Collective redundancies constitute a specific procedure for terminating employment relationships, involving numerous obligations on the part of the employer as well as specific rights for employees. This procedure applies where the reasons for workforce reductions do not relate to employees personally, but instead arise from decisions or circumstances on the employer’s side.
When do collective redundancies apply?
Collective redundancies occur when an employer employs at least 20 employees and, within a period of 30 days, terminates employment relationships with a specified number of employees for reasons not attributable to them. The required threshold depends on the size of the workforce:
- 10 employees – where the employer employs fewer than 100 employees,
- 10% of the workforce – where the employer employs between 100 and 299 employees,
- 30 employees – where the employer employs at least 300 employees.
Collective redundancies include both terminations by notice and terminations by mutual agreement, provided that the workforce reduction is initiated by the employer.
Reasons not attributable to employees and the right to apply collective redundancy procedures
Collective redundancies concern situations where the reasons for terminating employment are independent of the employee. These most commonly include:
- a decrease in orders or demand,
- restructuring or reorganisation of business processes,
- liquidation of positions or closure of the workplace,
- changes in ownership structure or process automation.
This means that such decisions do not result from employee misconduct, errors or performance issues, but rather from genuine business and organisational needs of the employer.
Employer obligations in the collective redundancy procedure
An employer planning collective redundancies is required to comply with a number of procedural obligations, including:
- conducting consultations with trade unions or employee representatives,
- notifying the competent labour office of the intended redundancies,
- observing statutory rules governing the selection and order of dismissals.
These requirements are intended to ensure transparency and the protection of employee rights at every stage of the process.
Severance pay – employee entitlement
An employee whose employment is terminated as part of a collective redundancy may be entitled to severance pay. Under the applicable rules:
- the amount of severance pay depends on the employee’s length of service with the employer,
- the maximum severance pay may not exceed 15 times the statutory minimum wage applicable on the date of termination.
As a result, severance payments may reach significant amounts, particularly in the case of long-serving employees, which requires employers to plan workforce reductions carefully from both a legal and financial perspective.
Protection of selected categories of employees
Labour law provides additional protection for certain categories of employees. Individuals such as:
- employees enjoying special protection periods (e.g. during parental leave),
- employees of pre-retirement age,
- members of trade union governing bodies,
may be subject to special rules or restrictions in the context of collective redundancies.
Practical implications for employers and employees
Collective redundancies involve not only procedural obligations but also tangible financial and organisational consequences. Employers should plan such processes well in advance, ensuring:
- compliance with applicable legal requirements,
- proper consultations with employees and trade unions,
- accurate calculation of severance payments and clear communication of decisions.
For employees, awareness of their rights (including the amount and calculation of severance pay) is essential to assess whether the redundancy process has been conducted lawfully.
Summary
Collective redundancies require particular care both at the planning stage and throughout the implementation of the procedure. Properly conducted, they help minimise the risk of employment disputes and the employer’s financial liability.