When Can You Be Laid Off Due to Redundancy?

Quick Overview

An employer may terminate an employee for redundancy only if they have previously decided on a genuine organizational change—such as eliminating a position, merging departments, or scaling back operations. Simply writing “organizational reasons” in the termination notice is not sufficient. The employer must be able to document what change has occurred and why you have become redundant as a result. If your position is soon to be filled by someone else or if the job title changes only slightly, the termination may be invalid.

Do you suspect that your termination for redundancy is just a pretext? Send us your termination notice and employment contract for review. An attorney will verify whether the conditions for an organizational change have been met, whether you are entitled to severance pay, and whether you have grounds to challenge an invalid termination.

An employer’s grounds for termination are limited

As an employee, you have it much easier when it comes to termination: you can resign at any time and for any reason. Conversely, an employer must always state a clear reason. The grounds for termination by the employer are specified in the Labor Code; otherwise, the termination is invalid. These grounds must be described in detail—a mere reference to the law is not sufficient.

Any employee conduct that led to the termination must also be clearly defined. The notice of termination must be in writing. The employment relationship ends upon the expiration of the notice period, which is 2 months, unless you and the employer agree otherwise in writing; the notice period begins on the day the notice is delivered.

If the employer makes a mistake when terminating the employment relationship and does not cite the correct grounds for termination, the employee may challenge it in court. A dispute over the invalidity of the termination of employment can be lengthy, and throughout that period, the employee’s claim for lost wages continues to accrue, potentially reaching hundreds of thousands of crowns without difficulty.

A lack of thoroughness in preparing legal documentation can thus prove devastating for an employer; therefore, it pays to consult with an attorney in advance in cases of dispute.

Are you unsure whether your employer described the reason for termination in sufficient detail? In cases of termination for redundancy, the details are crucial—the date of the organizational change, the connection to your employment contract, and whether the employer truly had no other work to assign to you. As part of our review of your termination notice, we’ll let you know whether it makes sense to contest it and what course of action to take.

Planning Organizational Changes

The COVID-19 pandemic and the ensuing economic crisis have led to the closure or downsizing of many operations. In this context, employees have faced a common reason for termination of employment: termination due to redundancy. However, from the employer’s perspective, this is a valid legal step if organizational changes are actually taking place, such as the merger of the PR and marketing teams, the downsizing of a specific production segment, or the closure of a branch in a particular city.

In the words of the Labor Code, these are situations where there is:

• the dissolution of the employer or part thereof,
• relocation of the employer or part thereof,
• an employee becoming redundant as a result of the employer’s decision to change the employee’s duties, technical equipment, reduce the workforce to increase work efficiency, or implement other organizational changes.

The decision regarding the organizational change must be made first, even before the employee receives notice of termination. It does not necessarily have to take a specific form—for example, minutes from a company management meeting are sufficient—but this decision must be verifiably communicated to the redundant employee. A properly prepared document, such as a template for a notice of termination due to redundancy, can significantly ease the entire situation for the employer.

Furthermore, there must be a causal link between the organizational change and the employee’s redundancy, and this change should genuinely lead to greater operational efficiency for the employer.

In practice, it is precisely this causal link that is most often the weakest point of a termination notice. If an employer claims that your position has been eliminated but part of the work is still being performed by a new colleague or an outside contractor, the termination may not automatically be valid. In such a situation, we recommend having the termination notice reviewed before you begin negotiating a settlement or sign any amendment.

Beware of Unnecessary Costs

However, be careful in situations where you terminate an employee’s employment effective on the date when the organizational change that renders them redundant takes effect. In that case, the employee’s notice period is still running, but the employee no longer has work to perform for you, since their position has been eliminated or merged with another.

Nevertheless, the employer must pay the employee compensation equal to their average earnings until the end of the employment relationship (i.e., until the notice period expires). If we also take into account any entitlement to severance pay, the employer will pay the employee wages equivalent to 3 to 5 months’ pay, even though the employee has not performed any work, solely as a result of the poor timing of the organizational change.

If we assume that, in the vast majority of cases, an employee’s redundancy is a problem that develops over a long period of time and can therefore be anticipated, a very simple and elegant solution is to terminate the employee’s employment due to redundancy resulting from an organizational change that has been decided upon but will not take effect until the future. In such a case, the affected employee will continue to work until the end of the notice period, and the employer will not incur what is known as a “dead cost.” The above procedure is also recognized and approved by the courts.

Trade Union Consent

If a labor union operates at the employer’s company, the employer is required to first discuss each termination with the union in advance; if the termination directly affects union members, it is conditional upon obtaining the union’s consent. This consent remains valid for a period of two months, during which the employer must, if necessary, give the employee notice of termination. A template for a notice of termination due to redundancy should therefore include the following information to facilitate the process.

Fictitious Organizational Reasons

We were approached by Ms. Kristýna, who worked as an assistant to the director of one of the company’s regional branches. The previous director, her boss, was under intense pressure from various quarters, and he ultimately failed to retain his position and left. The new director demanded that his two existing (and loyal) assistants leave with him and fired them both. He justified this by citing organizational changes.

Subsequently, the number of assistants was indeed reduced from two to one, and this position was filled by a new colleague whom the director had brought in from his previous workplace. As part of the stated organizational change, there was also a slight adjustment to the job description, and the new assistant was assigned a certain portion of the accounting and financial responsibilities. Conversely, however, she was relieved of a portion of her duties that involved organizing numerous meetings and taking minutes. Ms. Kristýna nevertheless believed that her termination was invalid.

When assessing redundancy, the type of work agreed upon in the employment contract is taken as the basis. Redundancy, therefore, cannot be linked to an organizational change that renders the employee’s previous duties unnecessary if the employer still has the option to assign the employee different work within the scope of the agreed-upon type of work.

When courts assess the validity or invalidity of a termination, they do not rule on the organizational change itself, but they naturally take it into account and consider it in the context of the termination. Case law clearly indicates that hiring another employee to fill a position from which a previous employee was “let go” due to redundancy is generally evidence that the reason given for the termination was unfounded.

We helped Ms. Kristýna draft a complaint to the court challenging the validity of her termination. The employer argued that the new position of assistant has a radically different job description and is incompatible with Ms. Kristýna’s previous job duties; however, the court found that the employer had both the opportunity and the obligation to assign work to the employee in accordance with her employment contract, even under the new organizational structure.

In assessing the situation, the court also took into account the fact that both existing assistants had been dismissed, which indeed indicated a desire for personnel changes rather than organizational changes. If, as a result of organizational changes, only one of them had been dismissed, the situation would have been different. As it stood, however, the court ruled the termination invalid and awarded Ms. Kristýna both back pay for the entire duration of the dispute and reimbursement of litigation costs.

Summary

Termination for redundancy is valid only if the employer has decided in advance on an actual organizational change and, precisely because of that change, no longer has work for the employee as specified in the employment contract. A general statement about reorganization or the formal elimination of a position is not sufficient if someone else continues to perform the work in the same or a very similar position. In cases of organizational reasons, an employee is generally entitled to severance pay based on the length of employment, and the employment relationship ends only upon the expiration of the notice period. Effective June 1, 2025, the start of the notice period for newly served notices of termination has changed—it now begins on the date of service. If you suspect that the redundancy is a pretext, do not delay in reviewing the notice of termination, as the defense against an invalid termination of employment is subject to statutory deadlines.