Changes in the Internal Organization and Job Classification in the Process of Resolving Redundant Employees – When Must the Rulebook Enter into Force?

Changes in the Internal Organization and Job Classification in the Process of Resolving Redundant Employees – When Must the Rulebook Enter into Force?

March 13, 2024

In Decision Rev2 987/22 dated May 12, 2022, the Supreme Court of Cassation (now the Supreme Court) took the position that an employee’s employment can be terminated due to redundancy even before the rulebook on internal organization and job classification, which introduced organizational changes at the employer, comes into force, or before its implementation begins.

The reasoning in the subject decision states, among other things, that this position was taken because the basis for issuing the termination decision in the specific case was not the regulation (on organization and job classification) but rather the decision was made as part of the redundancy program, executed in accordance with Articles 153-160 of the Labor Law.

Previous case law

However, this stance differs from previous case law on the same issue.

According to the ruling from the decision of the Supreme Court of Cassation Rev2 2738/17 dated October 24, 2018, established at the session of the Civil Department on February 12, 2019, it is unlawful to terminate an employment contract before the regulation on internal organization and job classification, by which a department (organizational unit within the employer) where the plaintiff (employee) worked and their position with the employer were abolished, comes into effect.

The court justified this stance by stating that, at the time when the contested termination decision was made, the department (where the plaintiff worked) still existed. Thus, due to the prohibition of retroactivity, the defendant, i.e., the employer, could not issue the aforementioned decision.

Legal provisions

The Labor Law stipulates that the rulebook on internal organization and job classification determines the organizational units within the employer, job titles and descriptions, required qualifications, and other specific conditions for working in those positions.

In addition to the above, the Law states that an employee’s employment can be terminated if there is a justified reason related to the employer’s needs, specifically if, due to technological, economic, or organizational changes, the need for certain work ceases or the workload decreases. In such cases, the employment contract of the redundant employee is terminated by a decision, or if the conditions prescribed by the Law are met, the employer is obliged to adopt a program for resolving redundant employees.

According to Article 196 of the Constitution of the Republic of Serbia, laws and all other general enactments are published before they come into force and take effect no earlier than the eighth day from the date of publication, unless there are particularly justified reasons determined during their adoption. Furthermore, Article 197 of the Constitution states that laws and all other general enactments cannot have retroactive effect. Only certain provisions of the law can have retroactive effect, if it serves the general interest determined during the law’s adoption.

Conclusion

While undoubtedly commendable for advancing a less formalistic approach, which often burdens the law excessively, the shift in judicial practice toward reducing formalism can, in certain cases, create room for legal uncertainty and abuse.

Given the above, the question arises as to how organizational changes (regarding organizational units and positions within the employer), especially for employers with a legal obligation to adopt this enactment (employers with more than 10 employees), are implemented if not through amendments to the rulebook on internal organization and job classification, so – according to the latest judicial stance – the effective date of the act implementing these changes becomes irrelevant.

This is particularly pertinent when organizational changes result in the cessation of certain work positions, i.e., deletion of specific positions within the employer. Namely, the process of resolving redundant employees in this case involves:

  1. identifying the need for organizational changes;
  2. analyzing the existing internal organization and job classification at the employer;
  3. making changes to the internal organization and job classification to meet the employer’s actual needs;
  4. terminating the employment contracts of employees identified as redundant due to these changes (whose positions are being abolished).

In other words, certain employees become redundant by the elimination of their positions, which occurs precisely when the amendments to the rulebook on internal organization and job classification take effect. Until that moment, their positions exist, and therefore, the employees are not redundant.

Even in cases where redundancy results from a reduction in workload for certain positions, in which case the work positions are not eliminated but the number of employees in them decreases – if the number of employees is specified in the rulebook on internal organization and job classification – the redundancy again occurs when the amendments to this enactment take effect.

According to the above, the only situation in which the effective date of the amendments to the rulebook on internal organization and job classification is generally irrelevant for determining redundant employees due to organizational changes within the employer is when redundancy results from a decrease in workload, i.e., the number of employees in specific positions, but the number of employees is not specified in the subject enactment. However, in this case, there is no need for passing amendments to the rulebook on internal organization and job classification, so it remains unclear how the court arrived at the conclusion stated at the beginning of this article.

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