The Voluntary Leave Program as an alternative solution to the collective redundancy procedure

BSJP Brockhuis Jurczak Prusak Sroka Nilsson Sp. k. | View firm profile

Employers who hire at least 20 employees and, due to the difficult economic situation, intend to terminate employment agreements with a considerable group of employees, are obliged to carry out a collective redundancy procedure.Pursuant to the applicable provisions of the act on collective redundancies (Act of 13 March 2003 on the Specific Principles for Terminating Employment Relationships with Employees for Reasons not Related to the Employees Concerned, consolidated text, Journal od Laws 2018, item 1969), an employer is obliged to implement the collective redundancy procedure within 30 days, if they intend to make a collective redundancy concerning:

·        at least 10 employees, if the employer normally hires less than 100 employees;

·        10% of employees, if the employer normally hires between 100 and 300 employees;

·        30 employees, if the employer normally hires 300 or more employees.

The procedure of collective redundancies is complicated and time-consuming, due to the fact that it requires consultation and agreement with trade unions or representatives of employees as well as a notice from the employer to the competent labour office about the adopted arrangements regarding collective redundancies. The employer may provide employees with a statement of termination of their employment agreements only after the aforementioned procedure has been completed. Such an employer who terminates an employment agreement while violating the procedure of collective redundancies (e.g. pays severance pay to employees but does not make any consultations with trade unions/representatives of employees) exposes himself to the risk that the redundant employee may seek compensation from their employer in court due to violation of the provisions related to termination of employment agreements, i.e. compensation in the amount of the employee’s remuneration for the notice period.

Employers who intend to make more employees redundant, and qualify these redundancies as collective redundancies, but for various reasons, e.g. time pressure, are not able to carry out the whole procedure of collective redundancies, may use the Voluntary Leave Program.

The Supreme Court in its case-law stated (judgment of the Supreme Court dated 22.10.2019, ref. no.: I PK 141/18) that an employer has to decide whether to initiate the procedure of collective redundancies, pursuant to the binding provisions of the Act on collective redundancies and the requirements provided therein (consultations with trade unions/representatives of employees, informing the labour office) or to  implement the Voluntary Leave Program.

While implementing the Voluntary Leave Program, an employer shall not be obliged to follow the procedure of collective redundancies and to make consultations with trade unions/representatives of employees or to inform the labour office, nor are the deadlines indicated in the Act on collective redundancies applicable.

Employers may unilaterally formulate a Voluntary Leave Program, without consultation with trade unions/representatives of employees, and may independently determine terms and conditions entitling their employees to terminate the employment agreement within the scope of such Program.

The Voluntary Leave Program may be addressed to all employees who work at the same workplace as well as to a given part of the staff / selected departments of the workplace. Generally, the Voluntary Leave Program shall include certain benefits, primarily financial ones (e.g. severance pay higher than those stipulated in the Act on Collective Redundancies), which are intended to encourage employees to express their will to participate in the Program in question and to terminate their employment contract by mutual agreement.

The Voluntary Leave Program may ensure the following benefits for the employer:

·        saving time and quick way of conducting employment reduction process, without a need to carry out a collective redundancy procedure;

·        elimination of the risk of claims and actions brought before the labour court by the redundant employees against their employer;

·        freedom to determine the requirements for participation in the Voluntary Leave Program;

·        control over the process of termination of employment agreements, by ensuring that an employee’s use of the aforementioned Program is subject to the employer’s consent.

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