Effectively managing collective redundancies

20 May 2024 | Knowledge, News, The Right Focus

The labour market is seeing an increased number of collective redundancies. There are various reasons for restructuring, among them the long-term effects of inflation, a significant increase in the minimum salary which translates into higher employment costs and the optimisation of internal processes due to technological progress. We check what rules govern collective redundancies and what obligations must be fulfilled in order to carry them out effectively.

Employment restructuring

Collective redundancies are a formalised procedure, which is regulated by the Act on special rules for the termination of employment with employees for reasons not attributable to employees of 13 March 2003, involving the termination of employment with larger groups of employees over a relatively short period of time.

In accordance with the Act, a collective redundancy is a dismissal that, within a period not exceeding 30 days, covers at least:

  • 10 employees where the employer employs fewer than 100 employees
  • 10% of employees where the employer employs between at least 100 but less than 300 employees
  • 30 employees where the employer employs at least 300 or more employees

The termination of employment takes place on the employer’s initiative only for reasons attributable to the employer, e.g. due to the elimination of positions or overall downsizing.

Who may be covered by collective redundancies

Only employees, i.e. persons employed under an employment relationship, are covered by collective redundancies. As such, this type of restructuring will not cover persons employed under a contract for a specific task or a contract for services.

In addition, the Act applies only to employers with at least 20 employees. Therefore, if an employer with fewer than 20 employees wishes to make a large number of those employees redundant, it will not be required to apply the provisions that strictly define the procedure for collective redundancies and the rights of the redundant employees.

Employer obligations

Collective redundancies are formalised processes which require the employer to:

  • Notify the trade unions or – where there are no trade unions – employee representatives of, among other things, the reasons for the redundancies and the proposed manner of carrying them out
  • Notify the district labour office of the reasons for the collective redundancies
  • Consult with the company trade unions (or employee representatives) about the intention of collective redundancies and the procedure for their implementation
  • Conclude an agreement with the trade unions or, in the absence of a consensus on its content or the absence of trade unions, lay down in regulations the procedure to be followed with respect to the affected employees
  • Notify the district labour office of the agreement or regulations specifying the manner of conducting collective redundancies
  • Give notices of termination or agreements on the termination of employment contracts and pay severance

Severance pay

Employees affected by collective redundancies are entitled to statutory severance payments, the amount of which depends on the period of employment with the employer and amounts to:

– One month’s salary if an employee has been employed with the employer for less than 2 years, or

– Two months’ salary if an employee has been employed with the employer for 2 to 8 years, or

– Three months’ salary if the employee has been employed with the employer for more than 8 years

Although the amount of severance pay depends on the individual salary of a given employee (as set out in the employment contract), it is limited and its maximum amount cannot exceed the amount of 15 times the minimum salary applicable on the date of termination of employment.

The employer should also remember that the amount of the severance pay is calculated according to rules analogous to those for calculating the payment in lieu of annual leave.

Collective redundancies and special protection against termination or dismissal

In some cases collective redundancies result in the overriding of an employee’s special protection against dismissal. Thus, as part of collective redundancies, the employer may terminate the employment contract of:

  • Employees on leave (e.g. annual leave) of at least three months’ duration, and
  • Employees absent from work for other justified reasons (e.g. during sick leave), if the period entitling the employer to terminate the employment contract without notice has already expired

However, as part of a collective redundancy, an employer may not terminate the contract of employees who:

  • Are not more than 4 years from retirement age
  • Are pregnant or on maternity leave
  • Have applied for maternity, paternity or parental leave, leave on terms of maternity leave (or part thereof), or carers’ leave, from the date of application and until the date of termination of such leave
  • Who are members of the management board of a company trade union organisation

In relation to these employees, the employer may only apply notices of modification of terms and conditions of work and/or pay.

Hiring new employees to fill the positions of employees dismissed in the context of collective redundancies

Sometimes, during or after a redundancy process, an employer needs to increase the number of its workforce again, e.g. as a result of increased customer orders. The question then arises as to whether it can recruit new employees to replace the redundant employees so as to ensure that the orders placed are serviced.

In practice, this is possible. The Act states that if there is a need to re-employ employees in the occupational group affected by the collective redundancies, the employer should first employ those employees with whom it terminated employment contracts as part of the collective redundancies, provided that the employee declares their intention to take up employment with that employer within one year from the date of termination.

A common mistake made by employers who find themselves in this situation is to use the services of an employment agency or temporary work agency and employ temporary workers.

It should be borne in mind that during the last 3 months preceding the expected date of commencement of work, the temporary worker must not have performed the same type of work that was provided by the employee dismissed as part of a collective redundancy.

Violation of this prohibition is punishable by a fine of between PLN 1,000 and PLN 30,000.

Any questions? Contact us

Angelika Stańko

Latest Knowledge

Whistleblower bill back in the Sejm

On 23 May, the Sejm (the lower house of the Polish Parliament) passed a bill on the protection of whistleblowers. We summarise what has changed from the previous versions, what needs special attention and what amendments the Senate has made.

Belka tax cut and what this means for companies

The Minister of Finance has announced a plan to reduce the Belka tax, to come into effect on 1 January 2025. And although he has said that the groundwork is already being laid, he has not yet revealed all the details of the proposed changes.

Liability of management board members

The liability of management board members is a complex and multifaceted issue. It is therefore worth taking a closer look at these issues, especially in light of recent developments.

SME Fund – Tomasz Szambelan accredited IP Scan provider

Tomasz Szambelan has been included in the list of accredited IP Scan providers maintained by the Polish Patent Office. The IP Scan service is part of the grant scheme for the filing of trade marks, designs and inventions from the European SME Fund.

New rules for setting fines for businesses by the President of UOKiK

At the beginning of April 2024, the President of the Office of Competition and Consumer Protection (UOKiK) published new clarifications on the determination of the amount of fines in cases related to the conclusion of agreements restrictive of competition and the abuse of dominant position.

Contact us:

Angelika Stańko

Angelika Stańko

Attorney-at-law / Senior Associate / Labour Law

+48 22 326 3400

a.stanko@kochanski.pl

Anna Gwiazda

Anna Gwiazda

Attorney at Law, Partner, Head of Labor Law Practice

+48 660 765 903

a.gwiazda@kochanski.pl