Staff Redundancy

Legal basis and definition

Staff redundancy is governed by Art. 328, para. 1, item 2 of the Labour Code. It represents the elimination (closure) of a specific staff position from the enterprise's staffing table. To be lawful, the redundancy must be genuine — the position must actually be eliminated, not merely renamed.

Redundancy may be full (elimination of all positions for a given job) or partial (reduction of the number of staff positions for a given job). In partial redundancy, a selection procedure among the employees holding the relevant position is mandatory.

When is the redundancy genuine?

Case law categorically requires the redundancy to be genuine, not fictitious. A redundancy is fictitious (and therefore unlawful) when:

• The position is eliminated but a new one with identical functions is created under a different title
• The functions of the eliminated position are assigned to a new employee hired specifically for that purpose
• No new staffing table has been approved showing the elimination of the position
• The redundancy was carried out with the aim of removing a specific inconvenient employee

Selection under Art. 329 of the Labour Code

When reducing some of the staff positions for a given job, the employer is obliged to carry out a selection procedure among all employees holding that position, as well as similar positions with analogous functions (Art. 329, para. 1 LC).

Selection criteria

The selection is carried out based on two mandatory criteria:

1. Professional qualification — education, additional qualifications, language skills, computer literacy, professional experience in the specific position
2. Level of work performance — quality, volume, timeliness, performance evaluations, disciplinary record

The employer must retain those employees who have higher qualifications and better performance. The selection must be objective and documented. Case law requires the preparation of written minutes with a reasoned assessment of each employee on both criteria.

When is the selection mandatory?

• When reducing some of the positions for a given job — always
• When eliminating the only position for a job — also, if there are employees in similar positions with overlapping functions
• When fully closing a position with no similar ones — selection is not required

Preliminary protection under Art. 333 of the Labour Code

Before serving notice of redundancy, the employer is obliged to check whether the employee falls within the circle of persons enjoying preliminary protection against dismissal (Art. 333 LC). For such persons, prior authorisation from the Labour Inspectorate is required.

Protected categories of employees

• Pregnant employees and employees in an advanced stage of IVF treatment
• Mothers with children under 3 years of age
• Reassigned employees — persons with reduced work capacity placed in suitable work
• Employees suffering from certain diseases — ischaemic heart disease, active tuberculosis, oncological diseases, occupational diseases, mental disorders, diabetes mellitus (Ordinance No. 5/1987)
• Trade union members — prior consent of the trade union body in the enterprise is required (Art. 333, para. 4 LC)

Authorisation from the Labour Inspectorate must be obtained before serving the dismissal order. Dismissal without such authorisation is unlawful, regardless of the existence of grounds for redundancy.

Step-by-step procedure

1. Decision on redundancy — the competent body (manager, Board of Directors) adopts a decision to amend the staffing table
2. Approval of new staffing table — showing which positions are being eliminated
3. Carrying out selection — a committee evaluates employees based on the criteria of Art. 329 LC; written minutes are prepared
4. Protection check — determining whether the employee selected for dismissal falls under Art. 333 LC
5. Obtaining Labour Inspectorate authorisation — for protected employees
6. Serving written notice — minimum 30 days (for open-ended contracts); compensation in lieu of notice is also possible
7. Issuing a dismissal order — written, stating the legal basis, reasons, and date of termination
8. Serving the order — personally against signature; in case of refusal — before two witnesses
9. Payment of compensation — on the date of termination or with the first paycheck
10. NRA notification — within 7 days of termination

Compensation upon redundancy

Upon termination of the employment relationship due to staff redundancy, the employer owes the following compensation:

• Compensation for unserved notice (Art. 220, para. 1 LC) — in the amount of gross remuneration for the notice period, if the employer has not observed the full period
• Compensation for unemployment (Art. 222, para. 1 LC) — in the amount of gross remuneration for the period of unemployment, but for no more than 1 month (or longer if agreed in a CLA or the employment contract)
• Compensation for unused annual leave (Art. 224 LC) — for all unused paid leave days
• Long-service compensation (Art. 222, para. 3 LC) — upon acquired pension rights, amounting to 2 (or 6 for 10+ years with the same employer) gross salaries

Frequently made errors

• Absence of genuine redundancy (no new staffing table approved)
• Failure to carry out or merely formal selection
• Lack of Labour Inspectorate authorisation for protected employees
• Selection limited only to employees in the specific position, without including similar positions
• Failure to observe the notice period without paying compensation

Frequently asked questions