LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

In accordance with the regulations binding in Poland, the employment relationship may be terminated upon the Labour Code dated 26^th April, 1974 (the “Labour Code”) or upon the Act of 13^th March, 2003 on special principles of terminating employment relationships with employees for reasons not attributable to employees (the “Redundancy Act”) (with supporting role of the Labour Code). The Redundancy Act implements Directive 98/59/EC of July 20, 1998 on the approximation of the laws of the Member States relating to collective redundancies.
The Redundancy Act provides for special principles in the scope of termination admissibility of employment agreements, severance pay and procedure of terminating employment agreements. The Redundancy Act applies to both private and public employers funded by the State Treasury in case of terminating an employment agreement for reasons not attributable to the employee, such as liquidation of the workplace or position, bad financial situation of the employer, liquidation or bankruptcy of the employer, etc.
The Redundancy Act shall apply in the event an employer employing at least 20 employees shall terminate employment contracts due to reasons not attributable to employees if within 30 days employment is terminated with at least:
(i)                   10 employees and provided that the employer employs fewer than 100 employees,
(ii)                 10% of employees if the employer employs at least 100, however, less than 300 employees, or
(iii)                30 employees if the employer employs at least 300 employees or more.
Regardless the above mentioned, the Redundancy Act applies to the termination of an individual agreement in the situation when two criteria are jointly met:
(i)             the employer employs at least 20 employees;
(ii)            the employment agreement is terminated for reasons not attributable to the employees.
In case the employer employs less than 20 employees or when the number of employees to be redundant is lower than stipulated in the Redundancy Act, but all other conditions are met, only provisions of the Labour Code shall apply. Thus, the employer is not obliged to conduct the layoff procedure and pay to the employees an additional dismissal allowance.

The general rules and requirements concerning termination of an employment relationship are governed by the Labour Code which provides detailed principles of terminating particular types of employment contracts with or without notice.

 

The basic and the most common way of terminating employment agreements is the termination with notice. The notice period depends on the type of agreement and the employee’s length of service.

 

The termination of an employment agreement for an indefinite period with notice must be performed in compliance with the requirements specified in the Labour Code, together with the obligation to state the reason of such termination. It should be emphasized that: (i) the termination reason should be specific and real (the employer is bound to indicate the reason for termination in the termination notice) and (ii) there is an obligation to consult the termination with trade unions (if any). Furthermore, the employer is obliged to respect the notice period and pay to the employee his/her remuneration during the notice period, as well as to issue to the employee a certificate of employment.

 

The Labour Code lists situations where it is impossible to terminate an employment agreement (e.g. during an employee’s leave or any other authorized absence at work) and the categories of employees whose employment relationship are subject to a particular protection (e.g. employees in pre-retirement age or during pregnancy).

 

There are certain procedures for specific ground for dismissal (i.a. collective redundancy) as well as for specific categories of employees (i.a. trade unions’ members).

 

Under the Redundancy Act, the employer has the obligation to consult or conduct negotiations with trade unions or the employees’ representatives (if there are no trade unions at a given employer), in order to agree on the conditions of collective redundancy and drawing up of the collective redundancy rules. Moreover, the employer is obliged to inform the district labour office about the planned collective dismissal.

 

Within 20 days from the day of providing the trade unions or representatives of employees with notification of the collective redundancies and after consultation with the representatives of employees, the employer shall conclude with trade unions an agreement or on its own draw up rules to govern the terms and conditions of the redundancies.

 

Following closing of consultations or negotiations with the employees and drawing up of the collective redundancy rules, the employer should provide the district labour office with a written notification of the arrangements. Only afterwards, the employer may start dismissing individual employees by giving them notice or executing agreements concerning termination of employment. Notice of employment termination may be given and employment may end thirty days after the labour office has been given the second notice at the earliest.

 

Dismissals as part of collective redundancies 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 fact of collective redundancies is no basis for the employer to shorten notice periods unilaterally, even when providing compensation. General rules apply in such cases and the employer may unilaterally shorten the notice period to one month if the reason for the redundancy is the liquidation or bankruptcy of the employer.

Apart from the collective redundant procedure described in point 2, the Redundancy Act provides for some additional legal requirements for a layoff, such as:
(i)              payment of a dismissal allowance;
(ii)            obligation of re-employment of employees that have been made redundant;
(iii)           prohibition of dismissal of certain categories of employees.
The employee which is made redundant is entitled to a dismissal allowance, and his/her remuneration during the notice period.
The amount of the dismissal allowance depends on the employee’s length of service with a given employer and amounts to appropriately:
-               a monthly remuneration, provided that the employee has been employed for less than 2 years,
-               a two-month remuneration, if the employee has been employed for 2-8 years,
-               a three-month remuneration in the situation when the employee has been employed for more than 8 years.
By provisions of law the amount of the dismissal allowance is limited to 15 times the minimum remuneration established pursuant to separate provisions applicable on the day of the termination of employment. In 2010 the minimum remuneration for work in Poland amounts to PLN 1,317 (approx. EUR 330). Yet, the parties may agree in the terms and conditions of the collective redundancy for an amount of dismissal allowance payment higher than the statutory amount.
In general, various provisions affording employees special protection against termination of employment with notice or otherwise do not apply to collective redundancies. In principle, the employer is not obligated to consult trade unions regarding the intention to dismiss any individual employee (if an agreement with trade unions was entered into). Additionally, the employer enjoys greater freedom to dismiss an employee who is absent due to annual leave or for other valid reasons.
On the other hand, the employer may not give notice of employment termination as part of collective redundancies to other employees who enjoy special protection, such as trade unionists, members of an employee council, pregnant women or pre-retirement employee. In such cases, in the event of collective redundancies, the employer may only terminate terms of work and pay, subject to the provision that if such employees’ remuneration are reduced, they are entitled to receive a compensatory benefit by the end of the protection period. The provisions regarding special protection do not apply in case the employer declares bankruptcy or is under liquidation.

Both cases, the unlawful or unjustified lay-off of an employee for economic reasons are regulated by the Labour Code. The employee, who considers that his /her lay-off was not justified or that it was not made according to the relevant procedure, has the right to claim for compensation or reinstatement into his/her position.

 

There is no legal guarantee of employment continuity in the event that the employer breaches the Polish Labour Code provisions concerning employees’ dismissals. Thus, even if the employer fails to follow the applicable procedure but communicates its intention to dismiss an employee to such employee (regardless the way), employment is effectively terminated. Such termination of employment may only be mitigated if the employee brings an action to a labour court and is reinstated. Without the employee claim, the employment will not be automatically restored.

The main risk is that an employee will bring an action to a labour court claiming reinstatement or compensation (in principle, equal to a maximum of three months’ salary; the compensation level is defined by the Labour Code and the court may only award such compensation up to this maximum level). An employee may lodge such a claim primarily if he/she concludes that the reason for employment termination is untrue, as well as where the employer violated general rules concerning collective redundancy.

 

Furthermore, if non-objective criteria violating the laws prohibiting discrimination are set down, the employee dismissed on the basis of such criteria may be awarded compensation of not less than the national minimum wage (in 2010, this is about EUR 330). The Labour Code does not specify any compensation cap.

 

When planning collective redundancies, one should consider the costs of potential court claims by employees challenging their dismissal. If the reasons for collective redundancies are well justified in legal and economic terms, the likelihood that such employee claim will be successful is limited, however, should not be fully disregarded.

 

The employer’s liability is essentially limited to financial liability in connection with employee claims. If redundancies are duly prepared, this risk may be minimized.

The most common mistakes of employers are connected with non-compliance with the procedure of the collective redundancies, in particular in the scope of meeting with deadlines, executing documents in a correct way and legitimating ground for layoff.

 

In addition, some mistakes are made by employers in connection with determination the selection criteria concerning employees to be dismissed during collective redundancies. Such criteria should be objective, so that the employer does not violate the laws prohibiting discrimination in employment.