A employers’ guide to redundancy
  • Insights

A employers’ guide to redundancy in 7 countries

Global
06.07.21
25
Written by
ALRUD, a confident Russian leader in labour and employment law.
In a guide coordinated by Ius Laboris Russian firm ALRUD, lawyers in Estonia, Israel, Kazakhstan, Poland, Russia, Romania and Ukraine provide a guide to redundancy procedures in their jurisdictions.

Estonia

By: Heili Haabu 

Staff redundancy: when to use? 

An employer may terminate the employment contract due to redundancy, if the continuance of the employment relationship, on the agreed conditions, becomes impossible, due to a decrease in the work volume, reorganization of work, or other cessation of work (lay-off). 

 

Types and options 

Estonian law distinguishes between individual and collective redundancy. 

Individual redundancy is a simple and straight-forward procedure, whereas collective redundancy triggers certain information and consultation obligations. A redundancy is deemed collective, if it involves termination due to lay-off, within 30 calendar days, of the employment contract of no less than: 

  • 5 employees in an enterprise, where the average number of employees is up to 19; 
  • 10 employees in an enterprise, where the average number of employees is 20–99; 
  • 10% of the employees in an enterprise, where the average number of employees is 100 to 299; 
  • 30 employees in an enterprise, where the average number of employees is at least 300. 

 Before the employer decides on the collective termination (i.e. before individual termination notices are submitted to the employees), the employer must consult, in good time, the trustee or, in his/her absence, the employees, with the goal of reaching an agreement on prevention of the planned terminations, or reduction of the number thereof, and mitigation of the consequences of the terminations, including contribution(s) to the seeking of employment by, or re-training of, the employees to be laid off. The employer is also required to inform the Estonian Unemployment Insurance Fund of the planned redundancy. 

 

Procedures 

Before termination of an employment contract, due to a lay-off, an employer must, if possible, offer another job to the employee. The obligation to offer another job involves also organising in-service training for the employee and changing of working conditions, if taking such measures would enable the employer to offer another position to the employee (a position that would otherwise not be currently suitable for the employee). Such in-service training and changing of working conditions is not required, if it would cause disproportionately high costs for the employer. 

If there are no suitable positions available, the employer may proceed with the redundancy. 

An employer must notify the employee of the termination of employment contract, in advance, as follows: 

Duration of employmentAdvance notice
Less than 1 year Not less than 15 days 
1-5 years Not less than 30 days 
5-10 years Not less than 60 days 
10 years of more Not less than 90 days 

 

Duration of employment  Advance notice 
Less than 1 year  Not less than 15 days 
1-5 years  Not less than 30 days 
5-10 years  Not less than 60 days 
10 years of more  Not less than 90 days 

 

In case the advance notice period remains shorter than that required by law, compensation needs to be paid in the amount of salary the employees would have been entitled to, if they had been given the possibility to work, until the end of the statutory advance notice period. 

In addition to providing prior notice, an employer is required to pay compensation to the employee, in the amount of 1 month’s average salary of the employee, upon termination of employment contract due to lay-off. 

Although the law accepts delivery of the termination notice, in any format that can be reproduced in writing, it is advisable to deliver it by hand (in writing) and have the employees sign a copy for the employer, confirming receipt of the notice on the respective date. The employment contract terminates automatically upon arrival of the termination date and no additional documentation needs to be formalised. The termination notice needs to include the legal basis for the termination, as well as the reason for the termination. 

 

Exceptions 

Certain categories of employees are protected under law against lay-off and termination of their employment contracts due to lay-off is, as a rule, prohibited: 

  • pregnant women; 
  • women who have the right to pregnancy, or maternity, leave (regardless of whether they are using this right at the moment, or not); 
  • employees on parental leave, or adoptive parent, leave. 

 

Employees belonging to the above categories may be laid off only in case of liquidation, or bankruptcy of the employer. 

None of the other categories of employees receive total protection against lay-off. However, upon selecting the employees for lay-off, the following persons have preferential right to keep their jobs: 

  • employees’ representatives (i.e. employee trustee, working environment representative, members of working environment council, trade union representatives, members of European Works Council); 
  • employees raising children under three years of age. 

 

Therefore, if there are several employees doing the same work and the employer decides to reduce the number of positions, employees’ representatives and employees raising children under three years of age cannot be selected among the ones to be laid off. In the case when the respective type of work ceases completely and all the respective positions are eliminated, the employees’ representatives and employees raising children under three years of age can by laid off (as well as others). 

The law does not regulate the selection criteria that the employer must apply upon choosing the employees to be laid off from among the rest of the employees. However, the law states that the employer must abide by the regulation of equal treatment of employees and the selection may not be discriminatory. 

 

Risks and implications 

Termination of an employment contract, without a legal basis, or otherwise in conflict with the law, is void. An action with the court, or an application with a labour dispute committee, for establishment of voidness of termination, may be filed within 30 calendar days, as of the receipt of the termination notice. 

Implications of unlawful dismissal: 

  • Compensation payment for unlawful termination (usually in the amount of the employee’s three months’ average salary); 
  • Reinstatement available, only if requested by the pregnant employee, an employee who has the right to pregnancy, or maternity, leave, or has been elected as the employees’ representative. 

Israel 

By: Orly Gerbi  

 Staff redundancy: when to use? 

Staff redundancy refers to a situation where termination is being considered due to business reasons, such as a reduction in force or organisational changes, rather than issues concerning an employees’ performance, or conduct. 

There are no specific mandatory selection criteria for redundancies. As a general rule, employers are entitled to terminate their employees’ employment at any time, subject to exercising this right, within 

the context of the relevant considerations, in compliance with any applicable laws (including anti-discrimination laws), and any other binding legal sources, whether written or oral, such as employment agreements, customs in the workplace and any collective bargaining agreements/settlements, or extension orders, if applicable. 

 

Types and options 

Any staff redundancy cases, even when only one employee is being eliminated, would be regarded as a redundancy. There is no threshold. 

 

Procedures 

According to court decisions, in all termination processes (including for redundancy), employers are required to hold a personal hearing with employees, whose employment they wish to terminate, prior to making any final decision regarding such termination. 

The purpose of the hearing procedure is to inform the employees as to the employer’s intention to terminate their employment, specify the reasons for such and give the employees the opportunity to respond to the employer’s intent. 

The obligation to conduct a hearing must be carried out in good faith and with a sincere and fair willingness to listen and to consider the employee’s views. 

The hearing process is divided into three steps: 

  1. Invitation:The invitation should specify the reasons for which the employer is considering the employee’s termination. Such reasons should be relevant, reasonable and non-discriminatory. 
  2. Hearing meeting:The employees should be given the opportunity to present their arguments and any relevant information which may affect the employer’s decision. 
  3. Decision:If the employer decides to proceed with termination, it should issue a written termination letter (from which time, the prior notice shall begin). 

In addition, as a general rule, case law requires employers to inform and consult with the employees with respect to redundancies. In practice, the employer will only be able to comply with this duty where there is an employee representative body with which to consult. 

 

Exceptions 

Israeli labor law prohibits the termination of an employee’s employment in certain circumstances, including terminating the employment of: 

  • a pregnant employee;  
  • an employee undergoing fertility treatments;  
  • an employee during statutory maternity, or paternity, leave, or statutory unpaid leave, following such parental leave and 60 days thereafter;  
  • an employee on army reserve duty and 30 days thereafter (provided the service is for more than two consecutive days); or  
  • an employee on sick leave, who must be enabled to utilise his or her accumulated sick days (up to the maximum statutory cap of 90 days and, in certain cases, even a more beneficial contractual cap); all subject to the conditions and circumstances set out in the relevant legislations / judgments. 

 

We note that specific ministerial approvals for the termination of some of the above groups of employees may be obtained in certain circumstances, if the employer demonstrates that the termination is not due to the special circumstances of the employee (for example, the employee being pregnant). 

Furthermore, according to a new and developing trend in recent labor court rulings, employers have a general duty to make an effort to locate an alternative position for employees, whose employment is being terminated for redundancy /due to organizational change. This duty is especially applicable in the case of certain group of employees (such as disabled employees and employees who are close to retirement age), before proceeding to termination. 

The court does not view this requirement by virtue of the result (i.e. whether the employee was indeed transferred to an alternative suitable position or terminated due to the lack thereof), but rather, whether the employer carried out a real and honest process to examine whether there is an alternative position. 

 

Risks and implications 

In general, if termination of employment is not made in good faith and for valid reasons, or if the employer does not follow the required process, the labor courts may, if approached, rule that the termination is unlawful. 

Wrongful termination may result in financial compensation. In principle, damages for wrongful termination are uncapped. However, the courts rarely award more than twelve months’ salary 

for successful wrongful termination claims. Theoretically, reinstatement of the employee is also an option, although this is rarely the primary remedy. The labour courts also have the authority to issue injunctive relief. 

Kazakhstan 

By: Alexandr Chumachenko 

Staff redundancy: when to use? 

According to the Labour Code, an employer must not substantiate its decision on staff redundancy, as being an act that can be made by the employer in the framework of freedom of business activities. Nevertheless, in practice staff redundancy and job displacement are referred to as being a statutorily allowed reorganization of an employer, which is intended, 

as a rule, to improve the work of organization. Staff redundancy (job displacement) is allowed both in case of actual reduction of the scope of work, and in the event of various technical and organizational measures allowing a company to reduce the number of employees, although the scope of work may remain the same, or even become greater. 

 

Types and options 

Kazakhstan legislation does not provide for any types of redundancy and their qualification features. However, in practice, a situation may involve reduction of specific positions (staff redundancy), or reduction of the number of employees holding similar positions (job displacement). Depending on the number of reduced employees, it is theoretically possible to distinguish redundancy of single and global nature. According to the relevant ministry, concurrent loss of jobs in connection with staff redundancy, or job displacement by more than three employees, will be global. 

 

Procedures 

In case of termination of labour relations with employees, on the employer’s initiative, in connection with staff redundancy, it will be necessary to do as follows: 

  • Notify the employees of staff redundancy and termination of labour relations with them for this reason at least one month prior (unless a longer period is stipulated by an employment contract and/or collective agreement, if any) to the contemplated date of termination of labour relations; in case the employees agree in writing, the employment contracts may be cancelled before expiration of the said notice period; 
  • Submit information to the population employment center, at the place of location of an employer (in writing, or by way of the state Internet resource ‘Labour exchange’) concerning the upcoming release of employees, in connection with staff redundancy (number, categories, positions, professions, specialties), qualifications and amounts of salaries of employees, as well as the terms, during which labour relations with employees will be terminated) at least one month prior to the contemplated date of termination of labour relations with employees; 
  • Perform full settlements with employees not later than three business days from the moment of termination of labour relations (specifically, to pay salary to employees for the actually worked time; compensation in connection with loss of job in the amount of an average monthly salary; compensation for the unused days of the annual paid labour leave; other payments, if stipulated by the employer’s internal regulations and/or employment contracts with employees); 
  • In case of presence of material claims, it is necessary to enter into negotiations with employees concerning voluntary repayment of the existing debts and compensation of the caused damages; to organise the transfer (return) of the property belonging to the employer and held by the employees; 
  • Revoke the powers of attorney, issued to employees for the representation of the employer’s interests before the state organizations and institutions, and any other legal entities and individuals (because such powers of attorney do not become automatically void in case of termination of labour relations with employees); 
  • Organise the transfer and acceptance of documents, special seals of the employer, if any, electronic keys, etc. 
  • Issue an employer’s act (order), which must specify the ground for the employment contract termination according to the Labour Code (staff redundancy and/or job displacement – Article 52.1.2 of the Labour Code); copy of the order is served, or sent to an employee (by registered mail with a description of the contents and mail notification of delivery) within 3 business days of the date of issue.  
  • On the day of termination of an employment contract, to issue a document to an employee confirming his/her labour activities. 

 

From the moment of cancellation of employment contracts with employees, it is necessary to immediately introduce changes into the employer’s staff schedule in order to record the fact of excluding the positions of such employees from the organization’s staff. 

 

Exceptions 

An employer has no right to dismiss employees in cases, as follows: 

  • If an employee submitted to an employer a certificate of pregnancy, or has children under the age of 3 years, or an employee is a single mother raising a child under the age of 14 years, or a disabled child under the age of 18: in these cases, it is necessary to select another ground for the termination of Labour relations, for example, agreement of parties. 
  • Without a positive resolution of a commission, formed from the equal number of representatives of management and employees of the employer, if employees have less than 2 years until reaching the retirement age, established by the Kazakhstan legislation, i.e. this ground for termination of labour relations may be applied only after formation of the said commission and adoption of a resolution approving displacement of the position of a respective employee. 
  • Without a motivated opinion of the trade union body, if employees hold positions in elective trade union bodies, without the release from the principal job; 
  • During the period of temporary incapacity for work and/or employee’s leave – in this case, an employee who is on leave, or on ‘sick leave’, must be notified of upcoming cancellation of the employment contract only after his/her return to work, and the employment contract cancellation will only become possible upon expiration of the established notice period. 

 

Risks and implications 

The risk that the employees will subsequently challenge, in court, their ‘redundancy’ is high. In case of a dispute with reduced employees, the court checks: 

  • compliance with the redundancy procedure; 
  • actual nature of redundancy (including whether any new persons have been hired, instead of dismissed employees, or not). 

 

An employer should not hire new persons instead of reduced employees within at least the limitation period for appealing against the redundancy. This means that it is necessary not to create new similar positions in the employer’s organization (in any subdivisions) after redundancy, until expiration of the limitation period for disputes concerning reinstatement at work. Later, if the need to create similar positions arises, such creation of positions must be thoroughly substantiated by the objective reasons, in order to avoid accusations of an employer of fake redundancy. 

In case the reduced employees, or other individuals, are engaged after dismissal under individual civil contracts for the performance of the same functions, the risk, that such redundancy may be recognised as fake redundancy, is high. The court may recognise that, in fact, there was no staff redundancy, and the employer’s actions were aimed at avoidance of the performance of labour obligations and impairment of labour rights of employees. 

Despite the absence of an expressed legal obligation to substantiate the decision on redundancy, in practice, it is recommended to include such substantiation in the documents on redundancy (first of all, from the viewpoint of economic and production needs). In case of a dispute, this will serve as an additional argument to support the valid, but not fake or discriminatory nature of redundancy. 

Poland

By: Katarzyna Dobkowska, Natalia Basista 

Staff redundancy: when to use? 

Staff redundancy is applicable to employers terminating employment, for reasons not attributable to employees. It implies the elimination of a certain job position, or reduction in number of certain and/or similar positions and its/their removal from the staff structure of the company. 

The grounds for staff redundancy are not legally defined. Therefore, usually these are business reasons (for example resignation from certain activities, restructuring or reorganizing a company’s structure, or a structure of a specific sector, or team). 

Redundancies are mainly governed by the Act of 13 March 2003 on Special Rules on Terminating Employment Relationships of Employees for Reasons not Attributable to Employees (‘the Act’). It is applicable to employers employing at least 20 employees. 

 

Types and options 

Staff redundancy, by its extent, can be collective or individual. 

  1. The redundancy is collective, if within 30 consecutive days, the following number of employees is made redundant:
  • 10 or more, if the employer employs up to 99 employees; 
  • 10%, if the employer employs between 100 and 299 employees; and 
  • 30 or more, if the employer employs 300 employees or more. 

 

The above limits include employees whose employment contracts are terminated with notice, or by agreement, if at least five agreements are executed in this 30-day period. 

  1. The redundancy is individual, if there is one dismissal, or several dismissals below the threshold of collective dismissals.

Staff redundancy can take form of liquidation or reduction of position(s). 

  • Liquidation is removing one, or more, positions completely (in this case, the selection procedure is not needed). 
  • Reduction is downsizing the number of employees, holding the same, or similar, positions (in such a case, the selection procedure is required). 

 

Procedures 

In summary, the procedure involves: 

  • Information/consultation with a works council (if it exists at the company). 
  • Notification to unions, or to employees’ representatives, if there is no union at the company. 
  • First notification to Regional Labor Office (‘RLO’). 
  • When 50 or more employees are to be dismissed within three months, conclusion of the agreement with RLO as to the assistance that will be provided to the dismissed employees. 
  • Consultation with unions, or employee’s representatives. 
  • After a maximum of 20 days following the consultation with unions, conclusion of the agreement with unions, or when it cannot be reached, or if there are no unions at the employer’s – issuing a collective redundancy regulation by the employer and announcing it to all its employees. 
  • Second notification to RLO. 
  • After the second notification to RLO dismissals can start: the Company can proceed to terminate employment, of the affected employees, by serving termination notices, or entering into mutual agreements. Employment can terminate no sooner than 30 days after the second notification that can be of importance only in case of the shortest notice periods. 

 

Exceptions 

There are special categories of employees that cannot be made redundant. The most important ‘protected’ categories of employees are as follows: 

  • pregnant employees; 
  • employees on maternity and similar leave; 
  • employees in the pre-retirement period (four years before the retirement age); 
  • employees during justified absence from work; 
  • members of works councils; 
  • trade union activists; 
  • social labor inspectors. 

 

If the affected employee belongs to the particular ‘protected’ category, the employer, as a rule, cannot terminate employment with such employee, during collective procedure. They can only be served with notices of alternative of terms of employment. 

However, if as a consequence of this change, such employee’s remuneration is decreased, he/she will be entitled to a special allowance for the period, equal to the period of protection (in practice it is usually impossible to decrease their remuneration). 

The above protection only does not apply in case of employer’s liquidation, or bankruptcy. 

 

Risks and implications 

If the employer does not observe the procedures specified by law, a dismissal may be considered as being unlawful. In such a case an employee may be reinstated, or adjudged compensation by court. 

 

What are the implications of unlawful dismissal? 

  • reinstatement and remuneration (capped at two months’ remuneration); only a protected employee can claim reinstatement and remuneration for the entire period of remaining without work; or: 
  • compensation in the amount of the remuneration for two weeks to three months, though not less than the remuneration for the notice period. 

 

How to reduce the risks of challenges to the redundancy? 

  • Follow the procedure specified by law (e.g. if one of the staff redundancy stages is omitted, the dismissal can be challenged). 
  • Do not introduce new job positions with the same, or similar, scope of duties, at least for a certain period. 
  • Avoid discrimination. 
  • Adopt the resolution, or introduce the new organisational structure, to confirm the change in employer’s, or team’s, structure. 
  • Apply fair and objective criteria while selecting employees for dismissal, in case of reduction in the number of positions (not elimination of a unique position, nor all the same and/or similar positions when criteria are not needed); criteria must be specified in notice document; 
  • Try to conclude a termination agreement instead of notice. 

Russia

By: Irina Anyukhina, Margarita Egiazarova, Ekaterina Bronitsyna 

Staff redundancy: when to use? 

Staff redundancy primarily implies the elimination of a certain job position and its removal from the staff structure of the company. As a consequence, the employment relationship with the employee is terminated. 

The grounds for staff redundancy are not defined by law. Generally, staff redundancy is carried out when the company reduces its activities, or shifts to the different type of activity, and there is no longer any necessity for certain positions (functionality). 

 

Types and options 

Staff redundancy by its coverage can be divided into ordinary and collective. Russian law provides for the following general criteria of collective redundancy: 

  • liquidation of a company with 15 or more employees; 
  • redundancy of particular number of employees during a certain period, as prescribed by regional rules (e.g. 50 or more employees during 30 calendar days); 
  • special criteria for regions, with a total number of employed of less than 5,000 people (e.g. the dismissal of 1% of the total number of employees due to the liquidation of the company). 
  • specific criteria may be established by regional, or industrial,agreements. 

 

Staff redundancy can be also in form of staff reduction and downsizing. When the staff is reduced, one or more job positions are completely removed (in this case, the selection procedure is not needed). When the staff is downsised, the number of employees, holding the same position, is reduced (for example, two out of four accountants are left; the selection procedure is required, in such a case). Staff reduction and downsizing can be carried out both independently and simultaneously. 

 

Procedures 

The procedure for staff redundancy is multi-stage, formalistic and consists of the following stages: 

  • To start, the company needs to make a formal decision (in form of an HR order) and then decide on who, among the employees, has/have a preemptive right to keep their job(s). 
  • Employees-to-be-redundant are eligible for job vacancies, available in the company’s structure (within a particular region). 
  • The general notice period is two months, prior to dismissal of employees and, in some cases, three months 
  • The company must notify in writing: the employees to be made redundant; the State Employment Centre; the trade union(s) (if any). 

 

The law provides for that the employee, subject to redundancy, is entitled to full salary, during the notice period (two months), and a severance payment of up to three monthly-average salaries, for the period of unemployment. This severance payment is being paid in instalments, upon request from the employee, and is subject to confirmation of pending unemployment, throughout the three months following dismissal. 

Exceptions 

There are special categories of employees that cannot be made redundant (pregnant women, women having children under three years old, individuals bringing up children under 14 years old (disabled children under 18 years old) without a mother/father). Staff redundancy is also not allowed while the employee is on sick leave, nor on vacation. 

Employees working in the Far North regions, and similar regions, equated by the government, are entitled to higher severance: in case of staff redundancy (average salary payments up to 6 months, in total). 

If an employee, who is a member of the trade union, is dismissed, the reasoned opinion of the trade union must be taken into account. 

Protection of other categories of employees may be given by regional and/or industrial agreements, company’s policies, employment contracts, etc. 

 

Risks and implications 

If the company does not observe the procedures specified by law, a dismissal may be considered as being unlawful and an employee may be reinstated at work, by court decision. 

 

How to reduce the risks of challenges the redundancy? 

  • Follow pedantically the procedure specified by law (e.g. if one of the staff redundancy stages is not fulfilled, the dismissal can be challenged). 
  • Learn and comply with regional particularities. 
  • Offer all vacant positions, including new job positions, part-time positions, positions at all branches and separate divisions, in the company region. 
  • Do not introduce new job positions with the same, or similar, job duties, at least for a certain period. 
  • Avoid discrimination. 
  • Adopt the new staff schedule to confirm the change in HR structure. 

 

What implications of unlawful dismissal? 

  • Reinstatement of the employee; 
  • Payment to an employee of the average wages, for the entire period between dismissal and reinstatement/the date of a court ruling; 
  • Payment to an employee of compensation for ‘moral damage’, as a result of unlawful dismissal; 
  • The company can be liable for an administrative fine up to 50,000 Rubles (approx. EUR 550).

Romania

By: Roxana Abrasu and Gabriela Dinu 

Staff redundancy: when to use? 

Redundancy occurs, in practice, when the employer changes its organizational structure for economic, financial or technical reasons. In order to be valid, the termination of an employment contract must be determined by the suppression of the position, occupied by the respective employee/s, from the organizational chart. The suppression has to be effective (i.e., the position is eliminated and cannot be renamed, nor recreated under a different denomination) and to be grounded on a real and serious cause (i.e., the purpose of this reorganization should not appear to be solely aimed at removing a certain employee, but must be grounded by objective reasons). 

 

Types and options 

The dismissal due to redundancy can be either individual or collective. Each type of redundancy process involves the effective suppression of positions. If only a part of a set of identical, or similar, positions are suppressed,a selection procedure must be performed, based on objective criteria (primarily performance-related). No mandatory amount of compensations for dismissal, nor obligation to provide vacant positions to the employees, affected by redundancy, are regulated by law (if regulated through internal rules, or applicable collective labor contract, they must be observed). 

As a general rule, a redundancy process is collective when the redundancy affects the following thresholds of employees, within a 30-calendar day period: a) at least 10 employees, if the employer has more than 20, but fewer than 100 employees; b) at least 10% of the workforce, if the employer has at least 100, but fewer than 300 employees; c) at least 30 employees, if the employer has 300 or more employees. 

 

Procedures 

Main steps to be observed in the case of an individual process are the following: 

  • Drafting an analysis justifying the necessity of the reorganization and proposal to reorganise employer’s activity, by suppressing the respective position/s, with the reasoning behind it and goals to be achieved. 
  • Adopting a corporate decision by the employer’s competent body on the reorganization; 
  • Issuing prior notice notification/s – minimum 20 working days (more favorable durations in internal rules/collective labor contracts/employment contract to be observed); 
  • Issuing the individual dismissal decision/s – issued in writing and communicated to the employee/s; must include the minimum requirements provided by law. 

 

The entire collective dismissal procedure may last over two months and consists of the following main steps: 

  • drafting an analysis justifying the necessity to reorganise the company’s activity; 
  • adopting a corporate decision, approving the intention of reorganization; 
  • notifying the intention to implement the collective dismissal (Notification I) to the employee representation bodies (i.e., employees’ representatives/ trade unions) – mandatory content as per the law; a copy thereof must also be forwarded to both the territorial labour inspectorate and territorial employment agency on the same date; 
  • performing information and consultation procedures, as per the law; 
  • adopting a corporate decision on the reorganization and collective dismissal; 
  • notifying the decision to implement the collective dismissal (Notification II) – minimum content as per the law; the employer must inform (at least 30 calendar days prior to the issuance of the individual dismissal decisions), at the same date, both the territorial labour inspectorate and the territorial employment agency, as well as the employee representation bodies of the results of the consultations; 
  • issuing prior notice notification/s – minimum 20 working days (more favorable durations in internal rules/collective labour contracts/employment contract to be observed); 
  • issuing the individual dismissal decision/s – in addition to the aspects mentioned for the individual procedure, these decisions should also comprise the criteria for establishing the priority order applied when implementing the collective dismissal. 

 

Termination of employment must be registered within the REVISAL app (labour authority platform). 

Within 45 calendar days from the date of dismissal, the employees dismissed (through collective procedure) have the right to be re-employed, with priority, in the position re-established in the same activity, without examination, competition or probationary period. 

 

Exceptions 

Dismissal is prohibited based on discriminatory grounds provided by the law, such as: sex (including pregnancy, childbirth, breastfeeding status), sexual orientation, age, nationality, race, color, ethnic origin, religion, political beliefs, social origin, disability, family status or responsibilities, participating in strikes or exercising any trade union related rights. 

Dismissal is also, in principle, prohibited (except where the employer undergoes bankruptcy, judicial reorganization or dissolution) while the employee is in one of the following cases: sick leave, quarantine leave, pregnancy, maternity and maternity risk leave, parental leave, paternal leave, while on reinsertion incentive, childcare leave, annual leave etc. 

 

Risks and implications 

Failure to inform and/or consult employee representation bodies, in case of collective dismissals, or providing incorrect, or incomplete, information in bad faith, is sanctioned with fines of up to RON 50,000 (approx. EUR 10,200). 

As a rule, any dismissal decision can be challenged within a maximum of 45 calendar days, as of the date it was communicated to the employee. If the court rules in favor of the employee, it will ascertain the nullity of the dismissal and order the employer to: 

  • pay the employee compensation, equal to the wages and other entitlements (index-linked and taking into account any increases that may have occurred in the meantime) from the date of dismissal, up to the date of the court ruling/effective reinstatement; 
  • reinstate the employee (upon express request); 
  • pay moral damages (upon express request), depending on the circumstances of the case. 

 

In an attempt to mitigate potential risks, employers must: 

  • follow pedantically the procedure provided by law and perform objective selection procedures (where needed); 
  • conclude (if possible) mutual termination agreements with the employees (after positions are suppressed through company documents); 
  • not recreate the suppressed positions, at least for a certain period. 

Ukraine

By: Valeriya Savchuk 

Staff redundancy: when to use? 

Staff redundancy is one of the grounds for the termination of an employment agreement. 

Redundancy takes place in the course of reorganization, liquidation, bankruptcy or change of business of the employing company. 

 

Types and options 

There are two types of redundancy: individual and collective. 

Collective redundancy is defined as a one-off redundancy (other than in the case of full liquidation of the company) or: 

  • a total reduction of ten or more employees, within a one-month, period where the company employs between 20 and 100 employees; or 
  • a total reduction of 10% or more of the workforce, within a one-month period, where the company employs between 101 and 300 employees; 
  • a total reduction of 20% or more of the workforce, within a three- month period, regardless of the sise of the company. 

 

Staff redundancy can take the form of staff reduction and downsizing. Staff reduction implies removing one or more job positions. In the case of downsizing, there are no changes in job positions, however, the number of employees, holding the same position, is reduced (for example, two out of four accountants are left). 

Both individual and collective redundancy are subject to the procedures on proper notification of the employee and negotiation with the trade union, specified below. 

 

Procedures 

The procedure for staff redundancy consists of the following steps: 

  1. Consultations with a trade union

An employer must provide information to a trade union, in advance, and no later than three months before the date of the dismissals. An employer must hold consultations with a trade union no later than three months after the decision on redundancy is made, by the employer. The consultations must cover issues of job-loss prevention and ways of minimizing the staff reduction, or mitigating the negative consequences of the redundancy. If an employee is a member of a trade union, it is necessary. 

The aim of consultation with a trade union is to minimise unemployment. There is no statutory requirement as to the duration of consultations. In practice, consultations take place within one month of the call for consultations and notification of the employees of the dismissals. 

There is no statutory requirement to reach an agreement, nor is there a requirement to achieve a specific result, during the consultations. 

  1. Notification of State Employment Service

Collective redundancy also triggers a mandatory notification obligation to the State Employment Service at least two months before the actual date of dismissal. The notification must be in the form of a written report on an official form. 

  1. Notification of employees

An employer must notify employees individually, two months prior to the date of the dismissals. In addition, all vacancies of the same qualification level and specialization should be offered to the redundant employee. The dismissal, due to redundancy, is only possible when there is no vacant positions of the same qualification level and specialization, or the employee refused to be transferred. 

  1. Consideration of the pre-emptive right to retain the job

The employer must consider any pre-emptive rights that the employees may have to retain their jobs. The preemptive right to retain the job is granted to employees with higher qualifications and productivity. In case of equal productivity and qualifications, certain categories of employees are granted the pre-emptive right. 

  1. Securing the trade union’s consent under specific circumstances

If an employee is a member of a trade union, it is necessary to obtain the trade union’s consent to dismiss him/her, except in the liquidation of the company. 

  

Exceptions 

There are specific categories of employees that cannot be made redundant or require a special redundancy procedure. 

Employees under 18 years old can be made redundant only in exceptional cases, under the consent of the service for children and when another employment is provided to them. 

Pregnant women, women with a child under 3 years old, women with a disabled child under 14 years old, or single mothers with a child under 14 years old can be made redundant only in case of a full liquidation of the company and when another employment is provided to them. 

 

Risks and implications 

Unlawful dismissal may lead to reinstatement of the affected employee, payment of his/her average salary during the whole time of unemployment and compensation for moral damage. 

Additional administrative actions may be brought against the employer, in case of failure to notify the State Employment Service about contemplated collective dismissals. A fine of approximately EUR 700 must be paid. 

Authors
Irina Anyukhina
Partner - Russia
ALRUD
Margarita Egiazarova
Senior Associate - Russia
ALRUD
Ekaterina Bronitsyna
Associate - Russia
ALRUD