The Act on Collective Redundancies – what does it look like in practice?
In a crisis situation caused, among others, by changes in the market, competition, economic crisis or fortuitous events, an entrepreneur wishing to save the company may use one of the methods of cost reduction, i.e. group redundancy. During a crisis occurring in a company, an entrepreneur faces very difficult decisions. The group redundancy procedure involves many regulations and formalities to take care of. Details concerning them are specified in the Act on Collective Redundancies.
What are collective redundancies?
The Act on collective redundancies applies when the employer employs at least 20 people and when the company terminates the employment relationship for reasons not attributable to the employees.
Collective redundancies can only be considered if the entrepreneur meets the above conditions by laying off the following within 30 days:
- 10 employees if it employs fewer than 100
- 10% of employees if it employs between 100 and 300 people
- 30 employees if it employs more than 300 people
Whether the Act on collective redundancies can be applied in a given case is determined by the number of employees in force at the time of termination of the employment contract. It is worth remembering that the number of employees does not take into account temporary workers, as well as other persons providing services to the employer on terms other than an employment relationship, including civil law contracts.
Act on collective redundancies – criteria for selecting dismissed employees
In the light of the law, when collective redundancies occur for reasons not attributable to employees, the employer does not have full discretion in selecting employees with whom the employment relationship will be terminated. The guiding principle applied in this case is the principle of non-discrimination of employees.
When selecting employees for dismissal, the employer is obliged to take into account all employees affected by the situation, and then to be guided only by objective premises when making decisions.
At the same time, the employer may be guided by its own interest and needs when making a decision to select specific employees for group redundancy. In this way, the employer takes into account criteria such as:
- the length of service of a given employee in the company,
- education and professional qualifications of the employee in a specific position,
- the course of previous employment in the company and the qualifications acquired during it.
Act on collective redundancies – employees under increased protection
An employer planning group redundancies does not have full freedom in the selection of employees who will be covered by the group redundancy. There are groups of employees who, for various reasons, are under increased protection, and the employer only has the right to terminate the current working conditions and pay of these employees.
Here are examples of employees with enhanced protection who cannot be covered by collective redundancies:
- members of the company’s trade union organization who are authorized by the organization to represent it before the employer;
- members of the management board of the trade union organization operating in the plant;
- members of special negotiating teams;
- members of the European Works Council;
- employees called up for active military service,
- compulsory military service or military training;
- social labour inspectors.
The only exception to this rule, allowing the termination of employment with an employee subject to enhanced protection, is the liquidation of the company or declaring it bankrupt.
If the employer decides to terminate the terms and conditions of work and pay for these groups of employees, and this results in a reduction in their remuneration, employees are entitled to a compensatory allowance. It is exactly the difference between the remuneration arising from the changes and the previous remuneration. Employees subject to enhanced protection benefit from the compensatory allowance until the end of the period during which they would benefit from special protection.
Additional obligations of the employer
Group redundancies also oblige the employer to complete the formalities specified in the law. An employer intending to carry out group redundancies must consult the trade unions and notify the relevant district labour office and inform them of the arrangements made through negotiations with the trade unions.
Consultation of collective redundancies with trade unions
When planning group redundancies, the employer is obliged to consult this decision with the company’s trade unions operating in the company. If there are no trade unions in the company, such an obligation exists for employee representatives. Trade unions or employee representatives must receive a letter from the employer containing key information about the planned redundancies.
The document should include the reasons for the planned group redundancy. The letter must also include the number of employees employed along with the occupational groups to which they belong. Among them, the employer indicates the groups that will be covered by the redundancies according to the plan. The document must also include information about the order in which the redundancies are made, the period in which the redundancies will take place and the aforementioned criteria for selecting employees, on the basis of which the dismissed employees will be selected.
Then, the employer and trade union representatives prepare an agreement on group redundancies. The document should be created after a maximum of 20 days from the moment when the employer informed the trade union organizations or employee representatives in writing about the planned redundancies.
It happens that the employer and representatives of trade unions cannot reach an agreement and work out such a document. In such a case, the employer prepares the regulations on collective redundancies on its own, but it is the employer’s obligation to take into account, as far as possible, the proposals presented by trade union organizations or employee representatives as part of prior consultations. The prepared agreement or regulations specify how many employees will be affected by the redundancies, what the criteria for selecting employees will be, as well as the order of dismissals and the deadlines for termination.
Group redundancies – notification of the labour office
This is not the end of the employer’s obligations regarding collective redundancy. After working out an agreement with the trade unions or preparing regulations regarding redundancies, the employer notifies the relevant district labour office of the arrangements in writing. A copy of the document is sent to the company’s trade union organizations or employee representatives. They have the right to give the authority their opinion on the exemption.
What should be included in the letter notifying the office about the conditions of the collective redundancy?
- The period during which the collective redundancy of employees will be made.
- Information on consultations on collective redundancies with trade unions or employee representatives.
- The number of employees in the company, as well as the number of dismissed employees along with the reasons for their dismissal.
An employer carrying out a collective redundancy may terminate the employment relationship with employees only after 30 days from the submission of a written notification to the labour office.
REMARK! In the case of a collective redundancy, the termination of the contract with the employee may take place no earlier than 30 days from the date of notification of the agreement concluded with the trade unions to the labour office.
Severance pay
Employees dismissed as part of group redundancies receive a benefit in the amount depending on the period of employment with a given company. The severance pay is as follows:
- the equivalent of 1 month’s salary if the employee has been employed by the employer for less than 2 years;
- the equivalent of 2 months’ salary, if the employee has been employed by a given employer for a period of 2-8 years;
- the equivalent of 3 months’ salary if the employee has been employed by the employer for more than 8 years.
The severance pay may not be higher than the value of 15 times the minimum wage in force on the date of termination of the employment relationship.
>> The most important information about employee severance pay after dismissal
Rehiring an employee after a collective redundancy
Employees who have been laid off under collective notice have priority to return to the company. However, there is no guarantee that you will receive the same position, salary or working conditions if:
- the employer re-employs employees in the same occupational group;
- the registered employee reported within one year of dismissal the intention to take up employment with this employer;
- Less than 15 months have passed since the termination of the employment relationship with the employee as part of a collective redundancy.
The employer is obliged to hire a previously dismissed person. Otherwise, the employee may demand employment and compensation.
Where there are fewer jobs than previously made redundant workers, criteria should be created based on the principles of equal treatment to choose who will be re-recruited.
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