HEP must reinstate Koračević, pay him over 1 million kuna in salary, and return the Audi A6

The Municipal Labor Court in Zagreb annulled the decision of Hrvatska elektroprivreda (HEP) regarding the dismissal of former CEO Zlatko Koračević from 2013 as unlawful and ordered HEP to reinstate him, pay him over 1.1 million kuna in outstanding salaries, and return the official Audi A6 for his use.

Media reports indicate that this is a non-final ruling which can be appealed to the County Court.

Zlatko Koračević stated in his lawsuit that in 2012 he entered into an employment contract with HEP as CEO, which granted him the right to use a car and mobile phone, as well as life insurance, and that he was obliged to perform duties according to the regulations and statutes of HEP. He emphasized that he established an indefinite employment relationship and that, according to the contract and based on the decision of the Supervisory Board, his mandate continuously lasted from 2012 to 2016. However, in July 2013, he received a decision from HEP terminating his employment contract. According to the reasoning for the dismissal, Koračević was revoked before the expiration of his four-year mandate and was offered to conclude an agreement on the termination of the employment contract, which he did not accept.

Koračević did not dispute that he was revoked in May 2013, but claimed that the decision to revoke was invalid and stated that the Supervisory Board of HEP acted arbitrarily – that is, it did not investigate whether the revocation was in the interest of HEP. In the lawsuit, he also stated that he believes the Government’s proposal for his revocation was unsubstantiated and that there was no explanation for the decision to revoke, and that the General Assembly of HEP did not vote him out of confidence.
The court considers that the decision to dismiss was unlawful.

HEP representatives argued that Koračević’s lawsuit lacked legally relevant circumstances over which the labor court was not competent to decide, as such a dispute falls under the jurisdiction of the Commercial Court. They also pointed out that Koračević’s revocation naturally prevents him from being in an employment relationship as CEO.

They stated that the previously concluded contract was not sustainable and that Koračević did not accept the amendment to the employment contract, leaving HEP with no option but to terminate the employment contract. In proposing the rejection of the lawsuit, they emphasized that the rights Koračević claimed were resolved by the decision on dismissal.

The reasoning of the judgment states that it was necessary to determine that the decision on dismissal from 2013 was unlawful and that HEP should have reinstated him to the duties he performed or other duties valued at the highest coefficient of complexity for his qualifications and work experience, with salary compensation according to the calculation of a financial expert. Furthermore, media reports indicate that the court concluded that he should be allowed to use the official car and mobile phone until the end of the employment contract and that life insurance should be paid.

According to the findings of the financial expert, Koračević’s lost earnings at HEP consist of two parts: from June 2013 to May 2015, amounting to over 729,000 kuna, and from June 2015 to February 2016, amounting to over 414,000 kuna. The largest monthly amount of unpaid salary for Koračević is also noted as 47,031 kuna for the previous year.