international employment law firm alliance L&E Global

6. Cost-Reduction Strategies

To what extent can employers implement the following cost-reduction strategies as a result of COVID, and what are the primary limitations on each? 

  • Furloughs

Employees may be sent to unused leave. For this time they are entitled to the equivalent of vacation leave.

  • Salary reductions.

If justified by the employer's financial situation, an agreement on the application of less favourable terms of employment than resulting from the employees’ employment contracts may be concluded. The Agreement should be concluded by the employer and the trade union representing employees, and if there is no such trade union - by employee representatives.

  • Redundancy.

There are no special redundancy rules concerning current COVID-19 crisis. General rules arising from The Act of 13th March 2003 on Specific Terms and Conditions for Terminating Employment Relationships with Employees for Reasons Not Related to the Employees shall apply. The Act refers to employers who hire at least 20 employees. On the basis of this Act, employees are entitled to redundancy pay. Moreover, if the number of people to be redundant exceeds the limit from the Act, the group redundancy procedure should be applied.

  • Facility closure.

Temporary facility closure, results in work stoppage at a plant. This means that employees are entitled to remuneration from the time of readiness for work. Employers who have suffered a drop in economic turnover as a result of work stoppage caused by COVID-19 may apply for subsidies aimed at protection of workplaces.

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