In this part 4 of the FAQ, we will cover questions related to collective redundancies.
What is the legal framework for collective redundancies?
The Danish Act on Collective Redundancies (the "Act") is based on the EU Directive of 20 July 1998 relating to collective redundancies. The Act does not apply to an employer subject to a collective bargaining agreement stipulating obligations corresponding to the Act.
When do the rules on collective redundancies apply?
The Act applies if an employer within a continuous 30-day period contemplates dismissing:
- at least ten employees in companies employing 21 - 99 employees;
- at least ten per cent of the employees in companies employing 100 - 299 employees;
- at least 30 employees in companies employing 300 employees or more.
If the employer has several job sites, the job sites will be considered as one site provided the job sites are located in the same municipality. If the job sites are located in different municipalities, each site will be considered an independent site (and the above threshold numbers will apply separately for each of these sites).
Please note that stricter rules apply if the number of contemplated dismissals within a 30-day period reaches (or exceeds) 50% of the employees in companies employing at least 100 employees.
How is the number of employees calculated?
The number of employees is calculated as the average number of employees normally employed during the previous four quarters. If the employer is a newly incorporated company or if it has recently expanded significantly, the number of employees will be calculated on the basis of the quarters following the incorporation/expansion.
All employees are included in the calculation, including part-time employees and fixed-term employees.
By way of example, if an employer has had an average of 60 employees during the previous four quarters and it contemplates dismissing 15 employees within a 30-day period, this will be considered a collective redundancy triggering an obligation to comply with certain formal procedural rules that are described below.
How is the number of redundancies calculated?
When calculating the number of the employer's contemplated redundancies, all redundancies are included unless a dismissal is due to the circumstances of the employee.
Employments that otherwise terminate on the employer's initiative (e.g. by entering into severance agreements) are also included in the calculation of the number of redundancies provided that there are at least five "genuine" dismissals in the total number of redundancies.
Expiry of fixed-term employment is not considered a redundancy for the purposes of calculating the number of redundancies unless the employer terminates the employment prior to the date of expiry of the fixed-term employment.
What is the collective redundancy procedure?
If an employer contemplates dismissing a sufficient number of employees (see the thresholds above) in order for the Act to apply, the employer is obliged to:
- Negotiate with the employees;
- Inform the Regional Labour Market Council (in Danish "Det Regionale Arbejdsmarkedsråd");
- Observe a minimum notice period.
How are the negotiations with the employees conducted?
The employer must initiate negotiations with the employees or their representatives if representatives have been elected. The purpose of the negotiations is to try to avoid or limit the collective redundancies or to reduce the consequences, for instance by redeploying or retraining the employees.
The employer must conduct genuine negotiations with the employees (only informing the employees is not enough to meet the negotiation requirement of the Act). However, the employer is not required to let the negotiations influence the actual decision regarding the contemplated redundancies in any way. Thus, the employer is ultimately entitled to carry out the contemplated collective redundancies without the employees (or their representatives) giving their consent, and the employees do not have any right of veto in relation to the decision on redundancies.
The employer must give the employees or their representatives all relevant information relating to the contemplated redundancies and as a minimum the following information:
- the reason(s) for the contemplated redundancies;
- the number of employees (and the categories of employees) contemplated to be made redundant;
- the number and categories of employees normally employed by the employer;
- the period during which the contemplated redundancies are expected to take place;
- the criteria proposed to be used for the selection of the employees to be made redundant;
- entitlement to severance payment.
What is the procedure for informing the Regional Labour Market Council?
The employer is required to inform the Regional Labour Market Council of any contemplated collective redundancies. This information consists of three separate notifications.
The first notification is a copy of the information given to the employees or their representatives prior to the negotiations with the employees or their representatives. This copy must be sent to the Regional Labour Market Council at the same time as the employees are informed.
If the employer contemplates carrying through the redundancies after the negotiations with the employees or their representatives, the employer must inform the Regional Labour Market Council (the second notification). The second notification must include all information relevant to the contemplated redundancies including information about the negotiations and in particular the reasons for the redundancies, the number of employees normally employed by the employer and the period during which the redundancies are expected to take place. A copy of the second notification must be sent to the employees or their representatives.
The third notification must be given as soon as possible following the second notification and no later than ten days after the second notification. The third notification must include a list of the names of the employees to be made redundant. The employees made redundant must be informed individually of the redundancies no later than when the third notification is sent.
Are the effective notice periods affected by the formal procedural rules?
The redundancies cannot be effective earlier than 30 days after the second notification is sent to the Regional Labour Market Council (i.e. the effective date of termination of the employment cannot be earlier than 30 days after the second notification). However, the individual notice period will be triggered by the employer giving the notice, and this rule will thus only affect employees entitled to less than 30 days' notice (i.e. only blue-collar workers).
What are the sanctions for breaching the procedure?
If an employer does not comply with the procedure set out by the Act, for instance by not conducting the negotiations, the employees may be entitled to compensation amounting to 30 days' salary. Furthermore, the employer may be fined.
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.