The EU Collective Redundancies Directive (CRD) requires employers to consult workers’ representatives when contemplating collective redundancies. In Pujante Rivera v Gestora Clubs Dir, SL and Fondo de Garantía Salarial, the Court of Justice of the European Union (CJEU) held that a collective redundancy includes a situation where a worker resigns as a result of a unilateral and significant change to their contract.
At the beginning of September 2013, Gesture Clubs Dir had 126 employees, 114 on permanent contracts and 12 on fixed-term contracts. Between 16 and 26 September it made 10 employees redundant, one of whom was Mr Pujante Rivera. In the 90 days before the last of the dismissals, 22 other employees’ contracts were terminated for a number of different reasons. This included an employee who resigned as a result of a change in her working conditions namely a 25 per cent pay cut.
Mr Pujante Rivera lodged a claim with the Spanish Labour Court arguing that, in the 90 days before the last of the dismissals, the company reached the threshold laid down in European law for triggering the collective consultation procedure.
The CRD applies where there are collective redundancies which mean "dismissals effected by an employer for one or more reasons not related to the individual workers concerned”, where the number of redundancies falls within one of the thresholds set out in the Directive and chosen by the member state. The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which implements the Directive in the UK applies where 20 or more employees are dismissed over a period of 90 days whatever the number of workers normally employed in the establishments in question.
Decision of Spanish Labour Court
The Spanish Labour Court referred a number of questions to the CJEU including the question as to whether an employee who resigns in response to an employer’s change in working conditions amounted to a collective redundancy.
Decision of CJEU
The CJEU held that the worker who resigned in response to the pay cut should be included. Although she had consented to the termination (and was subsequently compensated), the fact remained that the change was made unilaterally by her employer to an essential element of her employment contract for reasons not related to her as an individual worker. Although the EU directive did not expressly define the concept of “redundancy”, the Court held that it must be interpreted as encompassing any termination of an employment contract “not sought” by the worker. As the worker in this case did not consent to the change to her contract, the termination of her employment amounted to a redundancy.
The Court went on to note that as one of the objectives of the directive is to afford greater protection to workers in the event of collective redundancies, the concept of a redundancy should not be narrowly defined. It was also important to remember that the whole point of harmonising the rules applicable to collective redundancies across the EU was to ensure that employees in different member states enjoyed the same protection and that the costs incurred by EU undertakings were harmonised.
It is generally understood that the duty to collectively consult under TULRCA applies when an employer dismisses and re-engages 20 or more employees on new contracts of employment. This decision confirms that those who resign in response to a unilateral and significant change to their contract which is to their detriment and which is not for a reason related to them as an individual, should also be included in the threshold for collective redundancy consultation.