COLLECTIVE DISMISSAL OR REDUNDANCY
COLLECTIVE DISMISSAL OR REDUNDANCY
This subject was regulated by Collective Agreement No. 10 of May 8, 1973. The Agreement was concluded within the National Labour Council following the National Labour Conference of 1972. It is rooted in the notion that employees should not become the victims of social and technological progress. Employees who lose their jobs in a collective redundancy situation, for economic or technical reasons, receive special compensation paid by the employer.
Within the meaning of the Agreement, collective redundancies are deemed to occur when, within a period of 60 days, at least 10 per cent. of employees are dismissed (10 per cent. of the average number of workers employed during the calendar year preceding the dismissals). In the case of enterprises (defined as technical work/production units) with 20-59 employees, collective redundancies are deemed to occur if at least six employees lose their jobs. For manual workers, special formulas are also stipulated by the Agreement. The coal and steel industries (covered by the ECSC Treaty) are also excluded.
In collective redundancy situations the employees who are dismissed receive a special form of compensation called "vergoeding wegens collectief ontslag/indemnité due en cas de licenciement collectief" (redundancy compensation), which is equal to half of the difference between a net reference wage and the unemployment benefits they are able to claim and which is payable for a period of four months.
No such compensation is payable in cases of closure of the enterprise. Furthermore, the four-month period for which compensation is payable is reduced by the length of time by which the period of notice exceeds three months. Thus, if the period of notice is six months, the employee will receive compensation for only one month instead of four months; and if the period of notice is seven months, no compensation is payable. In short, many white-collar workers whose length of service in the enterprise is more than five years are ineligible for such compensation.
In execution of the EEC Directive of February 17, 1975, on the approximation of the laws of the Member States relating to collective redundancies, the National Labour Council concluded Collective Agreements Nos. 24 and 24a. Here, "collective redundancies" are defined as covering any dismissal of one or more employees, for reasons not related to the individual employees concerned (economic or technical reasons in the broad sense), where over a period of 60 days the number of employees dismissed is:
1. at least 10 in technical work/production units which, during the calendar year preceding the dismissals, employed on average more than 20 but fewer than 100 workers;
2. at least 10 per cent. of the number of workers in technical work/production units which, during the calendar year preceding the dismissals, employed on average at least 100 but fewer than 300 workers;
3. at least 30 in technical work/production units which, during the calendar year preceding the dismissals, employed on average at least 300 workers.
Any employer who is contemplating collective redundancies is under an obligation to inform the employees' representatives and start consultations with them on the matter. These consultations must cover possible ways and means of avoiding collective redundancies or limiting their number, and mitigating their consequences. To this end, the employer must supply the employees' representatives with all relevant information and in any event give them in writing the reasons for the redundancies, the number of employees to be made redundant, the number of workers normally employed and the period over which the redundancies are to be effected, so that the representatives will be able to formulate observations and proposals.
Any projected collective redundancies, even if associated with the closure of an enterprise (not ensuing from a court ruling), must be notified to the head of the subregional Employment Office. The employer is not permitted to give the employees concerned notice of dismissal earlier than 30 days after the official notification of the projected collective redundancies.
In conformity with Collective Agreement No. 27 of November 27, 1975, work/production units which employ on average at least 50 workers are required to inform the works council or the "union delegation " immediately when the enterprise has been in arrears for three months with payments to the National Office of Social Security, VAT, direct taxes or payments to secured creditors or mortgagees. The Investigating Office for Enterprises in Difficulties is also informed. See also Redundancy Payments Fund .
Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.