The voluntary termination of an employment contract due to unilateral change in working conditions can be a redundancy

Published on 22nd Feb 2016

The termination of the contract following the employee’s claim due to a significant unilateral change to essential elements of the contract which operates to his detriment constitutes a redundancy for the purposes of the EU directive on collective redundancies.

The European Court of Justice ruled on 11 November 2015 regarding a new interpretation of the terminations to be taken into account when calculating the number of redundancies to determine whether it constitutes a collective redundancy.

The EU directive on this issue establishes that terminations of an employment contract which occur at the employer’s will for one or more reasons not related to the individual employees concerned are to be equated to redundancies, provided that there are at least five redundancies.

Under Spanish law, in companies with between 100 and 300 employees, collective redundancy means the termination of employment contracts on business-related grounds that, over a period of 90 days, affects at least 10% of the employees.

The first issue raised relates to the eventual inclusion of employees with fixed term contracts to calculate the limits of a collective redundancy. The Court finds that these employees should be considered to be “normally” employed within the meaning of the directive but should only be counted for the collective redundancy if their contracts are terminated due to business-related reasons and not on the lawful ground that they are temporary.

The main issue discussed relates to the interpretation of the concept set out in the EU directive of redundancy or termination due to reasons not related to the individual employees concerned. In the discussed case, the company had unilaterally changed the working conditions of one employee and she therefore filed a claim under Article 50 of the Workers’ Statute claiming for the termination of her employment since the modification operated to her detriment. The company acknowledged at the conciliation act that the modification in fact operated to the detriment of the employee and that it was unjustified, with the employee receiving the severance established for unfair dismissals.

The European Court of Justice found that this case falls within the definition of redundancy since it is characterised by the lack of employee consent and any other interpretation will deprive the EU directive of its full effect in affording greater protection to employees in the event of collective redundancies.

This decision shows that companies should look deeper into
the causes of each termination (even if it seems that they have reached an
agreement with the employee for that termination) to ensure that they comply
with all legal obligations that may compel them to begin a collective
redundancy proceeding.

Interested in hearing more from Osborne Clarke?

* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Interested in hearing more from Osborne Clarke?