Collective redundancies

Collective redundancies

Undertaking any kind of activity involves taking risks and operating a business is no exception. A company may generate growing revenue for some time, expanding its activities and engaging new staff. However, in the wake of an economic slowdown, it may be forced to reduce the scale of its operations and the number of its employees. A difficult economic situation of an enterprise often results in its decision to resort to collective redundancies, also referred to as group layoffs. Presented below are the conditions under which collective redundancies may be carried out in Poland.

Corporate restructuring and collective redundancies

The Act of 13 March 2003 on special rules applicable to employment termination for reasons not attributable to employees (referred to as the Collective Redundancies Act) applies to employers with at least 20 members of staff on the payroll. Although the relevant provisions fail to specify the exact day on which the number of employees should be calculated (and there are conflicting views among legal scholars regarding this issue), we believe it to be the date on which the collective redundancy decision is being taken. 

When determining the level of employment with a given employer, workers ‘usually’ employed by the company, including those under fixed-term contracts, are included in the count. Others, however, such as temporary workers or persons performing work under civil law contracts, are excluded.

What may be the grounds for collective redundancies?

Collective redundancies may be carried out for reasons not attributable to employees, i.e. not related to their psychophysical characteristics or performance. However, it is irrelevant whether such reasons are attributed to the employer itself or the circumstances beyond the employer’s control.

In what form are collective redundancies carried out?

Collective redundancies can be effected either by termination notices given by the employer, or pursuant to an understanding between the employer and the employees, provided that at least five employees are covered by its scope.

It follows from the past rulings of the Court of Justice of the European Union that the total number of redundancies at a given employer should also include the cases of termination resulting from employees not accepting the proposed changes to their employment contracts (notice of change of employment conditions).

What is the minimum number of employees subject to collective redundancies?

For the collective redundancy procedure to be applicable, the redundancies must take place over a period of 30 days and affect at least:

  1. 10 persons – if the number of employed staff is under 100;
  2. 10 % of the staff – if the number of employed staff is between 100 and 300;
  3. 30 persons – if the number of employed staff exceeds 300.

Corporate restructuring – collective redundancies procedure

Prior to carrying out collective redundancies, the employer should undertake the following:

  1. conduct consultations on its intention to carry out collective redundancies with the enterprise trade union organisation or – in the absence of one – with employees’ representatives;
  2. notify the District Employment Office (Powiatowy Urząd Pracy) in writing of its intention to carry out collective redundancies;
  3. within 20 days from the notification referred above, enter into an understanding with the enterprise trade union organisations; if no such organisation operates at the enterprise, the employer, following the consultations with employees’ representatives, determines the rules of conduct with regard to the employees affected by the layoffs;
  4. notify the District Employment Office in writing of the above arrangements and provide a copy of such notification to the enterprise trade union organisations (or employees’ representatives);
  5. hand in termination notices to employees.

The termination of the employment relationship may not take effect sooner than 30 days following the notification of the District Employment Office of the employer’s intention to carry out group layoffs.

What severance pay are employees eligible to in case of collective redundancies?

Employees who lose their jobs as a result of group layoffs are eligible to severance pay the amount of which depends on the length of their service with the employer and may be equivalent to:

  1. one month’s salary – if the length of service is less than 2 years; 
  2. two months’ salary – if the length of service is between 2 and 8 years;
  3. three months’ salary – if the length of service with the employer exceeds 8 years.

The remuneration is calculated according to the same rules as those applicable to the calculation of payment in lieu of leave not taken. However, the amount of the severance pay may not exceed 15 times the minimum wage. 

Summary

When embarking on a collective redundancy procedure, which is very formalised and complex, it is worth resorting to professional assistance. Radkiewicz Lawyers Poland, whose practice areas include corporate restructuring, will provide you with professional support and guidance throughout the workforce reduction process.

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