What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?
Employment & Labour Law (3rd edition)
In case of massive layoff or reduction in force, employers must pursue a statutory crisis-prevention procedure, before dismissing or suspending a specified number of employees for economic or technical reasons, or because of force majeure. The procedure applies to the planned dismissal or suspension on these grounds of more than:
- 15% of employees in enterprises with fewer than 400 employees,
- 10% of employees in enterprises with between 400 and 1,000 employees, and
- 5% of employees in enterprises with more than 1,000 employees. In case of following this special procedure, employers may be able to reduce the mandatory severance package by proving that there has been a crisis situation beyond the employer’s control, which has been unforeseen and alien to the employer. If the employer wants to reduce the severance package, the procedure would be mandatory. But, in case employer pays the full severance package, the obligation of following the procedure would be debatable. 50% of the legal commentators would said that the procedure is always mandatory, and the other half would said the opposite. The court jurisprudence is also divided on this matter.
A large number of dismissals or redundancies can only be undertaken when certain conditions and legal procedures stipulated in LCL are met.
- ‘Mass redundancies’ refer to the termination of at least 20 employees, or less than 20 but accounting for at least 10% of the total number of employees.
- Legal reasons shall be satisfied, such as the employer is under restructuring according to the enterprise bankruptcy law, or encounters serious difficulties in production and business operation, or changes the products; or makes important technological update, or adjusts the methods of its business operation, or considerable changes to the objective economic situation mean the performance of the employment contract can no longer continue.
- Legal procedure must be complied with, for example, the employer shall draft an explanation 30 days in advance to the trade union or to all its employees, solicit their opinions and report the final redundancy plan to the labour administration.
- All employees being laid off must receive severance payment from the employer involved according to LCL.
- The employer shall take the employees’ years of service, the term of his/her contract and his/her family’s needs into consideration when it decides the priority of employees to be kept.
There are no additional considerations for the case of large numbers of dismissals. Nevertheless, the union organizations (if existing) could make collective claims pretending the reinstatement of the workers who have been dismissed. These claims are roughly listened by the authorities, but they may cause a conflicted period.
Redundancies must comply with additional requirements including the necessity to chose the potentially dismissed employees via application of selection criteria which in essence tend to protect the most fragile individuals.
Besides, employers must carry out consultation procedures whose content is determined by the number of layoffs and the size of the company. The timeframe typically ranges from one to four months. An interesting feature is that consultation deadlines (ranging from one to four months, depending on the number of dismissed employees) give employers better planning capacities.
Finally, if a company of 50+ employees contemplates laying off 10+ employees, it must set up a redundancy plan (negotiated with unions and/or discussed with the Works Council) containing inplacement and outplacement measures and have this plan approved by the Labour Authorities. This administrative process tends to secure the redundancy plans, as the latter will only be implemented once the Labour Authorities have issued their authorization.
Collective dismissals may trigger the obligation to issue a formal notification to the Federal Employment Agency.
Furthermore, if a works council is in place, the employer has to inform and consult the works council. If the mass layoff is deemed an “operational change”, the employer is obliged to try to negotiate a so-called reconciliation of interest and a social plan with the works council. As a rule of thumb, a social plan is mandatory, when 10 % or more of the employees are terminated. While the reconciliation of interest deals with the question of describing the operational change in detail, the social plan states the amount of compensation for economic disadvantages that the employees are entitled to.
When planning the operational change, the employer must consider the time (negotiating with the works council) and the costs (compensation).
Redundancy is not a ground of termination of the employment relationship in Chile; however, it can be assimilated to business needs or at will of the employer, as explained under Section 1.2 above.
Under the Labour Law, an employer must take all preventive measures before terminating an employment – this consideration must be taken for all types of termination, including mass termination. In the event of a termination of employment, the employer should consult with the labour union or individual employees before commencing termination. However, please note that consulting with the labour union or the individual employees does not necessarily mean that the employer must obtain their approval or consent. If a termination of employment is unavoidable the employer must obtain approval for termination of employment from the industrial relations court (“Labour Court”).
A specific procedure (the "collective dismissal procedure") within which the employer is charged with information and consultation obligations towards the trade unions/works councils apply whenever an employer staffed with more than 15 employees, due to reduction, transformation or shutdown of activities, intends to dismiss - within a 120-day term - at least 5 employees employed at the same production unit or at different production units within the same province.
Instances of redundancies would often bring about a retrenchment exercise. The Industrial Court generally recognises an employer’s managerial prerogative to reorganise its business to meet its business and operational needs. However, an employer bears the burden of proving that the retrenchment exercise was done bona fide for the objective of reorganising its business and was not intended to victimise the employee(s).
In the selection process for a retrenchment exercise, employers are required, as a general rule, to comply with the “last in-first out” (“LIFO”) principle i.e. longer serving employees should be given the first right of retention over more junior ones unless there are justifiable reasons to depart from LIFO. The Code of Conduct for Industrial Harmony provides guidelines on the best practice and considerations to be taken into account when carrying out a retrenchment exercise.
Termination benefits (more commonly referred to as retrenchment benefits) are payable to employees who fall within the ambit of the Employment Act 1955 (“EA”) so long as they have been employed for at least 12 months. The sum payable shall not be less than the rate of payment set out in the Employment (Termination and Lay-Off Benefits) Regulations 1980 as follows:
Non-EA employees are not statutorily entitled to retrenchment benefits and their entitlement is as stated in their employment contracts or the company’s policy. However, the Industrial Court has recognised the need to afford some compensation to them as they have lost their livelihood by no fault of their own. Bearing this in mind, most employers exercise their discretion to pay them retrenchment benefits and the formula is usually at the rate of 1 month’s wages for each completed year of service.
The employer must also notify the nearest Labour Department of the retrenchment exercise by submitting the PK Form no later than 30 days before the date of intended retrenchment, otherwise the employer may be fined up to RM10,000.
The WEA does not make any distinction between different kinds of redundancies. The threshold for having justifiable reason to terminate an employment contract is the same regardless of the number of employees being made redundant.
If the employer terminates the contracts of 10 or more employees within 30 days, this is deemed to be “collective redundancies” pursuant to the WEA. The number of employees leaving the company as a result of severance agreements within the 30-day period is considered and included in the number of relevant terminations in relation to this statutory provision. Projected collective redundancies cannot take effect earlier than 30 days after the Norwegian Labour and Welfare Organisation has been notified.
Mass dismissals based on the first four authorized causes above, to be valid, must satisfy the following requisites –
- Dismissal due to installation of labor-saving devices:
introduction of machinery, equipment, or other devices;
introduction thereof must be done in good faith;
purpose for such introduction must be valid (e.g., cost savings, enhance efficiency);
no other option available to the employer than the said introduction, and the consequent
termination of employment of those affected thereby; and
fair and reasonable criteria in selecting employees to be terminated.
- Dismissal due to redundancy:
superfluous positions or services of employees;
positions or services are in excess of what is reasonably demanded by the actual requirements of the enterprise to operate in an economical and efficient manner;
good faith in abolishing redundant positions;
fair and reasonable criteria in selecting employees to be terminated; and
adequate proof of redundancy (e.g., feasibility studies, new staffing pattern).
- Dismissal due to retrenchment or downsizing:
must be reasonably necessary and likely to prevent business losses;
losses, if already incurred, are substantial, serious, actual, and real, or if only expected, are reasonably imminent;
expected or actual losses must be proved by sufficient and convincing evidence;
must be done in good faith and not to defeat the employees’ right to security of tenure; and
fair and reasonable criteria in ascertaining the employees to be dismissed or retained.
- Dismissal due to closure or cessation of operation:
decision to close or cease operation of the enterprise by the management;
decision must be made in good faith; and
no other option available to the employer except to close or cease operations.
Mattos: Until the Labor Reform, the employment law did not establish a rule for layoffs/collective dismissals. However, the case law determined that employers had to bargain with the union of employees before proceeding with the collective dismissals.
After the Labor Reform, the law provides that employers may terminate the employees without consulting or negotiating with the union of employees, whether this termination is individual or collective.
Considering that this new disposition is against the current case law on this matter, it is advisable to request legal advice before conducting any collective dismissal.
There are no specific additional legal requirements regarding redundancies. However, if the termination of employment is made without cause or without reasonable cause and fairness to an employee, the employee would be entitled to file a claim in the Labour Court against the employer for damages for unfair termination. Therefore, the employer would need to give careful consideration to the necessity and reasons for the large number of dismissals prior to invoking the termination exercise and implement a fair procedure (using fair criteria) for the selection of employees whose employment would be terminated.
There are no restrictions on an employer’s ability to collectively dismiss its employees. However, the Worker Adjustment and Retraining Notification (WARN) Act requires covered employers to provide notice 60 days in advance of covered plant closings and mass layoffs to: 1) the affected workers or their representatives (e.g., a labor union); 2) the dislocated worker unit in the state where the layoff or plant closing will occur; and 3) to the local government.
In general, employers are covered by the WARN Act if they have 100 or more employees, excluding employees who have worked fewer than six months in the last 12 months and not counting employees who work an average of fewer than 20 hours a week.
A covered plant closing is defined as the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees.
A covered mass layoff is defined as a layoff that does not result from a plant closing, but which will result in an employment loss at the single site of employment during any 30-day period for: (1) at least 33% of the employer‘s active workforce (excluding any part-time employees) and 50 or more employees (excluding any part-time employees), or (2) at least 500 employees (excluding any part-time employees).
Even if a single mass layoff or plant closing does not trigger the WARN Act’s collective dismissal requirements, an employer also must give the 60-day WARN Act notice if the number of employment losses for two or more groups of workers, each of which is fewer than the minimum number needed to trigger notice, reaches the threshold level, during any 90-day period, of either a plant closing or mass layoff.
In addition to the federal WARN Act, many states have implemented their own collective dismissal notification statutes, known as “mini-WARN” laws. The state mini-WARN laws often mirror the federal statute, but may provide additional protections such as increasing the notice period or lowering the minimum thresholds for providing notice. For example, Illinois, Iowa, and New Hampshire, New York, and Wisconsin’s “mini-WARN” acts apply to layoffs of as few as 25 employees.
The term “redundancy” is not defined in the Employment Relations Act 2000. The courts have defined a redundancy as a situation where an employee’s position becomes surplus to the needs of the employer.
The law applicable to termination for cause also applies to no-fault termination for redundancy. A redundancy must be substantively justified. The business decision underpinning the redundancy has to be measured against what a fair and reasonable employer could have decided to do in the circumstances.
A redundancy must be carried out in a way that is procedurally fair. Any process agreed to in an employee’s employment agreement (if any) must be strictly followed. Employees must be informed of their jobs being in jeopardy and be consulted, and the employer must consider any alternatives to redundancy before a final decision is made. Selection of an employee for redundancy must be carried out using fair criteria and the employer must be able to show that it has considered any possibility of redeploying the employee.
Once a final decision has been made to implement redundancy:
- An employee’s agreement may provide for compensation upon redundancy, but otherwise there is no statutory entitlement to redundancy compensation.
- Notice of termination must be given to an employee who is being made redundant. A notice period of termination for redundancy is usually specified in the employee’s employment agreement. If there are no provisions relating to notice, reasonable notice must be given.
A well-resourced employer should consider what assistance it can provide to redundant employees including matters such as providing a reference, support in searching for alternative employment, curriculum vitae development or access to counselling.
If the number of employees in the workplace are between;
- 20 and 100, and at least 10 employees,
- 101 and 300, and at least 10% employees,
- 301 and more, and at least 30 employees,
will be dismissed on the same date or different dates in one month, such dismissal will be defined as collective redundancy.
In case of a collective redundancy, the employer shall make a notification in writing to
- the workplace union representative,
- the Regional Social Security Directorate, and
- Turkish Employment Agency. The notification should contain information regarding the date and cause of termination and the number of dismissed employees. The notice for termination shall be effective after thirty days following the notification made to the Regional Social Security Directorate. If these notification obligations are not fulfilled, administrative fine shall be imposed on the employer for each employee dismissed in this way.
If there is a union representative(s), then a consultation (which should then be documented) shall take place between such representative(s) and the employer, relating to the matters of whether it is possible to eliminate the collective dismissal, to lower the number of employees to be dismissed, and to minimise the negative effects. However, if the employer does not have a collective bargaining agreement or a union membership, a notification to the Regional Social Security Directorate and Turkish Labour Institution is sufficient.
Swiss law contains specific provisions on collective dismissals (Articles 335d et seq CO). A collective dismissal is defined as any notice of termination given by an employer within a period of 30 days, for reasons not pertaining to the employees themselves, to:
- at least 10 employees in companies that usually employ more than 20 but fewer than 100 people;
- at least 10% of employees in companies that usually employ at least 100 but fewer than 300 people;
- at least 30 employees in companies that usually employ at least 300 people.
If an employer intends to undertake a collective dismissal, they must start a consultation process, during which the employees' representative body or, if there is none, the employees themselves, must be informed of the reasons for the collective dismissal, the number of employees affected, the number of people usually employed by the company, and the timeframe within which it is planned to carry out the dismissals. The competent authorities must also be informed that a consultation process is underway and given the above-mentioned information.
The employer must also give the representative body or, if there is none, the employees the opportunity to make suggestions on how to avoid or limit the dismissals and mitigate their consequences.
Once the consultation process is completed, the employer must review the suggestions carefully and notify the competent cantonal authorities and employees in writing of the outcome of the consultation process and provide all necessary information on the planned dismissals. It is only once this notification has been made that notice can be given to the dismissed employees.
Additionally, all companies that dismiss ten or more employees at a time are required by law to notify the competent authorities at the latest on the day that notice is given. In cantons where the local labour market requires it, this number can be lowered. For example, in the canton of Geneva, any company that wishes to dismiss six or more employees must notify the competent authorities.
Moreover, companies that usually employ at least 250 people and intend to terminate at least 30 employees within 30 days for management reasons unrelated to the employees themselves, must establish a social plan. In order to do so, the employer must carry out negotiations with the contracting trade union if the employer is party to a collective labour agreement, or otherwise with the employees' representative body or, if there is none, with the employees themselves. If a social plan cannot be agreed upon during negotiations, an arbitral tribunal must be appointed.
Even though there is currently no statutory obligation for companies that do not usually employ at least 250 people to put in place a social plan in the event of a collective dismissal, it is frequent for companies to choose to do so or to enter into a collective labour agreement which compels them to do so. The aim of such a social plan is to provide benefits to dismissed employees (e.g. severance payments, additional pension contributions, etc.).
The Swedish Co-Determination Act (“CDA”) does not make a distinction between different kinds of redundancies. Thus, the rules concerning redundancies are always triggered, irrespective if one employee or a larger number of employees are affected.
However, a notification to the Swedish Public Employment Service (“ES”) must be made prior to termination when at least five employees are affected by a redundancy. This also applies if the total number of terminations are expected to be 20 or more during a 90-day period. The notice period to the ES is two months if up to 25 employees are affected, four months if 26-100 are affected and six months if more than 100 are affected.
If collective redundancies are planned (triggered by legal thresholds) then the employer must first negotiate a social plan with the personnel representatives (and the unions if a collective bargaining agreement is applicable). The negotiations include the possibility to avoid or mitigate the number of redundancies planned.
If the company should have had personnel representatives (again, triggered by legal thresholds) and does not when the collective redundancies are planned, then it must first organise the social elections to comply with the above.
At the latest when the negotiations for a social plan start, the employer must provide the Employment Office and the personnel representatives (and unions, if applicable) with the reasons for planning the collective redundancies, the number and categories of employees impacted, the number and categories of employees on payroll, the period during which the redundancies are planned (if known), the selection criteria to determine the employees impacted and the calculation method for any extra-legal compensation or the reasons for not considering any such compensation.
Usually the employee made redundant is faced with a choice: he may either choose the benefits of the social plan concluded (and waive his rights in a settlement agreement) or he may renounce them and request the reasons for his redundancy.
In the latter case, the reasons to be provided must follow the general criteria of being specific, real and serious.
Applicability of mass lay-offs/ collective redundancies rules is triggered if, within any 30-calendar-day period, a significant number of employees is made redundant. Such number depends on the employer's total headcount, under the following thresholds: (a) at least 10 employees – if the employer hires more than 20 employees, but less than 100 employees; (b) at least 10% of employees – if the employer hires more than 100 employees, but less than 300 employees; or (c) at least 30 employees – if the employer hires more than 300 employees. Assimilated termination cases (above five, arguably also mutual exits) must be considered.
If so, the employer must (1) observe the same rules as relevant in individual redundancies (a real and serious cause for effectively removing such positions typically, economic reasons), and, in addition, (2) duly follow a significantly more cumbersome procedure (with additional steps and clear deadlines), which includes the legal requirement to consult (sometimes, in 2 rounds) with the appropriate social dialogue partner (trade union or employee representatives) or, if not existing, arguably even with all employees, as well as involvement of several labour authorities.
In practice, the process to lawfully implement collective redundancies can take even up to 3-4 months to complete, plus the notice period to which employees are entitled and the time required to prepare all necessary documentation.
Under Peruvian legislation, collective dismissals are only considered valid under the following scenarios:
a) Due to economic, technological, structural or similar reasons, which generally involves a situation in which the company has been having negative results in its operating profits or in which the continuity of the labor relationship with the workers entails a profit loss.
For this to be a valid cause of termination, it must include at least 10% of the total number of workers in the company and be subject to a procedure before the Labour Authority for its prior approval, which involves:
- Negotiations with the union or worker’s representatives regarding the termination of the employment agreements and the measures that could be taken instead, in order to avoid such dismissal (for example, the suspension of activities or variation on working shifts);
- The filing -among other documentation- of a technical research executed by an auditing company that evidences the cause alleged by the employer for termination of employment; and,
- Conciliation meetings with the worker’s representatives before the Labour Authority.
As you may see from the above, applying the referred cause could be a rigorous procedure, reason why the Labour Authority has only approved three (3) collective dismissals under this modality in the last 14 years.
b) Due to a fortuitous event or force majeure that involves the total or partial disappearance of the workplace. Once again, the Labour Authority will carry out an inspection as described in section 2 (a) (ii) above, in order to approve the dismissals.
c) Due to the dissolution and liquidation of the company, in which the employer must communicate the workers, within a prior notice period of ten (10) calendar days, the date scheduled for the termination of employment.
d) Due to capital restructuring operations. This applies when the company is in a faces a bankruptcy situation.
Considering the difficulties engaged in collective terminations, employers find it more feasible to execute voluntary disengagement plans based on economic incentives, in order to achieve a valid termination of employment agreements with a group of workers. This requires, however, the written consent of worker and –in order to be an attractive alternative for the worker and a legitimate instrument for the employer- the granting of a package of benefits that are beyond the legal standards.
In a redundancy situation, precedent requires that courts apply a strict standard in determining the validity of dismissals. Specifically, a court is required to consider the following four factors in this determination:
- the necessity of reducing personnel,
- the necessity of dismissal as the method of reducing personnel (as opposed to relocation, solicitation of voluntary retirement, etc.),
- the appropriateness of the process for determining which employees will be dismissed, and
- the appropriateness of the termination proceedings, including providing reasonable explanation to the dismissed employees.
There is no material difference in the legal requirement for large numbers of dismissals compared with that for a single dismissal. The employer would need to prove the necessity of reducing such a large number, but generally the same rules apply.
As for procedural requirements in case of termination of employment of 30 or more employees or five or more elderly employees due to redundancy, please see Question 10.
Specific information and consultation rules apply in case of collective redundancy according
to the Collective Dismissal Notification Act. These rules apply when 20 or more employees
are dismissed within a period of three months.
An employer must inform or consult the trade unions, involve the works council if present,
notify the UWV (Dutch Employee Insurance Agency), observe a one-month waiting period,
apply for dismissal permits or terminate the employment contracts with mutual consent and
The notification of trade unions must be done timely as to allow for timely consultation. The
advice of the works council must be requested in writing and in sufficient time for the council
to impact the planned decision significantly.
There are additional rules that apply to large number of dismissals. It is the employer’s general duty to consult the works council when large number of dismissals are planned and inform them about changes affecting the business. If all or most of the employees are negatively affected by the reorganisation, the works council can request a social plan and can also call in an administrative tribunal in order to compel the employer to produce a social plan. As defined in section 45a of the Labour Market Promotion Act, the local Employment Market Service must be notified if the employer wishes to dismiss, within a 30-day period:
- At least five employees in businesses with more than 20 and less than 100 employees
- At least 5 per cent of employees in businesses with 100 to 600 employees
- At least 30 employees in businesses with more than 600 employees, and
- At least five employees aged 50 or over for businesses of any size.
Dismissals declared within a 30-day waiting period are void.
The FLL dedicates a full chapter to this matter (Title 7, Chapter 8). The only reasons for which an employer can dismiss a large number of employees together (collective terminations) are described on article 434 of the FLL, as follows:
1. Force majeure or any unforeseeable event not imputable to the employer, or the employer’s physical or mental incapacity or death, the necessary, immediate and direct consequence of which is the end of work;
2. The known and obvious failure of the business to cover costs;
3. Exhaustion of the subject matter of an extractive industry;
4. The cases referred to in article 38. The employment relationships for mining and mineral extractions that exhaust the minerals or for the restoration of abandoned or paralyzed mines, can be employed for a determined time or project or for the investment of a determined capital; and
5. Insolvency proceedings instituted by creditors or in a lawfully declared bankruptcy.
For a large number of dismissals or a shutdown, the employees are entitled to a full severance payment equal to that of an employee terminated without a justified cause, except in the case of introduction of machinery and equipment, in which case the employees will be entitled to 4 months of integrated salary.
Pursuant to article 437 of the FLL, to dismiss a large number of employees in a lawful manner, the number of jobs in a business or establishment and the lists ranking workers on the basis of qualifications, job category and seniority, shall be taken into account so that workers with the least seniority are the ones first affected.
If an employer proposes to dismiss 20 or more employees within a 90 day period or less, the employer will be required to inform and consult with representatives of affected employees on a collective basis. These obligations are set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The definition of ‘redundancy’ to which they apply is wider than that applying to individual redundancies under the Employment Rights Act 1996. A proposal to dismiss employees for a reason not related to the individuals will fall within the scope of redundancy under TULRCA. This includes, for example, a proposal to dismiss employees for failing to agree to new terms and conditions of employment.
If the employer is proposing to dismiss 100 employees or more within a 90 day period, consultation with the affected employees must begin at least 45 days before the first of the dismissals takes effect. If the proposal is to dismiss 99 or fewer employees, consultation must begin at least 30 days before the first of the dismissals takes effect.
An employer that fails to comply with its obligations to inform and consult with employee representatives, is liable to pay a protective award to employees. The amount is decided by an Employment Tribunal, having regard to what is just and equitable in the circumstances.
The starting point is that a maximum punitive award of 90 days’ actual pay, per employee can be awarded, although in practice the actual award is often less.
An employer must notify the Secretary of State where it proposes 100 or more redundancies within a 90 day period (see question 10 below).
If more than 10% of the total number of employees are envisaged to be dismissed during a two-month period, the employer must submit information about the number of the employees to be dismissed to the Ministry of Labour and Social Relations and to the employees' representative, not later than two months before the dissolution of the labour contracts.
Layoffs or terminations for redundancy may also be referred to as “terminations for managerial reasons.” The Labor Standards Act (“LSA”) sets forth the requirements for a lawful layoff (collectively, the “Layoff Requirements”). Please note that –as a general proposition – satisfying the Layoff Requirements is more difficult than the just-cause requirement for individual terminations. The Labor Relations Commission (“LRC”) and the courts also tend to review layoff case with greater scrutiny than individual terminations, due to the larger number of employees involved in layoffs.
The Layoff Requirements are as follows:
- An imminent managerial necessity for the layoff must exist (e.g., severe financial strain over a period of time without a reasonable prospect of improved financial conditions);
- The employer must make best efforts to avoid the layoff;
- The employer must establish reasonable and fair criteria regarding those to be laid off;
- The employer must consult in good-faith with the employee representative or labor union (if majority union exists) on matters related to the layoff;
- Advance notice must be provided at least 50 days before the scheduled layoff date to the employee representative or labor union (if majority union exists) and good faith consultation in connection thereto; and
- The employer must submit a report to the Ministry of Employment and Labor (“MOEL”) if, in principle, 10% or more of the workforce is being laid off.
Collective redundancy of workers is applied. The employer who expects to have 20 or more redundancies in a 90-day period, out of which at least 5 employment contracts would be terminated because of business conditions, is obliged to consult with the works council and notify the competent public authority responsible for employment about said consultations. During a 30-day period the competent public authority responsible for employment may request the employer to postpone either collective or individual redundancies for a maximum of 30 days if the employer is able to ensure the continuation of employment for the workers during this extended period.
Special rules apply to collective redundancies, which arise where during any period of 30 consecutive days, the number of employees being made redundant are:
(a) five employees where 21-49 are employed;
(b) ten employees where 50-99 are employed;
(c) 10% of the employees where 100-299 are employed; or
(d) 30 employees where 300 or more are employed.
The employer is also required to provide certain prescribed information in writing to the Minister for Employment Affairs and Social Protection at the earliest opportunity and, in any event, at least 30 days before the first notice of dismissal is served.
The employer is also obliged to consult with the employees' representatives with a view to reaching agreement about avoiding the proposed redundancies, reducing the number of employees affected, mitigating their circumstances by redeploying or retaining and deciding the basis on which it will be selected for redundancy. Individual employee consultation is also advisable before implementing any redundancies.
Employees with more than two years' service are entitled to a statutory redundancy payment. This payment is calculated based on two weeks' pay for every year of service and one further week's pay, subject to a maximum weekly earnings limit of €600. The statutory redundancy payment is tax-free. In addition, employees may also be entitled to an enhanced redundancy payment based on implied or express terms in their contracts.
It would have to make agreements between the parties, which are framed in the law.
The following rules apply as from two employees being dismissed. Failure to meet the provisions below is punishable by criminal laws.
The reality of economic difficulties
Employers basing dismissal on economic grounds must prove that the dismissal is justified by economic difficulties or the necessity to safeguard the competitiveness of the company, as well as the effectiveness of the abolition of the post.
The mandatory consultations and timeframe
The Labour Inspectorate and the staff representatives, if any, must be informed of the proposed redundancies and the relevant economic factors, as well as the order of lay-offs and the measures to limit the dismissals.
Whether the redundancy is justified by economic difficulties, a merger, a company restructuring or the departure of the company from the territory of the Principality of Monaco, the staff representatives must be summoned to negotiate before the final decision is taken.
2.2.1 When the dismissal is justified by economic reasons, a period of 8 days to 1 month (depending on the number of dismissals envisaged) must be respected between the 1st meeting of the staff representatives and the final decision.
2.2.2 In the event of collective redundancies envisaged within a period of 6 months, following a merger of several enterprises, a concentration of the means of production between several establishments dependent on one or more enterprises, a restructuring of the company or departure from the company of the territory of the Principality, the period between the first meeting of the staff representatives and the final decision is increased from 1 to 3 months depending on the number of dismissals envisaged.
The order of dismissal
For each professional group concerned by the redundancies, the employer must respect the order of dismissal provided by the law as follows:
1° Foreigners domiciled outside the bordering towns;
2° Foreigners domiciled in the bordering towns;
3° Foreigners domiciled in Monaco;
4° Foreigners married to a Monegasque;
5° Monegasque nationals.
In each of the above categories, seniority in the workplace will be taken into account; if the employee has been working there for two years, at least one seniority bonus of one year per dependent child will be granted. This bonus cannot exceed five years.
When the dismissal only affects one occupational category, the employee affected by this measure may apply to be paid into a lower category under certain conditions.
Non-compliance with these provisions is punishable by criminal laws.
Priority of re-employment and measures to reduce the number of dismissals
Employees dismissed are entitled to a priority of redeployment and employers who foresees a redundancy must reduce as much as possible the number of dismissals by resorting to retirements or voluntary departures.
The re-employments take place in the inverse order to the dismissals.