In recent years, it has been assumed that collective redundancies are the domain of financial institutions, particularly banks, which rely on remote customer services. However, the COVID-19 pandemic reality seems to have shifted the emphasis. The statistics on the number of redundancies reported in the media indicate that the number of people made redundant in 2020 is twice as high as those made redundant in 2019. The reason for this was the COVID-19 pandemic. This trend is expected to continue in 2021 as well. This applies in particular to the industries most affected by the restrictions, such as tourism, but also to retail due to the returning restrictions on the operation of shopping malls.
What one should know about the legal and practical environment in Poland with respect to redundancies?
Legal framework
Poland has adopted the Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies in the Act of 13 March 2003 on special rules on termination of employment relations with employees for reasons not attributable to them (the "Act on Collective Dismissals" or the “Act”). However, only companies employing at least 20 employees are required to observe it. It does not apply to companies with smaller headcount. Contractors or temporary workers are not included in this threshold.
Collective redundancies occur when, within a period of max. 30 days, the employer terminates the employment relationships for reasons not related to the employees with at least:
(i) 10 employees in companies hiring 20-99 employees,
(ii) 10% of workforce in companies with 100-299 employees or
(iii) 30 employees in larger companies
- by way of giving a termination notice or by mutual agreement of the parties (as far as agreements are concerned, the conclusion of at least five triggers the aforementioned thresholds).
Reasons not related to the employees underlying the dismissals are understood as all valid circumstances not attributable to the person subject to the dismissal of, e.g., economic, technological or organizational nature.
If the above-mentioned headcount thresholds are met, the company should follow a specific collective redundancies procedure (described below) and pay severance payments. One must remember that failure to follow the redundancy procedure leads to the individual redundancies being recognised as unlawful. As a result, the employer may be obliged, at least, to pay compensation to individual employees.
If the redundancies do not reach the above threshold, they are considered individual ones. This means the company is still obliged to pay the employee a severance pay but is not required to observe the consultation procedure provided for in case of collective redundancies.
Procedure
Where the group lay-offs are to take place, the employer should carry out the mandatory consultancy procedure with the company trade union organizations (if in place) or other employee representatives. The consultation should focus on the possibility of avoiding the collective redundancies or reducing their scale and on support measures for the employees subject to the redundancy, including in particular the possibility of professional retraining or obtaining alternative employment.
The consultation procedure is initiated by a written notification from the employer to the trade unions (employee representatives) and a respective labour authority of the intended redundancies. The company should negotiate with the trade unions (employee representatives) the terms and conditions of the redundancies. However, if no consensus has been worked out (or if negotiations are conducted with employee representatives other than trade unions) – the employer adopts dismissal by-laws. Otherwise, an agreement should be executed by the company and the trade unions in this respect. Having determined the rules concerning collective redundancies, the employer notifies on them the respective labour authority. The effective termination of the employment within the collective redundancy procedure cannot take place earlier than after 30 days from the date of this notification.
Redeployment offers prior to conducting redundancies are not mandatory. However, employees made redundant in a collective redundancies procedure have the right to be re-employed, in case the company commences recruiting staff in the same occupational group. This entitlement expires after 15 months from the termination date. Reemployment does not guarantee the employee the same type of contract, position, working and pay conditions as he/she had before. However, violation of the obligation of reemployment results in the possibility of claiming compensation from the employer on the basis general rules.
In case an employer intends to make at least 50 employees redundant within a period of three months, an outplacement procedure (so-called monitored redundancies) should be observed. The employer is then obliged to arrange with the respective labour authority for the scope and forms of assistance for employees made redundant, concerning in particular: job placement, vocational counselling or trainings. Moreover, in the case of monitored redundancies, the employer is obliged to take measures aimed at providing the dismissed employees with labour market services in a form of a structured programme and may fund a training allowance at the request of the employee.
Protection against redundancies
In Poland, labour law regulations place particular emphasis on the protection of certain groups of employees against termination. The beneficiaries of this protection are, for example, employees at pre-retirement age, pregnant ones or the ones on parental leaves. This protection is also applicable to some extent in the case of collective redundancies. Certain groups of employees cannot have their employment contract definitively terminated straight away. Firstly, the so-called termination of pay and working conditions must be made with respect to them. If such employees refuse to accept the new conditions, they can be dismissed within the framework of the collective redundancies. However, if they agree to the amending notice, they will simply not be covered by this procedure. Where protected employees are subject to a reduction in their remuneration as a result of the termination of pay and working conditions, they are entitled to a special compensatory allowance.
Severance pay
The statutory severance pay provided for by Polish labour law are rather low comparing to other EU states. Their amount varies depending on the given employee's length of service with the given company, and amounts to:
(i) the employee's one average monthly remuneration, if he/she has been employed for less than two years;
(ii) two average salaries, if he/she has been employed for 2 to 8 years; and
(iii) three average salaries, if the length of service exceeded 8 years.
The amount of the severance pay is additionally capped at the level of 15 times the statutory minimum pay – in 2021 it is PLN 42,000 (approx. EUR 9,300). COVID-19 anti-crisis temporary legislation reduces this limit under certain circumstances to 10 times the statutory minimum. Extra voluntary payments are of course permissible.
Communication of the redundancies
Irrespective of the need to carry out redundancies in accordance with the law, the success of the entire project may be determined by how it is communicated to employees. For many of the employees, especially those who have been with the company for many years, having to look for a new job will be a stressful experience. Therefore, the company's future image as an employer and its attractiveness on the labour market when the economy turns around may depend on how it addresses these doubts and emotions.
In practice, collective redundancies are a difficult process not only for the employees, but also for the employer, who has to carry out the redundancy and communicate it to the employees. This is why it is so important for company representatives to be well prepared for meetings with employees or their representatives. The manner and form of communication should be adapted to the recipients of the message. Communicators should also be prepared to answer difficult questions asked by employees. If such answers are not available, it is sometimes better to delay the meeting than to give them the feeling that it has not provided them with answers to their most pressing questions about their future.
On the other hand, prolonging uncertainty is not recommended either. Usually, rumours of possible collective redundancies spread through the workplace fast and it happens earlier than the employer's management would expect. This, of course, has a negative impact on work performance and team commitment.
Importantly, due to the low level of unionisation in Poland, communication with individual employees must be taken into account. This may also place an additional burden on the HR department. It is there that most questions concerning the dismissal will be asked. On the other hand, companies with trade unions must take into account the fact that in Poland trade unions usually stand in opposition to employers. Therefore, they will not always act as an intermediary between the company and the employees in terms of communication about redundancies.
When preparing to communicate with employees, one must remember to first explain the reasons why the company has decided to take such measures (drastic from the perspective of individual employees). It is also worth having a detailed answer prepared about the actions taken by the company to prevent redundancies. Employees may have a negative perception of a situation in which the employer shifts the consequences of a negative economic situation onto the employees in order to preserve the company's results.
Communication should also address the key by which employees will be selected for redundancy. Clear criteria in this respect can help to manage employees' expectations about their future in the future.
A necessary element of communication is also a description of the entire redundancy process, in particular the timeframe, so that employees can prepare themselves and look for new employment. One must also remember also to outline the terms of the financial package offered to redundant workers. Anything on top of the statutory benefits will probably be welcomed.
It should also be taken into account that during the first communication meeting, employees may be surprised by the news of the redundancies. As a result, they may not ask all the questions they have about the process. Employer representatives should be available to answer them. This can help manage the emotions of the employees.
The next step will be meetings with individual employees. It is worth remembering that in Poland a trade union representatives or other employee representatives does not have to attend these meetings.
Finally, it is also important to remember to manage the emotions of employees who remain with the company after the redundancies have ended. For these people, redundancies can also be a difficult experience and the future of the company will depend on their work and commitment.
Voluntary redundancy programmes
Voluntary redundancy programmes may be an alternative to collective lay-offs. Such programmes are gaining popularity in Poland. They usually precede the process of group lay-offs or are intended as long-term programmes (covering several years) aimed at reducing employment in cases where urgent employment restructuring is not necessary.
The advantage of such a programme is that it can be addressed to employees who are protected against involuntary termination. The psychological aspect cannot be overlooked either. It is easier to part with an employee who wants to leave voluntarily than to communicate to him/her that he/she is being dismissed.
On the other hand, voluntary redundancy programmes are usually more costly for the employer than regular collective redundancies. Persuading employees to take the decision to leave requires offering them an appropriate incentive. In practice, companies wishing to persuade employees to voluntarily leave usually offer employees higher severance pay. Often, the offer also includes support for the departing employee in finding a new job or setting up own business.
The disadvantage of such programmes is the limited influence of the employer on the number of employees made redundant (the company cannot control how many employees decide to participate in the programme).
The company also has limited measures to select employees for voluntary redundancy. Usually, the most willing to take advantage of the programme are employees with the best qualifications who can easily find new opportunities on the labour market. These are the ones the company usually wants to keep. When preparing for the introduction of a voluntary departure programme, one should remember to address such cases - e.g. provide for a precise definition of the programme's addressees or a consent of the employee's line manager.
Due to the above disadvantages, voluntary redundancy programmes will not always be an adequate solution. This applies in particular to cases where the employer, for example due to a change in the company profile or to the production process, is forced to liquidate an entire department.
When constructing a voluntary redundancy programme, one must remember that there are no statutory regulations in this respect in Poland. On the one hand, this gives employers more freedom in constructing them. On the other hand, however, the programme by-laws must comprehensively regulate the whole matter.
However, freedom in structuring the programme is not synonymous with the absence of any restrictions. The general legal framework, in particular labour law, will also apply. For example, the selection of addressees of a programme cannot be based on discriminatory criteria, such as, in particular, religion, belief, race or sexual orientation. One must remember, however, that the catalogue of grounds for discrimination is open in Poland, so any differentiating premise which does not have an objective justification may turn out to be discriminatory.
In addition, the structure of the programme may affect the employer's autonomy in the implementation of the programme. If the voluntary redundancy programme meets the prerequisites for the application of the procedure of collective redundancies, for its implementation it may be necessary to cooperate with the employee representative bodies (trade unions or elected employee representatives). Regardless of the fact that the termination of the employment contract as part a voluntary redundancy programme takes place at the request of the employee, the employer remains the initiator of the whole process (the employee would not decide to leave if it were not for the introduction of the programme). In this case, the headcount thresholds and the duration of the programme will determine the need to involve the employee side.
Compared to other European Union countries, collective redundancies are not particularly costly in Poland, which gives room for offering above-standard benefits. However, it is important to follow the legal procedure and observe employee protection, as the legality of the whole process may be called into question.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
