LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

The layoff procedure is regulated by the Labor Code and the Collective Employment Agreement concluded at the National Level for the years 2007-2010 (“CEA”).  In addition, the provisions of the Collective Employment Agreements approved at the sector level or company level are also applicable.  According to Art. 68 of the Labor Code, this procedure regarding layoffs applies in three cases: (i) if an employer dismisses at least 10 employees within a period of 30 days and has less than 100 employees; (ii) if the employer dismisses at least 10% of the employees, within 30 days and has less than 300, but more than 100 employees;(iii) and if the employer dismisses at least 30 employees and has more than 300 employees.

In case of layoffs, the employer’s most important obligation is to start consultations with the trade unions or, with the employees’ representatives. These discussions should focus on methods and means for avoiding collective layoffs or reducing the number of affected employees. Throughout the consultations, the employer must notify the parties, in writing, of:  the total number and categories of employees; the reasons for the layoff;  the number and categories of employees to be affected by the layoff; the criteria, according to the law and/or the collective employment contract, for establishing the layoff priority order; the measures considered in order to limit the number of the dismissed employees; the measures considered for the mitigation of the consequences of the layoff and the compensations to be granted to the dismissed employees, according to the legal provisions and/or the applicable collective employment contract; the date on which, or the period during which, the layoffs shall take place; and the deadline until the  employee's representatives  may submit proposals for avoiding layoffs or for diminishing the number of dismissed employees.  The employer is obliged to send a copy of such notification to the trade union/employee's representatives on the same date as the employer sends such to the Territorial Labor Inspectorate and to the Territorial Unemployment Agency. The trade union/employees’ representatives may send its/their points of view to the Territorial Labor Inspectorate. At the grounded request of any of the parties, the Territorial Labor Inspectorate, with the approval of the Territorial Employment Agency, may order the reduction of the 30-day notice period, without infringing the individual rights with regard to the notice period.  The Territorial Labor Inspectorate has the obligation to inform in due time the employer or the trade union/employee's representatives, as the case may be, with regard to such reduced period, as well as to the reasons for such decision.

The goal of this 30-day notice period before the commencement of a collective layoff is to allow the Territorial Unemployment Agency to find solutions to the issues resulting from the projected collective layoff and to notify these solutions promptly to the employer and to the employee's representatives.

If more time is needed to agree on a solution, the Territorial Labor Inspectorate, with the consultation of the Territorial Unemployment Agency, may postpone the issuance of the layoff decisions by 10 calendar days. The Territorial Labor Inspectorate may postpone any decisions if the issues surrounding the layoff require more time to be solved than the date mentioned in the collective layoff notification.  The Territorial Labor Inspectorate has the obligation to inform in writing the employer or the trade union/employee's representatives should there be a postponement of the issuance of the layoff decisions and notify the reasons for this postponement prior to the expiry of the initial period. 

The provision included in the CEA stipulating that in case of layoffs the employer has to inform the employees in writing about the prior notice term creates confusion among the employers with regard to whether the prior notice term should be notified to the employees as a different document or should be part of the layoff decision.

If the prior notice term is notified before issuing the layoff decision, the employers risk that a court might void the entire layoff procedure. Because the Labor Code provides that the layoff decision has to mention the duration of the prior notice term, this flaw becomes fatal.  Moreover, the prior notice term has to be part of the layoff decision as this term is determined from the date of notification of the said decision. At the end of this term, the employment relationship between the employer and employee will cease to exist, without any other formalities.  In general, employers do not comply with the steps of the layoff procedure or the applicable deadlines.