The new law on mass layoffs
This new law, officially referred to as the Act on the Termination of Labor Relationships for Reasons not Attributable to Employees, otherwise known as the Mass Layoff Law, was signed into law earlier this year on March 13, 2003. The Mass Layoff Law is intended to harmonise Polish regulations with those of the European Union, namely Council Directive 98/59/EC, which was adopted on July 20, 1998. The Mass Layoff Law replaces the current regulations on the mass layoff of employees enacted in 1989.
Are all companies subject to the provisions of the Mass Layoff Law? No. The new regulations, similar to the current set of regulations, only apply to those companies with twenty or more employees. Companies with less than twenty employees are not subject to the Mass Layoff Law.
The Mass Layoff Law distinguishes the redundancy of employees into two separate categories. First, as the name implies, the Mass Layoff Law regulates the large-scale termination of employees. The second category refers to the layoff of individual employees if the reason for the termination is not attributable to the employee.
What constitutes the large-scale redundancy of employees? The answer depends on the size of the company and the number of employees made redundant. The layoff of ten or more employees by a company with less than 100 employees will qualify as a mass layoff within the meaning of Art. 1(1). A company with a work force of more than 100, but less than 300, will be subject to the Mass Layoff Law if at least 10 percent of its employees are made redundant. Companies with more than 300 employees, regardless of the actual number of employees, will be subject to the Mass Layoff Law if more than 30 employees are made redundant. Further, and this represents a major change from the previous regulations, companies will only be subject to provisions of the Mass Layoff Law if the number of redundancies enumerated above occur within a 30 day period.
The previous regulations kicked in if such redundancies occurred within any given three month period. In other words, if a company were to lay off its workforce over a period of time exceeding 30 days, the above thresholds may not apply, thus avoiding the need to comply with the Mass Layoff Law.
Similar to the former regulations, the Mass Layoff Law retains the requirement that the employer must first consult with the employees' union prior to initiating the redundancies. These consultations will be deemed concluded, either upon the execution of an agreement between the employer and the employees' union on the terms and conditions of the layoff, or upon the unilateral adoption by the employer of its own internal bylaws regarding the lay off of employee, if agreement with the employees' union cannot be reached. Further, the employer is required to notify the local employment office about the mass layoff.
The Mass Layoff Law will also apply to the termination of individual employees if the sole reason for the layoff is due to reasons not associated with the performance or fault of the employee. With respect to individual layoffs, the thirty day time period regarding the mass layoff of employees will not apply.
Other than the above procedural requirements, what obligation does the Mass Layoff law impose upon employers? First, depending on an employee's length of employment, the employer will be required to make a severance payment equal to up to three months of the employee's salary. However, the employer will only be required to make such payment up to the amount not exceeding fifteen times the monthly minimum wage then in effect in Poland. As such, the amount of severance due may be less than the actual amount earned by the laid off employee in a three month period. Further, unlike the previous regulations which excluded certain classes of employees from being entitled to receive a severance payment, the Mass Layoff Law does not differentiate among groups of laid off employees. Previously, an employee who conducted a side business, reached retirement age, worked for more than one employer, or operated a farm would not be entitled to any severance payment. Now, however, these groups of employees will have the same rights as other employees.
Additionally, the regulations restricting the lay off of certain protected classes of employees, such as those individuals serving on the boards of unions, employees serving in the military reserve and social work inspectors, have been amended. Under the previous regulations, these special classes of employees could not be made redundant during a mass layoff. Now, however, in the event of bankruptcy or liquidation, no special protection is afforded these groups of employees.
Finally, if and when the employer's fortunes improve, and it becomes necessary to hire new staff, the Mass Layoff Law imposes an obligation on the employer to first offer the new job to those former employees previously laid off, if such position has a similar job description, provided that the new position becomes available within 15 months of the mass layoff, and further provided that the former employee applies for the position within a prescribed time period.
Maja Bińkowska is an associate with Miller Canfield W. Babicki & Partners
Are all companies subject to the provisions of the Mass Layoff Law? No. The new regulations, similar to the current set of regulations, only apply to those companies with twenty or more employees. Companies with less than twenty employees are not subject to the Mass Layoff Law.
The Mass Layoff Law distinguishes the redundancy of employees into two separate categories. First, as the name implies, the Mass Layoff Law regulates the large-scale termination of employees. The second category refers to the layoff of individual employees if the reason for the termination is not attributable to the employee.
What constitutes the large-scale redundancy of employees? The answer depends on the size of the company and the number of employees made redundant. The layoff of ten or more employees by a company with less than 100 employees will qualify as a mass layoff within the meaning of Art. 1(1). A company with a work force of more than 100, but less than 300, will be subject to the Mass Layoff Law if at least 10 percent of its employees are made redundant. Companies with more than 300 employees, regardless of the actual number of employees, will be subject to the Mass Layoff Law if more than 30 employees are made redundant. Further, and this represents a major change from the previous regulations, companies will only be subject to provisions of the Mass Layoff Law if the number of redundancies enumerated above occur within a 30 day period.
The previous regulations kicked in if such redundancies occurred within any given three month period. In other words, if a company were to lay off its workforce over a period of time exceeding 30 days, the above thresholds may not apply, thus avoiding the need to comply with the Mass Layoff Law.
Similar to the former regulations, the Mass Layoff Law retains the requirement that the employer must first consult with the employees' union prior to initiating the redundancies. These consultations will be deemed concluded, either upon the execution of an agreement between the employer and the employees' union on the terms and conditions of the layoff, or upon the unilateral adoption by the employer of its own internal bylaws regarding the lay off of employee, if agreement with the employees' union cannot be reached. Further, the employer is required to notify the local employment office about the mass layoff.
The Mass Layoff Law will also apply to the termination of individual employees if the sole reason for the layoff is due to reasons not associated with the performance or fault of the employee. With respect to individual layoffs, the thirty day time period regarding the mass layoff of employees will not apply.
Other than the above procedural requirements, what obligation does the Mass Layoff law impose upon employers? First, depending on an employee's length of employment, the employer will be required to make a severance payment equal to up to three months of the employee's salary. However, the employer will only be required to make such payment up to the amount not exceeding fifteen times the monthly minimum wage then in effect in Poland. As such, the amount of severance due may be less than the actual amount earned by the laid off employee in a three month period. Further, unlike the previous regulations which excluded certain classes of employees from being entitled to receive a severance payment, the Mass Layoff Law does not differentiate among groups of laid off employees. Previously, an employee who conducted a side business, reached retirement age, worked for more than one employer, or operated a farm would not be entitled to any severance payment. Now, however, these groups of employees will have the same rights as other employees.
Additionally, the regulations restricting the lay off of certain protected classes of employees, such as those individuals serving on the boards of unions, employees serving in the military reserve and social work inspectors, have been amended. Under the previous regulations, these special classes of employees could not be made redundant during a mass layoff. Now, however, in the event of bankruptcy or liquidation, no special protection is afforded these groups of employees.
Finally, if and when the employer's fortunes improve, and it becomes necessary to hire new staff, the Mass Layoff Law imposes an obligation on the employer to first offer the new job to those former employees previously laid off, if such position has a similar job description, provided that the new position becomes available within 15 months of the mass layoff, and further provided that the former employee applies for the position within a prescribed time period.
Maja Bińkowska is an associate with Miller Canfield W. Babicki & Partners
