The European Court of Justice: judgment on the directive on collective redundancies

26 June 2015

Soeren Narv Pedersen, Mia Boesen

The European Court of Justice (ECJ) has interpreted Directive 98/59/EF on collective redundancies in a decision of 13 May 2015.

According to the directive on collective redundancies - which is implemented by the Act on Collective Redundancies in Denmark - a number of quantitative requirements must be fulfilled for the directive/act to apply. In this judgment, the ECJ was among other things asked to take a stand on whether fixed-term employment contracts must be counted in the calculation of number of redundancies.

Background:

A Spanish company, Nexea, which is a part of a bigger concern, had two companies: one in Madrid with 164 employees and one in Barcelona with 20 employees. In July 2012, 14 employees were made redundant in the Madrid-company due to the economic downturn. In the period from September 2012 to November 2012 additional 8 employees were made redundant - 4 in the Barcelona-company and 4 in the Madrid-company.

On 20 December 2012, additional 13 employees were made redundant from the Barcelona-company because Nexea chosen to close this company and transfer the remaining member of staff to the Madrid-company.

On this basis, one of the employees took legal actions against Nexea, claiming that his termination - which was a fixed-term employment - was void as Nexea had not followed the procedures for collective redundancies according to the directive. The Spanish court put the case to the ECJ.

ECJ-Judgment:

The Spanish Court asked among other things the ECJ whether

  1. the termination of the fixed-term contracts should be counted in the calculation of redundancies and
  2. whether it is necessary for the cause of the collective redundancies to derive from the same collective contractual framework for the same duration or the same task.

In respect of the first question, the ECJ stated that in relation to collective redundancies no consideration should be taken to fixed-term contracts as a general rule. However, the ECJ also stated that this is only the case if the fixed-term contract expires at the same time as the redundancy. In other words, if the fixed term contract is terminated before its expiry date, this termination should be taken into account in the calculation of redundancies in relation to collective redundancies, while this is not the case if it expires automatically at the same time as the collective redundancies are completed.

With regard to the second question, the ECJ stated that the cause of the redundancies in relation to the collective redundancies is not sufficient. The only relevant thing is that the redundancies are not are justified by the employee's circumstances. Thus, it is not necessary for the cause of such collective redundancies to derive from the same collective contractual framework for the same duration or the same task.

Bird & Birds comments:

For the purposes of establishing whether 'collective redundancies', within the meaning of that provision, have been effected, there is no need to take into account individual terminations of contracts of employment concluded for limited periods of time or for specific tasks, when those terminations take place on the date of expiry of the contract or on the date on which that task was completed. Thus, with this judgment the directive is "limited" a bit.

Furthermore, it is now clear that it is not necessary for the cause of such collective redundancies to derive from the same collective contractual framework for the same duration or the same task.

Authors

Mia Boesen

Junior Associate
Denmark

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