Collective Redundancy

Yet another stab at defining ‘redundancy’ for the purpose of collective redundancy consultation.  

In Pujante Rivera v Gestora Clubs Dir SL and another ECJ has revisited the definition of ‘redundancy’ in the European Directive to assess when the collective redundancy consultation process should be triggered.

In this case Gestora made 10 employees redundant for economic reasons. During the 90 day period a further 22 contracts were terminated for various reasons and these terminations included one employee who resigned in response to a unilateral 25% cut to her salary. Pujante Rivera was affected by the redundancy and argued that the company had failed to comply with collective consultation provisions as they did not count the resignation when calculating the number of people affected.

The ECJ held that aim of the Directive was to afford workers greater protection in the event of collective redundancies. It was noted that case law has already established ‘redundancy’ does cover any termination of an employment contract not sought by the worker and, therefore, without his consent. In this case while the employee resigned and so could be said to have agreed to the termination of her contract, she did so in response to the unilateral change made by her employer to an essential element of her employment contract for reasons unrelated to her personally. They therefore held that excluding employees whose contracts are terminated in this type of situation would be to deprive the Directive of its full effect.

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JSC MOTIF lime  Comment

We have accepted for some time that redundancy has a wider remit than the definition of a statutory redundancy for collective consultation purposes. It is well established that changing contractual terms which results in the dismissal and re-engagement of employees on new terms has come within the remit of “dismissals effected by an employer for one or more reasons not related to the individual workers concerned”.

In this decision the ECJ has now confirmed that this wider definition of “redundancy” also embraces situations where an employer unilaterally makes significant changes to terms and conditions, for reasons not related to the individual employees, which results in resignations.

In her opinion on this case, the Advocate General argued that any unilateral change to terms and conditions of employment, which substantially degrade the working conditions should trigger the same collective consultation protection for employees as a redundancy situation.

The key in this type of case will be to assess the proposed variation to the contracts to determine whether it will be so significant to justify bringing any subsequent resignation into the scope of the collective redundancy consultation.

 Julie Bann Signature

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