What is the procedure for collective redundancies?

Chapters of the article

• What is mass redundancy?
• What about severance pay?
• Discussions with the union and in the workplace
• Information obligation to the employment office

The economic crisis has affected the financial situation of many Czech companies. In the past year, dozens of them have announced mass redundancies at regional labour offices. However, the number of such redundancies ran into the thousands.

What are mass redundancies?

If the boss in your company has disbanded a team of four, it must be an unpleasant experience for its members, and they may even mention that they have all been “massively fired”. But this may not correspond at all with the definition of collective dismissal under the Labour Code. This occurs when the employment relationship ends within 30 days:

• 10 employees from a company employing between 20 and 100 people,
• 10% of employees in a company of 101 to 300 people,
• 30 employees from a company employing at least 300 people.

It is also a condition that the termination is due to the closure or relocation of the employer or part of it, or that the employees have become redundant due to, for example, organisational changes (decreasing orders, introduction of new technologies, equipment, etc.).

The above-mentioned numbers of redundancies under the Labour Code are met even if only 5 (or more) employees are dismissed and an agreement is concluded with the others to terminate the employment relationship for one of the reasons mentioned above.

Example: if the boss gives notice to the four people mentioned above and concludes a termination agreement with the other ten people in the company, then in general terms the dismissals will appear to be mass dismissals. However, in this case the statutory condition is not met (it is not 5 employees who have been dismissed), so it is not a collective dismissal under the Act.

If, on the other hand, the boss had given notice to six people due to organisational changes and concluded a termination agreement with five others for the same reasons, then, although fewer people will leave overall than in the previous case, it will nevertheless be a collective redundancy under the law.

However, various illnesses and incapacities can also significantly shuffle the cards. The key to assessing a collective redundancy is the actual termination of employment within a certain timeframe. Theoretically, however, there could be a situation where, although the employer intends to hand out terminations, some employees are in a state of sickness (where termination for redundancy cannot be given) or have fallen ill during the notice period and so the notice period has been extended by the period of sickness. In the end, a total of, for example, 10 employees would be dismissed, but within three months. Again, this would not be a mass redundancy.

What about severance pay?

Redundant employees are always entitled to severance pay in the event of collective redundancies. The amount varies depending on the number of years of service. If employees have worked for the company for at least two years, they will receive three salaries. If the employment relationship lasted more than one year but less than two years, the severance payment will be two salaries. An employee who has worked for the company for less than 12 months will only be entitled to one salary.

Discussions with the trade union and at the workplace

If there is a trade union (orworks council) at the workplace, the employer must consult it in advance. In this case, at least 30 days in advance (i.e. before the actual giving of notice), the employer must consult and inform the trade union of the reasons for the collective redundancies, the number of employees to be made redundant, as well as the number and occupational composition of all employees employed by the company, the period during which the redundancies will take place, the right to severance pay and any other rights of the employees to be made redundant.

If no trade union or council is established in the company, the dismissed workers must be informed directly.
The purpose of this obligation to inform is, among other things, to initiate negotiations that could possibly avert collective redundancies and outline other possible solutions. The employer must also ensure that the effects of the intended measures do not jeopardise the social situation of the workers and that all their rights are preserved.

Information obligation to the employment office

You must also communicate with the local Job Centre 30 days in advance to the extent of the above information. In addition, the latter is interested in the selection of the employees to be made redundant and whether and when negotiations with the trade union were initiated.

A further summary report is also sent to the regional employment office 30 days before the termination of the employees’ employment. At this stage, it is already clear how many employees have finally been terminated and what their professional composition is. The report should also include a summary of the negotiations with the trade unions that have taken place.

This obligation is very important and should not be omitted, as it is linked to the actual termination of the employees’ employment. It terminates 30 days after the report is received by the labour office concerned. If the employer is 14 days late in sending it, for example, then the employment of the employees is extended by 14 days. Even if their notice period has already expired. There is only one exception to this rule, and that is if the employee declares that they do not insist on the extension.

Of course, the dismissed employee has the right to know when the message was delivered to the regional employment office.
All of the above rules would apply even if the employer itself, but not the authority or the court, decides on collective redundancies.