The penalty schedule:degrees, caps, and the required procedure

The types of penalty, and nothing else

The Labor Law sets out the penalties an employer can impose: a warning, a fine, withholding or delaying a pay rise, and dismissal. Each has its place in the order of escalation.

Under Article 67, an employer cannot impose a penalty that is not provided for in the law or the work regulations. A penalty with no basis in the regulations is void, however reasonable it seemed.

So the regulations are where your disciplinary authority comes from. If a penalty is not in them, you cannot impose it. Check the regulations before taking any disciplinary step.

The fine cap: five days' pay

Article 70 sets several limits. A fine for a single breach cannot exceed five days' pay. Only one penalty can be imposed for a single breach. No more than five days' pay can be deducted for fines in one month. Suspension without pay cannot exceed five days. And no penalty can be imposed for something done outside the workplace, unless it is connected to the work, the employer, or the responsible manager.

The monthly limit is the one that comes up most. However many breaches there are in a month, the total deducted for them cannot exceed five days' pay. This limits the deduction, not the penalty: fines that were validly imposed are still owed, and anything over the limit is deducted in later months. The single-breach limit is different. It applies to the penalty itself, so a fine above five days' pay for one breach cannot be imposed at all.

The cap only covers fines. Deducting pay for time not worked is not a fine. The employee is simply not paid for work they did not do, so it is not counted towards the cap.

The thirty-day window

Article 69 sets two deadlines. An employee cannot be charged with a breach that was discovered more than thirty days earlier. And a penalty cannot be imposed more than thirty days after the investigation ended and the breach was established.

This stops employers from saving up old breaches to use later in a dispute. The employer has to act at the time or lose the right to act.

Record each breach, with its date, as soon as it happens. Relying on memory is how that right gets lost.

Escalation resets after one hundred and eighty days

Under Article 68, a penalty cannot be increased for a repeat breach if one hundred and eighty days have passed since the previous breach, counted from the date the employee was notified of the earlier penalty.

Repeats are not counted across the whole period of employment. An employee who made one mistake and then went six months without repeating it is treated as a first-time offender next time.

So you need to keep the date each penalty was notified, not just the date of the breach, because the period runs from notification.

The procedure every penalty needs

Under Article 71, no disciplinary penalty can be imposed until the employee has been told in writing what they are accused of, has been questioned, and their defence has been heard. All of this goes in written minutes placed in their file. For minor breaches, where the penalty is no more than a warning or a fine of one day's pay, questioning can be verbal, as long as it is recorded in the minutes.

This procedure is a legal requirement. A penalty imposed without an investigation is void even if the breach was proven, and the employer must repay the amount deducted and may owe compensation.

The minutes should record the breach and its date, what the employee said, the employer's decision, and the date the employee was notified. These are the details any tribunal will ask about later.

Escalation and its exception

Penalties normally escalate: first a warning, then a fine, then something more serious. You can only move to a higher level if the regulations provide it for that same breach.

Dismissal without gratuity sits outside this escalation. It is limited to the cases in Article 80 and their conditions, including giving the employee a chance to state their case and ending the contract within the set period.

For absence, a prior written warning is required before dismissal. If an employer dismisses someone for absence without a documented warning, the dismissal may be overturned.

What settles the dispute

A disciplinary penalty depends on three documents: a clause in approved, posted regulations, written investigation minutes that include the employee's defence, and a record showing the incident with its date and time.

If one system links the attendance record, the breach, the penalty, and the notification date, you can answer any challenge with the evidence in order. If they are scattered, you end up searching through messages and folders.