Katarzyna Zwierz-Wilkocka
Attorney at law

Due to potentially unfavorable economic conditions, a number of Polish companies may in the future be forced to adjust and reduce their business operations and conduct restructuring processes. In practice, a restructuring most often means a reduction in employment, which usually assumes the form of a collective redundancy.

A collective redundancy takes place when an employer who employs 20 or more persons dismisses a specific number of employees within a period of 30 days. This number varies depending on the total number of workers employed at a particular organization (in either the public or private sector) and amounts to respectively: (i) 10 employees if the employer employs fewer than 100 persons; (ii) 10 percent of employees if the employer employs from 100 to 299, or (iii) 30 employees if the employer employs at least 300.

Furthermore, a collective redundancy should be carried out for reasons that are not related to employees per se, such as liquidation of a workplace, reorganization, technological changes, a bad financial situation, or liquidation or bankruptcy of the employer. In the above-mentioned circumstances, the Redundancy Act of March 2003, which outlines the collective redundancy procedure, shall apply.

Redundancy Act

In case the employer employs fewer than 20 persons or when the number of employees who are to be made redundant is lower than the number stipulated in the Redundancy Act, only provisions of the Labor Code shall apply. Thus, the employer is not obliged to conduct a collective redundancy procedure. Moreover, the employer is not obliged to pay employees a redundancy allowance if they are dismissed outside of the collective redundancy procedure.

The stages of the collective redundancy are, in chronological order:

1. Negotiations or consultation by the employer with trade unions or – if there are no trade unions at a given employer – employees’ representatives, in order to agree on the conditions of collective redundancy and the rules which govern it. At this stage the employer is obliged to notify in writing trade unions or employees’ representatives about the reasons for redundancy and other information required by the Redundancy Act.
2. Notifying the relevant district labor office about the planned collective redundancy and providing it with the relevant information specified in the Redundancy Act.
3. Concluding with trade unions an arrangement that governs the terms and conditions of the redundancy, or the drawing up by the employer of its own rules to govern the redundancy.
4. Providing the relevant labor office with a second notification detailing the scale of the collective redundancies and the nature of the arrangements that have been made following consultations with trade unions or employee representatives.
5. Dismissing individual employees affected by the collective redundancy by giving them written notices or executing agreements of termination of employment. Notice of employment termination may be given and employment may – at the earliest – end 30 days after the day the labor office has been given the second notice (stage 4 above).

In general, dismissals under the collective redundancy procedure follow the rules applicable to standard dismissals. Thus, the same notice periods apply, the notice should meet specific legal requirements and the employer should issue an employment certificate to the dismissed employee. The notice period may be unilaterally shortened by the employer to one month only if the reason for the redundancy is the liquidation or bankruptcy of the employer.

Apart from the collective redundancy procedure, the Redundancy Act provides for some additional obligations, such as: payment of a dismissal allowance, obligations concerning the re-employment of employees who have been made redundant and prohibition of dismissal of certain groups of employees.

In order to execute the collective redundancy procedure swiftly and within the law, employers should pay special attention to legally mandated deadlines, the correct use of documents, the grounds under which they can legitimately make employees redundant and the criteria they select as reasons for dismissing employees. These criteria should be objective so that the employer does not violate laws prohibiting discrimination in employment.

The most important issues that relate to collective redundancy are the timing and execution of arrangements with trade unions, or determination of the collective redundancy rules with employees’ representatives. If the employer reaches this stage of the collective redundancy procedure smoothly, the procedure may be shortened and the redundancies themselves may take place earlier.