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Restructuring of employment

The year 2020 is not easy for entrepreneurs. According to the data of the Central Statistical Office (GUS), as many as 41 thousand employees were affected by collective redundancies. That is more than in the entire 2019.

It is clear that the requirements and restrictions as well as the economic and social situation in Poland and worldwide, do not have a positive impact on the financial condition of companies. As a result, the companies may need to restructure their employment. The concept of the restructuring of employment should be understood as a deliberate action aimed at making changes in the area of human resources within the company. Restructuring of employment does not necessarily entail the dismissal of employees. The employer may simply decide to reduce employees’ remuneration, reduce the number of job positions or eliminate certain jobs. Restructuring of employment can also bring qualitative changes with modified requirement process, professional framework or job position structure.

Staff costs constitute a large part of the costs of the entrepreneurs. Since April, entrepreneurs affected by the effects of the coronavirus pandemic can benefit from the Anti-Crisis Package, which provides, inter alia, for subsidies to the remuneration of employees. Labour law regulations provide for other instruments (in addition to the Anti-Crisis Package) for the restructuring of employment, including the following:

  • suspension of the application of all or part of the provisions of labour law (Article 91 of the Labour Code, Article 231a of the Labour Code and Article 24127 of the Labour Code),
  • notices of termination amending the contract of employment (Article 42 of the Labour Code),
  • collective redundancies (pursuant to the Act of 13 March on special rules for termination of employment contracts for reasons not related to employees).

The choice of the instruments depends mainly on the goal the employer intends to achieve. Another key question is how much time the employer can devote to implement the changes and whether employee representatives will be involved in the process.

  1. Suspension of the application of all or part of the provisions of labour law

Pursuant to Article 91 § 1 of the Labour Code: “If it is justified by the financial situation of an employer, agreements can be concluded suspending the application of all or part of the provisions of labour law determining the rights and duties of the parties to an employment relationship; this does not apply to the provisions of the Labour Code and the provisions of other laws and subordinate legislation.”

This instrument can be primarily used in the case where the financial situation of the entrepreneur has deteriorated. The arrangement may suspend the provisions of labour law defining the rights and obligations of the parties to the employment relationship, with the exception of the provisions of the Labour Code and the provisions of other laws and subordinate legislation. Moreover, § 5 provides that § 1–4 do not infringe Article 24127 of the Labour Code concerning collective labour agreements. This means that both corporate and supra-company collective labour agreements may be suspended only in the manner provided for in Article 24127 of the Labour Code. Therefore, it may be assumed that the suspensive agreement provided for in Article 91 of the Labour Code refers – as a rule – only to collective agreements, regulations and statutes other than collective labour agreements. The suspensive arrangement may cover all or part of sources of labour law, or even individual provisions. The content of the arrangement should clearly state which source of labour law it refers to which part is to be suspended.

Pursuant to Article 91 § 2 of the Labour Code, the suspensive arrangement shall be entered into between the employer and a trade union representing the employees. If no such organisation is operatingin the employer, it is the employer and representatives of the employees chosen in the standard manner adopted by the employer that enter into the agreement.

The arrangement is primarily aimed at suspending the application of the labour law provisions indicated therein. The regulations remain in force, but do not have legal effects specified therein (pursuant to Article 24127 § 3 of the Labour Code, the application of the regulations shall be excluded by virtue of law on the date of entry into force of the arrangement or on any other date set by the parties).

The suspension of the application of the labour law provisions shall not last longer than 3 years (Article 91 § 3 of the Labour Code). Upon the lapse of the period of suspension, the conditions resulting from the suspended provisions shall be automatically restored.

With respect to employers whose financial situation has deteriorated, and who are not covered by a collective agreement or employ fewer than 20 employees, Article 231a of the Labour Code provides for the possibility of entering into an arrangement on the application of less favourable conditions of employment than those resulting from the employment contracts, in the scope and for the period determined in the arrangement. The provisions of Article 91 § 1–4 of the Labour Code shall apply accordingly to the arrangement. The main purpose of the arrangement is to temporarily suspend the the employment contract conditions and apply less favourable conditions.

If the employer is covered by the corporate collective labour agreement, , then in the case where the employer’s financial situation has deteriorated, the parties to the agreement may, on the basis of art. 24127 of the Labour Code, enter into the suspensive arrangement to suspend the application of all or part of this agreement and/or the supra-company agreement for a period not longer than 3 years.

The main advantage of the instruments indicated in Article 91 of the Labour Code, Article 231a of the Labour Code and Article 24127 of the Labour Code is that less favourable conditions of employment can be introduced by way of a single arrangement covering all employees so that there is no need to notify each employee separately about the changes regarding working conditions and/or remuneration. In addition, these instruments can be introduced relatively quickly. The only condition is the involvement of trade unions or employee representatives.

  1. Notices of termination amending the contract of employment

In order to change the remuneration or other terms and conditions of employment of some employees, the employer may use the notice of termination. However, pursuant to Article 42 § 1 of the Labour Code, the provisions on the termination of an employment contract shall apply accordingly to the notices of termination . Moreover, this form of employment restructuring assumes relative independence of the employer in its actions as it does not require the involvement of employee representatives. The only exception is when trade unions operate in the employer. In such a case, pursuant to Article 38 § 1 of the Labour Code in conjunction with Article 42 § 1 of the Labour Code, the employer shall notify the company trade union representing the employee in writing of the intention to terminate the working and/or pay conditions with respect to the employee employed under a contract for an indefinite period. The period for which the employer can conduct the restructuring of employment by means of notices of termination depends on the length of the notice period. The effects of the notice of termination shall be valid upon the lapse of the notice period .

  1. Collective redundancies

Collective redundancies are probably the most far-reaching instrument of the restructuring of employment as the employer permanently terminates employment relationships with a larger group of employees. However, the employer has to to pay the employees a severance pay the amount of which depends on the employee’s length of service with the employer (we have covered it here).

In addition, the procedure for collective redundancies is quite spread out over time as it requires the employer to cooperate with trade unions or employee representatives. The employer is obliged to notify in writing the company trade unions of the reasons for the intended collective redundancies, the number of employees and the occupational groups to which they belong, the occupational groups of employees covered by the intention of collective redundancies, the period during which such redundancies will take place, the proposed criteria for selecting employees for collective redundancies, the order in which the redundancies will be made and the proposals for resolving employee matters related to the intended collective redundancies. Additionally, if cash benefits are to be included, the employer is obliged to present how the amount of such cash benefits has been determined (the criteria for selecting employees for collective redundancies are described here).

The employer is obliged to provide the above information to the relevant district employment office.

If there are no company trade unions in the employer, the consultative rights of these organisations shall be vested in the employees’ representatives appointed in accordance with the procedure adopted in the employer.

After notifying the trade unions of the intention to carry out collective redundancies, the employer enters into an arrangement with the company trade unions. The arrangement shall set out the rules for dealing with matters involving employees who are the subject of the intended collective redundanciesand the employer’s obligations to the extent necessary to resolve other employee cases related to the intended collective redundancies. If there are no company trade unions in the employer, the rules for dealing with matters involving employees who are the subject of collective redundancies shall be laid down by the employer in the regulations, following consultation with employee representatives. After entering into the arrangement (or determining the conditions in the regulations), the employer shall notify the relevant district employment office in writing of the arrangements for collective redundancies.

The employment relationship within the procedure for collective redundancies may be terminated not earlier than after 30 days as of the date of the above mentioned notification.

 

Marta Strzecha-Bociąga, attorney-at-law

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