InsightsInsight - Employment & HR - POSTED: November 13 2015
European Court of Justice decides on latest development in Collective Redundancy law
The European Court of Justice has decided the latest in a series of cases on the meaning of the EU Collective Dismissals Directive.
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This more commonly known in the UK as the Collective Redundancy laws.
The latest decision decided that where an employer imposed a unilateral pay cut on its employees (above the relevant number thresholds in Spain – 20 or more in the UK within a period of 90 days at one establishment) and as a result of that action an employee resigned (in circumstances we would consider to be constructive dismissal and potentially constructive unfair dismissal in the UK) that resignation was a “dismissal” for the purposes of collective redundancy law.
In other words, if you impose a breach of contract on 20 or more employees at one establishment within a period of 90 days you may now have to comply with the special rules governing collective redundancy consultation before deciding to do so as the decision to impose such changes may be viewed as a proposal to dismiss 20 or more employees by reason of redundancy.
It is conceptually hard to see how proposing to impose a pay cut (not arguably permitted within the contract) equates to proposing dismissals when those dismissals only result from the employee’s decision to resign in response to the imposition. However, this appears to be the position accepted by the ECJ in this case.
This clarification is likely to increase the risks, complicate the processes and restrict the options published to employers seeking to make larger scale contractual changes stopping short of actual job cuts. It makes it even more important to seek legal advice at an early stage before any such proposals are announced or implanted.
This content is correct at time of publication
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