Brussels, 12/11/2015 (Agence Europe) - When an employer terminates an employment contract if a worker refuses to accept a “significant unilateral change to essential elements of the contract”, which operates to his detriment, such as a cut in wages, is nothing less than a redundancy.
This is effectively what the European Court of Justice decided in this case (C-422/14) on Wednesday, 11 November on the basis of Directive 98/59/EC on the approximation of member states' legislation on collective redundancies.
For the purpose of determining whether there is a collective redundancy, this directive establishes the number of redundancies over a certain period (30-90 days). Therefore, the directive stipulates that terminations of an employment contract which occur on the employer's initiative, “for one or more reasons not related to the individual workers concerned” are to be equated to redundancies, provided that there are at least five redundancies.
Under Spanish law, in undertakings employing between 100 and 300 workers, “collective redundancy” means the termination of employment contracts on objective grounds where, over a period of 90 days, the termination affects at least 10% of the workers.
A Spanish Labour Court approached the European Court of Justice with two important questions regarding the interpretation of this directive. The first involves temp workers. Are they excluded from the scope and protection of the directive and should they be taken into account when establishing the number of workers “normally” employed by the company, which is decisive when setting out the benchmark upon which a collective redundancy is effectively taking place?
In reply to this question, the Court explained that these workers should not be taken into account in an effort to establish whether a “collective redundancy” has taken place when their contract ends as agreed. They must, however, be considered as part of the workers “normally” employed, which has a particular impact on the calculation of the numerical threshold of the collective redundancy.
The second question put to the European judges is perhaps even more important in the current economic context. In fact, the court asked whether it was necessary to consider a redundancy as a situation in which a worker agrees to his employment contract being broken after having been informed of the modification of their work conditions, such as a 25% reduction in wages, in the context of a crisis, for example.
Looking at the question of necessity, sanctioned under the directive and seeking to enhance workers' protection in the event of collective redundancies, the Court argued that this situation did involve a redundancy. According to the Court, the agreement of the worker and the payment of compensation do not change this at all because the termination of an employment contract amounts to a significant change to the essential elements of the employment contract for reasons not related to that individual worker. (Original version in French by Jan Kordys)