COLLECTIVE REDUNDANCY

I. INTRODUCTION

The private sector was strongly affected by the sequence of internal and external events that had a major impact on the economy. This has led many companies towards one”solution” to preserve the company – collective redundancy.

If your company is also in an objective situation that requires massive redundancies, as an employer, it is necessary to comply with all the procedures found in the national legislation, but also the provisions provided by the European Union.

Any deviation can result in a court order for annulment of the procedure, and for employers, important resources of time and money, lost.

II. LEGAL PROVISIONS

Collective redundancy (or collective layoff) is regulated by the Romanian Labour Code and is a type of dismissal for reasons that do not concern the employee (objective reasons).

It is important to mention the fact that, with the entry into the EU, the Romanian state adopted the internal legislation taking into account the community rules provided by Council Directive 98/59/EC, of July 20, 1998, on the approximation of the laws of the Member States relating to collective redundancies. For this reason, if the company’s activity is carried out in another member state, it is important to study the applicable national legislation, as some EU member states offer more protection to employees.

III. CRITERIA OF COLLECTIVE REDUNDANCY

Article 68 of the Romanian Labour Code defines collective redundancy as that type of termination of employment agreement for objective reasons, decided in a period of 30 days, for a larger number of employees, as follows:

  • At least 10 employees for the employer who has more than 20 but less than 100 employees;
  • At least 10% of the employees for the employer who has more than 100 but less than 300 employees;
  • At least 30 employees for the employer who has more than 300 employees.

The Labour Code provides that when determining the number of employees targeted for collective redundancy, the employees whose agreements were terminated through layoffs shall also be taken into account, provided that there were at least 5 such employees.

Of course, those employees whose employment agreement ended for other legal reasons, by mutual agreement, or by resignation, shall not be taken into account.

IV. PROHIBITING COLLECTIVE REDUNDANCY

The Romanian Labour Code presents two situations in which collective redundancy cannot be realised:

  1. In the case of employees of public institutions and authorities;
  2. In the case of employees with a fixed-term employment contract – except for the situation where the dismissal takes place before their expiration.

It is important to specify that the collective redundancy, like the dismissal for reasons related to the employee, also has other restrictions, situations in which it cannot be applied:

  1. during the temporary incapacity for work, established by a medical certificate;
  2. during the suspension of the activity as a result of the quarantine;
  3. pregnant women, to the extent that the employer was notified before issuing the dismissal decision;
  4. during maternity leave;
  5. during child leave and benefits (for children who are up to 2 years old or, in the case of a disabled child, until reaching the age of 3);
  6. during sick child leave for caring for a sick child up to 7 years old or, in the case of a disabled child, for intercurrent ailments, until reaching the age of 18;
  7. during annual leave or paid holiday.

Important! If we are discussing reorganization, bankruptcy or dissolution of the company, these provisions do not apply, regardless of whether it is a public or private company. However, according to Article 123 of the Insolvency Code adopted in 2014, should the collective dismissal provisions apply or become applicable, the terms and deadlines provided for in Articles 71 and 72 paragraph 1 of the Labor Code are reduced by half.

V. COLLECTIVE DISMISSAL PROCEDURE

  1. Information and consultations

The first step the employer must take is to initiate consultations with the trade union or workers’ elected representative.

These consultations aim to:

  • Find methods or means to avoid collective redundancy;
  • Reduce the number of employees dismissed, if avoiding the process is not possible;
  • Call for social measures to mitigate the consequences of the redundancy, including through a professional conversion or requalification process of said

The trade union, or workers’ elected representatives, need all the necessary information to be able to prepare relevant proposals in a timely manner.

Thus, the employer will notify, in writing, the following:

  1. the total number and categories of employees targeted by redundancy;
  2. the reasons which determine the need for collective dismissal;
  3. the number and categories of employees who shall be affected;
  4. the criteria taken into account, according to the law and/or collective labour agreement, for establishing the order of priority for dismissal;
  5. mitigating measures considered to limit the number of dismissals;
  6. the measures to mitigate the consequences of the dismissal and the compensations to be granted to the dismissed employees, according to the legal provisions and/or the applicable collective labor agreement;
  7. the date from which or the period in which the dismissals shall start;
  8. the term for the trade union or, as the case may be, the employees’ representative can make proposals to avoid or reduce the number of dismissed employees.

The trade union, respectively the representatives of the employees, are able to formulate the proposals within 10 calendar days from the receipt of the notification. Afterwards, the employer has 5 calendar days to respond to these proposals.

*The employer is obliged to send a copy of the above notification to the territorial labour inspectorate and the territorial employment agency on the same date.

**The Romanian Labour Code emphasizes the fact that the employer has the duty to comply with these regulations, even in the situation where the collective dismissal decision was taken by an enterprise that has control over it.

  1. Communication of the collective dismissal decision

If the employer decides to go ahead with the application of the collective redundancy, they shall inform, in writing, all the parties involved:

  • The territorial labor inspectorate and the territorial employment agency;
  • The trade union or employee representatives.

This notice must be provided at least 30 days prior to the dismissal decisions and shall include:

  • Results of previous consultations;
  • Reasons for the decision;
  • The number of employees concerned;
  • The total number of employees;
  • The date or period in which the layoffs will take place.

VI. EFFECTS OF COLLECTIVE DISMISSAL

The reasons why the employer has the obligation to communicate all relevant information to the territorial employment agency are of social, moral and pragmatic nature. The main aim is to reduce the dramatic effects of collective redundancy affecting a large group of employees.

Here both Law no. 76/2002 regarding the unemployment insurance system and the stimulation of employment, as well as the Labor Code, come into debate.

The rights and obligations of employees and employers

  1. The collectively dismissed employees shall have priority for re-employment in the case the position is re-established/reinstated in the same activity, without examination, competition or trial if that position was re-established within 45 calendar days from the date of dismissal. The employee shall be notified in writing and will have a maximum of 5 calendar days to give his consent in writing. If he does not respond, or explicitly refuses to be rehired, the employer can call on other people.
  2. Collectively dismissed employees are entitled to unemployment benefits and certain compensatory payments, under the terms of the law and the applicable collective labour agreement.
  3. Employees targeted for redundancy have the right to access all pre-dismissal services. These are generally organized by employment agencies or other accredited providers, and among them are: information on the legal provisions regarding the protection of the unemployed; information about the provision of employment and professional training services; placement on vacant jobs, existing locally; job search training; professional reorientation within the dismissing company or through short-term training courses; surveying the opinion of employees and advising them on measures to combat unemployment.

VII. CONCLUSIONS

In the previous articles regarding the dismissal for reasons related to the employee’s person, respectively the disciplinary sanctions procedure, I recommended the employer turn to a legal consultant and/or an expert in labour law. Iin this case however I emphasize this necessity.

The employer has the right to protect their business by any means. However the obligations and responsibilities are still on thier shoulders, so it is vital that they take the best advice, i.e. relevant and correct information.

Do you have a concern regarding employment or labour law? Feel free to leave me a comment on this article, or contact me privately and let’s figure out your pressing legal issues together!

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