Individual dismissal under the Act on collective redundancies.
Contrary to the common name of the Act on Group Redundancies, the solutions contained therein may also apply in the case of termination of employment with even one employee. The application of this Act means, on the one hand, a reduction in employee protection and, on the other hand, additional financial and procedural obligations for the employer. What should be kept in mind when deciding to terminate employment with an employee in circumstances beyond their control?
Application of the Act to individual cases
Individual redundancies within the meaning of the Act on Group Redundancies can be considered when an employer employing at least 20 people dismisses employees in numbers below the statutory threshold for group redundancies applicable to that employer, i.e. below:
- 10 employees, if they employ between 20 and 100 employees,
- 10% of employees, if they employ between 100 and 1,300 employees; or
- 30 employees, if they employ more than 300 employees
counted in a 30-day reference period, provided that the dismissal is for reasons not related to those persons. However, as in the case of collective redundancies, individual dismissal includes both termination of the contract and separation by mutual agreement, concluded on the employer's initiative.
In order to consider the applicability of the Collective Redundancies Act in individual cases, the separation from the employee must be for reasons beyond their control. As in the case of collective redundancies, the reasons for the separation may generally be the liquidation of the position or a smaller-scale reduction in employment. These actions directly translate into the decision to dismiss a specific employee. Reorganisation processes carried out in the company, dictated, for example, by the employer's poor financial situation or the outsourcing of certain functions outside the company, will only constitute the business ‘background’ for personnel decisions. Indicating these processes as the reason for termination may therefore prove insufficient if it does not provide clear and specific information to the employee about the circumstances behind their dismissal.
The next step should be to verify whether the separation from the employee is solely for reasons that cannot be attributed to the employee. If so, the separation is an individual dismissal and the Act on Group Redundancies will apply. Individual dismissals for reasons not related to the employees will not be considered if the liquidation of the position is only one of the reasons for the termination and, in addition, the employer makes allegations against the employee, e.g. related to the manner in which he/she performs his/her duties.
In this case, however, the reason for terminating the employment contract must be distinguished from the criteria for selecting the employee for dismissal. This is because when an employer reduces the number of positions, the selection of employees for dismissal should be based on objective criteria and on a comparison of the situations of employees within the same employee group (persons performing similar work or holding the same positions). An employee's productivity and efficiency, length of service, professional qualifications, commitment or availability may constitute criteria for selection for dismissal.
Doubts as to the application of individual dismissals for reasons not related to employees arise when the employment relationship is terminated on the basis of a notice of amendment. This is because an employee's refusal to accept the newly proposed terms of employment may be classified as a contributing factor to the termination of the employment contract. In such situations, the context of the situation and the nature of the proposals made by the employer are decisive. Following the Supreme Court, it can be pointed out that the termination of employment as a result of a notice of change in pay conditions, which would lead to a radical reduction in the employee's remuneration without any change in requirements, may be considered to have been made solely for reasons relating to the employer and justify a claim for severance pay.
Employer's obligations
The fundamental difference between collective and individual dismissal is that in the latter case there is no obligation to follow a specific information and consultation procedure. Individual dismissal is subject to the same requirements in this respect as termination of employment for any other reason. It may therefore be necessary to consult with the trade union representing the employee's interests. However, these consultations will be individual, not collective.
Employees who are dismissed by the employer under individual dismissal procedures, like employees who are dismissed collectively, are entitled to severance pay. The statutory amount of severance pay is the same as in the case of collective redundancies, i.e. it is equivalent to (i) one month's salary for employees employed for less than 2 years; (ii) two months' remuneration for employees employed for between 2 and 8 years, or (iii) three months' remuneration for employees working for more than 8 years. The same limits apply to this amount as in the case of collective redundancies. Thus, in principle, the amount of severance pay should not exceed 15 times the minimum salary, and in the case of individual redundancies carried out in entities affected by a decline in turnover or a significant increase in the payroll burden during a state of epidemic or a state of epidemic threat, the anti-crisis regulations related to COVID-19 10 times the statutory minimum wage. It is, of course, permissible to agree on a severance payment higher than the statutory limits. In this case, however, it will be subject to individual negotiations with the employee.
Modification of employment protection
As in the case of collective redundancies, the protection of the employment relationship of certain groups of employees under general provisions is also limited in the case of individual redundancies.
Firstly, an employer may terminate the terms and conditions of employment of employees whose employment relationship is subject to special protection if, for reasons not related to the employees, it is not possible to continue to employ them in their current positions (Article 5(5) of the Act on Collective Redundancies). This primarily concerns employees (i) of pre-retirement age, (ii) who are pregnant or on maternity leave; (iii) who are members of the management board of a trade union organisation. The employer must consult the trade union organisation representing the employee on the intention to terminate the employment relationship, in accordance with Article 38 of the Labour Code. If the termination of the terms and conditions of employment and remuneration of specially protected employees results in a reduction in their remuneration, they are entitled to a compensatory allowance for a period not exceeding 6 months. However, the right to a compensatory allowance is excluded in the case of employees protected due to justified absence from work (pursuant to Article 41 of the Labour Code).
Secondly, as part of individual redundancies, the employer may definitively terminate the employment relationship of employees who, in principle, are protected against termination of employment, but this protection is excluded in the case of collective redundancies. The definitive termination of an individual employment relationship in the case of these employees is conditional upon the trade union organisation at the workplace not raising any objections in this regard within 14 days of receiving notification from the employer of the planned dismissal. The above procedure for termination of employment will apply, inter alia, to (i) employees on parental leave, if it lasts longer than three months; (ii) young employees during the term of an employment contract for vocational training; (iii) employees engaged in combating infectious diseases; (iv) members of professional self-government bodies; or (v) members of trade union founding committees.
It should be noted that there is a group of employees who are completely excluded from the individual dismissal process. This applies to members of parliament, senators and councillors.
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Individual dismissals for reasons not related to employees, although less formalised than collective redundancies, often raise more interpretative doubts. It also happens that individual cases of parting with employees unjustifiably lull employers into a false sense of security, who fail to comply with the obligations provided for in the Act on Collective Redundancies. It is therefore advisable to prepare thoroughly for each planned redundancy, especially if the reason for it lies with the employer.