Collective redundancy

The European Directive relating to collective redundancies (Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies) provides the following definition of collective redundancies: ‘dismissals effected by an employer for one or more reasons not related to the individual workers concerned...’.

The Directive is a consolidated version of Directive 75/129/EEC, the original collective redundancies Directive, and Directive 92/56/EEC, which amended the 1975 Directive. The context for the introduction of this Directive was the economic difficulties following the oil crisis of 1973, which led to many closures and restructuring of enterprises. The aim of the Directive is to harmonise Member States' laws on the procedure and practical arrangements for collective redundancies, in order to afford greater protection to workers in the event of collective redundancies.

To be classified as collective, the number of redundancies has to reach the following thresholds stipulated in the Directive:

(i) either, over a period of 30 days: at least 10 in establishments normally employing more than 20 and less than 100 workers; at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers; at least 30 in establishments normally employing 300 workers or more;

(ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question. Terminations of individual contracts can also be included in the relevant numbers (provided that there are at least five) when they take place contemporaneously with the collective redundancies.

The Directive sets out the obligations of employers regarding information and consultation of workers. It states that any employer contemplating collective redundancies must hold consultations with workers' representatives with a view to reaching an agreement. These consultations shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed at redeploying or retraining those workers made redundant.

The Directive also obliges the employer to provide workers' representatives with all relevant information during the course of the consultations and, in any event, must notify them of the following in writing:

• the reasons;
• the period during which the redundancies are to be effected;
• the number and category of workers normally employed;
• the number to be made redundant;
• the criteria used to select those workers to be made redundant;
•  the method used to calculate compensation (where applicable).

The Directive also sets out a procedure for collective redundancies, based on requiring the employer to notify the competent public authority in writing of any projected collective redundancies. The employer then forwards a copy of the notification to the workers' representatives, who may send comments to the competent public authority. Collective redundancies take effect at the earliest 30 days after the notification; the competent public authority uses this period to seek solutions. Member States may grant the public authority the power to reduce this period or to extend it to 60 days following notification in cases where the problems cannot be resolved.

The collective redundancies Directive was one of the three Directives that underwent a Fitness Check exercise as part of the under the European Commission’s REFIT exercise, looking specifically at information and consultation provisions. The results of this Fitness Check were published in 2013. The Commission is now considering possible consolidation or recasting of three Directives in this area: the collective redundancies Directive; Directive 2002/14/EC on information and consultation of employees; and Directive 2001/23/EC on transfers of undertakings. The Commission is expected to consult the social partners on this issue in the near future.

See also: dismissals; flexicurity; information and consultation; REFIT; restructuring