Due to the negative impact of COVID-19 on the economy, many businesses were forced to change their employment structure, liquidate jobs or entire establishments. When does the collective redundancy legislation apply to an employer?
An employer which plans to terminate employment due to reasons unattributable to employees may be obliged to comply with the provisions of the Group Dismissals Act. It applies when:
Termination of employment in this manner is known as collective redundancy and imposes on employers certain obligations which must be complied with in order to carry out redundancies lawfully.
The employer which plans collective dismissals has a duty to consult such intention with:
The primary objective of consultations is to avoid dismissals or reduce the numbers to be made redundant and matters affecting employees in connection with those dismissals, such as offering alternative employment to employees affected by the planned dismissals or retraining them or offer alternative professional training.
The employer has a duty to notify trade unions in writing about:
The employer provides the relevant district labour office, in writing, with the above information.
Another mandatory step is to enter into the agreement on redundancies which sets out the principles of action in matters concerning the employees covered by the proposed collective redundancy, as well as the obligations of the employer necessary to resolve other employee matters connected with this redundancy. As a matter of principle, the agreement is entered into between the employer and trade union organizations, however, if it is not possible, the principles of action in matters concerning employees covered by the proposed collective redundancy will be set out by the employer in regulations. These principles are also set out in the regulations issued by the employer if no trade unions operate at the employer, after consultation with the employee representatives.
The agreement will be concluded or regulations be adopted within a time period no longer than 20 days from the date of submitting the written notification to trade unions as part of consultation process.
The employer, after concluding the agreement, will notify the relevant district labour office, in writing, about the adopted arrangements concerning the collective redundancy, including:
The employer will provide a copy of the notification referred to above to the trade union organizations or employee representatives. These bodies may present their opinion on the collective redundancy to the relevant district labour office. The notification is not required if an employer ceases to conduct activity as a result of a final and unappealable court decision.
An employee, with whom an employment relationship was terminated as part of a collective redundancy, will be entitled to a severance pay calculated by reference to a length of service at a given employer, namely:
In any case, the amount of the severance pay may not exceed the amount of 15 times the minimum remuneration for work. An employee who did not receive the severance pay is entitled to claim its payment in court. This claim does not exclude the right to claim a compensation for breach of regulations on termination of employment contract.
The severance pay is also due in an individual dismissal situation on the basis of the provisions of the Group Dismissals Act i.e. while meeting the conditions of collective redundancy, the employer terminates the employment with lower number of employees than required for a collective dismissal.
An employer which carried out collective redundancy has also a duty to re-employ an employee with whom it terminated the employment relationship as part of the collective redundancy, if:
An employer should re-employ the dismissed employee within 15 months from the date of terminating the employment relationship with him as part of the collective redundancy.
We offer support to companies facing the need to downsize their workforces in electing the optimal form of collective redundancy. We analyse individual situations to avoid the risk of potential disputes, prepare necessary documents, including termination of employment contracts, service contracts or management contracts.
Director of the Labour Law Department, Attorney-at-law
TGC Corporate Lawyers
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