it moves directly to a hypothetical compensation rule calculated according to the type of contract: in indefinite-term contracts, compensation is calculated on the basis of the length of service, and in fixed-term contracts, compensation is essentially related to the remaining term of the contract
Then comes the most crucial element that gives the text its practical weight: the minimum compensation. The article stipulates that compensation shall not fall below two months' wages under any circumstances. This is not merely a formality, but a safeguard that prevents compensation from becoming a paltry sum in short-term contracts or in cases where the formula alone does not reflect the true impact of sudden termination. Therefore, this minimum is understood as a "safety net" that complements the formula and ensures a reasonable level of redress
From an application perspective, some provisions have tended to consolidate this understanding: that two months' wages represent a minimum to be applied in case of disagreement or whenever the output is less, as it is the minimum intended by the regulator to ensure a minimum level of compensatory justice
In conclusion, Article (77) does not create bias towards one party, but rather establishes a balance. It simply states: agree on clear compensation if you wish, and if you cannot, there is a standardized minimum that the injured party must not be left without. In this way, the dispute is transformed from an "open-ended debate" to "calculated compensation," which is as much what the labor market needs as it needs flexibility
