This particular method of terminating the contract of employment is governed by the Act of 13 March 2003 on special rules on termination of employment for reasons not attributable to employees.

It applies where the grounds for termination do not relate to the employee, including where they are independent of the employer. They may include bankruptcy or liquidation of the employer, economic, organisational or employment reduction reasons.

This act applies to employers with at least 20 employees. If fewer than 20 employees are employed, the employer may dismiss employees on general terms.

This act governs both collective and individual redundancies.

Collective redundancy is redundancy which covers, within a period of 30 days:

• 10 employees, where the employer employs fewer than 100 employees,
• 10% of employees, where the employer has at least 100 employees, however, fewer than 300,
• 30 employees, where the employer has at least 300 employees.

Individual redundancy is redundancy which is not collective redundancy (that is, it does not cover enough employees to count as collective redundancy).

In principle, collective redundancies include the termination of contracts of employment. However, they also include agreements of the parties if at least 5 employees are covered by the redundancy in such manner.

In the event of a collective redundancy, the employer shall:

• consult with the trade unions, and where there are no trade unions – with representatives of employees selected in accordance with the procedure adopted by the employer,
• subsequently, conclude an agreement laying down the rules for collective redundancies and, where there are no unions – issue regulations for collective redundancies,
• notify the district employment office of the established rules for collective redundancies.

The act contains numerous restrictions on collective redundancies. For example, pre-retirement age employees, pregnant employees, employees on maternity leave may only be given an amending notice concerning terms and conditions of work and remuneration while they retain the right to compensatory allowance.

If the collective redundancies are a consequence of liquidation or bankruptcy, special protection against dismissal is cancelled.

An employee who is covered by collective and individual redundancy is entitled to a severance payment. The amount of that severance payment depends on the length of service of the employer concerned and amounts to:

• one-month remuneration if the employee has been employed by the employer for less than 2 years;
• 2-month remuneration if the employee has been employed by the employer for between 2 and 8 years;
• three-month remuneration if the employee has been employed by the employer for more than 8 years.

The amount of the severance payment may not exceed 15 times the minimum wage applicable on the date on which the employment relationship is terminated.