How to reduce employee costs on the basis of the Anticrisis Shield?

During the COVID-19 pandemic, the spectre of collective redundancies hangs over many companies. However, by dismissing staff at a large scale, the employer is not only obliged to pay employees a severance due to collective redundancies, but it also loses qualified personnel. In addition, employers that have taken advantage of funding from the State Development Fund should be also eager to retain their employees because of funding repayment terms and conditions.

What should be done if present employee costs are too high?

One of solutions forming an alternative for collective redundancies and allowing to reduce employee costs at the company stems from the Act on special solutions connected with preventing, counteracting and fighting COVID-19, other communicable diseases and crises caused by such diseases.

Pursuant to Art. 15zf.1.3 of the Act, an employer whose business turnover drops as a consequence of COVID-19 and which was not in arrears with taxes, social security premiums, health insurance premiums, contributions to the Guaranteed Employee Benefit Fund, Labour Fund or Solidarity Fund till the end of the third quarter of 2019 may enter into, with its employees, agreements providing for less favourable employment terms and conditions than those stemming from those employees’ employment contracts to the extent and for the period set out in the agreement.

To take advantage of such a solution, the employer must first record a drop in its business turnover as a result of COVID-19. The drop in turnover is defined in Art. 15zf.2 of the Act.

As another condition, the employer should not have been in arrears with taxes, social security premiums, health insurance premiums, contributions to the Guaranteed Employee Benefit Fund, Labour Fund or Solidarity Fund till the end of the third quarter of 2019.

When both of the above conditions are met, the employer may set to designing amendments. It must not, however, enforce the amendments on its own as the agreement providing for the new status of employees must be entered into between the employer and a representative/internal trade union or, if there is no such union at the enterprise, with employee representatives (appointed in the way applicable to the employer).

As regards the most important issue, the agreement may provide for less favourable terms of employment for employees than those stemming from their employment contracts. Thus, only arrangements stemming from the employment contract can be amended. The agreement must not amend any conditions set forth in work rules or remuneration regulations. Collective labour agreements form an exception because based on Art. 15zf.6 of the Act, to the extent and during the period set out in the agreement, terms of employment contracts stemming from an intergroup collective labour agreement and a collective labour agreement of the company and other acts constituting the basis for employment do not apply.

Thus, on the basis of the agreement, the employer may reduce the employee’s wages. However, it is necessary to note that the reduced wages must not be smaller than the minimum pay for work. What is also important, if, for example, the employer’s remuneration regulations provide for a “range of wages” with regard to a given function, the wages must not be reduced below such a range in the agreement because they would exceed the regulations stemming from the employment contract and interfere in issues set out in the company’s internal sources of law.

It is necessary to add that the agreement should provide for a period in which less favourable terms of employment will apply. Otherwise, the agreement cannot be considered as a source of labour law and will be ineffective.

Legal Advisor Marta Strzecha-Bociąga