Collective redundancies not for all

Despite the labour market and low unemployment, in 2020 collective redundancies will be made by such giants as Volkswagen, Tesco, Orange, T-Mobile and Bank Millennium. However, there is a group of employees who, despite the application of the procedure under the Act on special rules of dissolution of employment relationships with employees for reasons not related to the employees, are protected by law.

When will the employer be obliged to apply the Act? The first condition is that the employer must employ at least 20 employees. This means that if the employer has fewer than 20 employees, the Act will not apply to it (in such a case, the dismissal of the employees will take place in accordance with the general principles set out in the Labour Code). Importantly, the limit of 20 employees refers to persons employed on the basis of an employment contract – for a trial period, for a fixed or indefinite period of time to perform a specific job. Persons employed under civil law contracts are not taken into account. The employer is not obliged to express the number of employees as full-time equivalents employees. This means that everyone employed regardless of the working time is counted as an employee. When determining the number of employees, account is also taken of employees who are not currently working, e.g. who are on sick leave, unpaid leave, maternity leave, parental leave or child care leave. It is also worth noting that the act, when setting the limit of 20 employees, refers to people. Thus, an employee with two jobs at the employer will be counted as one person.

The Act regulates the cases when the employment contract is terminated for reasons that do not concern employees in the framework of collective or individual redundancies.

Collective redundancies happen when the employer terminates the employment contract with a certain number of employees within 30 days. The number of employees depends in turn on the size of the employer (10 employees if it has less than 100 employees, 10% of employees if it has 100 or more, but less than 300 employees or 30 employees if it has 300 or more employees). Importantly, the employment contract may be terminated by notice of termination by the employer as well as by mutual agreement between the parties.

In addition to collective redundancies, the Act also regulates individual redundancy procedures. In this case, the reason indicated by the employer should be the sole reason justifying the termination of the employment relationship or its termination by mutual agreement of the parties. The individual redundancy procedure does not require the employer to terminate the employment contract with a certain number of employees. This means that the employer will be obliged to comply with the obligations indicated in the Act even if it terminates the contract with only one employee.

However, there is a group of employees who are protected by law and who cannot be affected by the consequences of a collective redundancy procedure. This group includes, among others, employees who do not have more than 4 years to reach retirement age, pregnant employees, employees during maternity, parental or paternity leave or employees who are members of the management board of a company trade union organisation (the full list is stated in Article 5 section 5 of the Act).

In the case of these employees, the employer may only terminate their existing working and pay conditions. However, if such termination would result in a reduction in their remuneration, they are entitled to a compensatory allowance until the end of the period during which they remain under special protection.

Of course, the above regulations will not apply in case of bankruptcy or liquidation of the employer. In such a situation, employees previously protected lose their status and the employer may terminate their employment contracts with them within the framework of collective redundancies.

Attorney-at-law Marta Strzecha-Bociąga