The Labour Law (“the Law”) prescribes, among other, that employee’s employment may be terminated if there is justified reason which refers to employer’s needs and if due to technological, economic or organisational changes the need for certain job ceases or if the scope of work is reduced.
In relation thereto, the Law also stipulates that, if it establishes that technological, economic or organisational changes will terminate the need for work of full-time employees and if other legally prescribed requirements are met (with regard to the number of full-time employees engaged by the employer and time period in which the need for their work will cease), employer shall be obliged to adopt a program for redundancy resolution. One of the mandatory elements of this program are employment measures, namely transfer to other jobs, work for another employer, retraining or additional training, part-time work but not less than half-time and other measures.
In case of employment termination on the stated grounds (so-called technological redundancy), employer shall be obliged prior to termination of employment contract to pay severance to the employee, as set out by the Law.
In addition, the Law prescribes that employer may offer to the employee the change of working terms, including for secondment to appropriate job with another employer, in accordance with Article 174 of the Law. Accordingly, Article 174 of the Law prescribes that:
- An employee may be temporarily seconded to work for another employer at an appropriate job if the need for their work has temporarily ceased, if business premises are rented or business cooperation agreement concluded, while reasons for secondment are in place and no longer than one year.
- With previous consent, in previously mentioned cases and in other cases established by general act or employment contract, an employee may be temporarily seconded to work for another employer longer than one year, while reasons for secondment are in place.
- The employee and the employer where he/she has been seconded to shall conclude a fixed-term employment contract.
- Upon expiry of the period of secondment to another employer, the employee shall have the right to return to work for the employer which seconded them.
In relation to the above, the Supreme Court of Cassation (“SCC”) passed a Decision no. Rev2 433/2016 on March 17, 2016 (“the Decision“) and assumed an unusual as well as disputable position.
Namely, the Decision was passed upon revision stated against second-instance decision, in the case with the following factual situation:
- Employer changed the rulebook on organization and job classification, thereby closing an entire organizational part (service);
- Accordingly, the employer established the surplus of employees in jobs within the stated service (deleted from the rulebook) and adopted a program for redundancy resolution in terms of the Law;
- Within measures for employment of surplus employees, the employer concluded an agreement on employee takeover with another employer; and
- Based on the concluded agreement, the employee (plaintiff) was seconded according to annex to the employment contract to work for another employer and afterwards terminated their employment contract on basis of technological redundancy.
In relation to that, the SCC took a position that the stated annex to the employment contract and decision on contract termination are unlawful for the following reasons:
- The Law stipulates that work for another employer represents one of employment measures within redundancy resolution program;
- However, the adoption of such measure for redundancy resolution does not in itself represent a reason for employment termination;
- In order to lawfully terminate an employee’s employment contract, the employer is obliged to pay appropriate severance to the employee before termination;
- The law prescribes that employer may offer to the redundant employee an annex to the employment contract if the latter provides for exercising of rights on such basis, i.e., within redundancy employment measures;
- According to the Law, an employee may be seconded to work for another employer only temporarily.
In other words, the SCC took a position that secondment of employee to work for another employer within redundancy resolution measures is only possible under the terms specified by the Law with regard to secondment to work for another employer, i.e., annex to the employment contract and for a fixed term, while the stated situation does not represent a basis for termination of employment contract by virtue of the Law.
Why is such position of SCC disputable?
The SCC position essentially means that if an employee’s employment contract was terminated on grounds of redundancy and appropriate severance was paid, and such employee has, by efforts of the employer who terminated their contract, started employment with a new employer, such termination would not be unlawful, however the work for another employer as a measure for redundancy resolution becomes absurd.
The Law on Labour explicitly prescribes that employee may be temporarily seconded to work for another employer at an appropriate job, by conclusion of annex to the employment contract if:
- the need for their work has temporarily ceased,
- if business premises are rented, or
- business cooperation agreement was concluded.
Therefore, Article 174 of the Law does not stipulate the existence of so-called technological redundancy with an employer as a basis for employer to offer to the employee modification of the agreed terms of work, i.e., conclusion of annex to the employment contract according to this article.
On the other hand, Article 155, para. 1 of the Law stipulates the following employment measures that may be provided for by the redundancy resolution programme: transfer to other jobs, work for another employer, retraining and additional training, part-time work but not less than half-time and other measures. Nevertheless, the Law does not specify that this is secondment to work for another employer within the meaning of Article 174 of the Law.
Therefore, the SCC extremely extensively interprets both of the stated provisions of the Law, while it is questionable whether the measure of secondment of technologically redundant employee to work for another employer, in case of secondment under Article 174 of the Law, i.e., for a temporary period (no longer than one year i.e. with employer’s consent, while reasons for secondment are in place), is suitable for the objective, i.e., for the purpose of employment measures. Namely, what happens in a situation where secondment period expires, while the employer who seconded the employee to another employer still has no need for the work of the seconded employee?
Please be reminded that the Law notes in Article 153, para. 1 the termination of the need for work of full-time employees, while it does not restrict it to temporary termination of such need.
In relation thereto, according to the Opinion of the Ministry of Labour and Social Policy no. 117-00-466/2011-02 of 15 August 2011, employer may declare employee redundant only if the need for employee’s work permanently ceased, and in case it temporarily ceased the employee may be temporarily seconded to work at appropriate job for another employer.
What is particularly concerning is the fact that such position of the SCC, alike the position regarding the termination of employment contract during trial period (article available here), creates significant legal uncertainty, considering that this regime is not explicitly prescribed by the Law but the SCC enforces the law along with interfering with its creation.
Later case law
The fact that in a Judgment Rev2 1188/2015 of April 13, 2016 (“the Judgement”), which was passed less than a month after the Decision, in a case with essentially the same factual and legal situation, the SCC has taken a different position, further contributes to the legal uncertainty.
Namely, in the Judgement the SCC took the position according to which the second-instance (appellate) court acted correctly when it found that the disputed annex to the employment contract and the decision on the termination of the employment contract were legal, by which annex the employee, as part of the measures to resolve the redundancy, had been sent to work with another employer, and by which decision his employment contract was therefore terminated. The SCC stated therein:
- that by concluding the subject annex the employee accepted the transfer to another employer;
- that it is a discretion of the employer which employment measure from the Labor Law will be applied; and
- that in this particular case the employer is not obliged to pay the employee severance pay, since severance pay is a monetary compensation paid by the employer to the employee for loss of salary that occurs through no fault of the employee, i.e., when the need for the work that he was working on ceases, and the employee’s employment contract is therefore terminated, i.e., its purpose is to provide the employee with financial support in the period from the termination of one employment relationship until the establishment of another employment relationship (which period does not exist in this case).
It remains to be seen therefore if these dilemmas will be eliminated in future court practice upon the matter concerned, or by relevant amendments to the Law, in order to regulate employers’ obligations and available options more clearly and transparently, which will definitely contribute to better protection of employees’ rights.
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