Collective redundancies. What are the employer’s obligations, and what should be provided to employees?

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Legal basis

Act of 13 March 2003 on particular principles of termination of employment relations with employees for reasons unrelated to employees (i.e. Journal of Laws of 2018, item 1969, as amended).

According to the regulations, group dismissals may only concern employees, i.e. persons employed under:

  • employment contract,
  • appointment,
  • election,
  • appointment or
  • cooperative employment contract.

Only employees are entitled to the special rights arising from such termination of employment relationships.

In the case of persons employed based on civil law contracts (e.g. contract of mandate, contract of specific work, contract for the provision of services), even if they were actually dismissed at the time when the employer was making collective redundancies, they are not subject to the conditions on collective redundancies. They are not entitled to special rights in this respect.

When can an employer make collective redundancies?

Under the current law, collective redundancies can only occur at a workplace with at least 20 employees.

However, an employer with fewer than 20 employees may dismiss many workers at the time – but that is not considered collective redundancy, and the affected employees are not entitled to any special rights.

Collective redundancy

We speak of a collective dismissal if, within a period not exceeding 30 days, the discharge involves at least:

  • 10 employees when the employer employs less than 100 employees,
  • 10% of employees when the employer hires at least 100 but less than 300 employees,
  • 30 employees when the employer has at least 300 or more employees.

The above figures relating to employees include employees with whom, within the framework of collective redundancy, employment relations are terminated on the employer’s initiative by agreement of the parties if at least 5 employees are affected.

The employment contract with an employee subject to collective redundancy may be terminated:

  • by notice given by the employer, and
  • by agreement of the parties.

Group dismissals for reasons not related to the employee

For a reduction of employment to be considered a collective redundancy, the reason for the layoff must be a cause unrelated to the employee.

These can be various reasons, e.g. reasons beyond the employer’s control (e.g. poor financial condition of the company, occurrence of natural or social events affecting the operation of the company negatively), as well as reasons on the employer’s side (e.g. change of activity profile, reorganisation, the decision to liquidate the company).

Collective redundancies and severance pay

An employee, in connection with the termination of an employment contract as part of a collective redundancy, is entitled to a severance payment in the amount of:

  • one month’s remuneration if the employee has been employed by the employer for less than 2 years;
  • two months’ remuneration if the employee has worked for the employer for 2 to 8 years;
  • three months’ salary if the employee has worked for the employer for over 8 years.

The severance pay shall be determined according to the rules for calculating the cash equivalent for annual leave.

The severance pay cannot exceed the amount of 15 times the minimum remuneration for work, established under separate regulations in force on the day of termination of the employment relationship.

Is severance pay due when a smaller number of employees are dismissed?

When reasons unrelated to the employees constitute the sole reason for dismissal, employees are also entitled to severance pay, even if too few employees are dismissed within 30 days to speak of collective redundancy. This only applies to dismissals made by an employer with at least 20 employees.

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