Springhouse Solicitors

When a resignation can give rise to a redundancy

The ECJ has concluded that incidents involving the resignation of an employee due to independent and sizeable alterations in their contract and working conditions do fall under the European legal definition of ‘redundancy’. We explain more about how this decision came about and the implications of it below.

Background

Workers need to be consulted in good time about any collective redundancies under the European Collection Redundancies Directive. The Directive allows member states to define collective redundancy situations in a number of ways, but the central point is that redundancies are defined as “dismissals effected by an employer for one or more reasons not related to the individual workers concerned”. This is obviously much broader than the traditional redundancy scenario, where a redundant employee is terminated, as opposed to resigning.

In this case, an employee – Mr Pujante Rivera – resigned from Gestora Clubs in Spain because his salary had been unilaterally reduced by 25 per cent. Ten employees were dismissed during this period because of production and economic motives, and 21 additional contracts were terminated with the reasons varying. Mr Rivera argued that a collective redundancy consultation process should have been carried out in respect of his resignation, and thus brought proceedings against his ex-employer.

One of the questions the ECJ needed to address was whether Mr Rivera’s resignation amounted to a “dismissal effected by an employer for one or more reasons not related to the individual workers concerned”.

The ECJ concluded that the unilateral alteration in Mr Rivera’s contract related to a pivotal part of his contract (his salary) and should therefore be classified as redundancy. They clarified that redundancy can include instances when an employee’s contract is terminated without their consent, as was the case here. The ECJ stressed that a narrower definition would work against the aim of the Directive.

Implications

The ECJ have now clarified that redundancy does not only relate to changes that arise out of re-engagement and termination, but also to any resignations that occur due to significant alterations in working conditions and an employee’s contract. This means that such employees are offered the same protection as those that are made redundant, but in the UK this will only apply in collective situations (where the employer proposes that 20 or more dismissals will take effect within any period of 90 days or less).