Economic dismissals

Economic Crises

In times of crisis, economic or mass redundancies are unfortunately necessary. They are usually synonymous with job cuts, restructuring, relocation or company closures. In order to do so, the employer must sometimes respect precise rules and a strict procedure.

Mass redundancies

Economic dismissals become mass redundancies when the employer dismisses a large number of employees for economic or restructuring reasons within a certain period of time. However, this will depend on a number of criteria, including the number of redundancies, the timeframe in which they are made and the size of the company.

When economic redundancies meet these criteria, the employer must imperatively respect the formal consultation procedure as provided for by the law. Otherwise, in the event of legal action, he or she risks having to pay compensation for wrongful termination to each of the dismissed employees.

Modification-leave

With a change of employment, the employer terminates the employment relationship of the employee and at the same time proposes a change in the employment contract. The main purpose of the leave of absence is not to dismiss the employee but to continue the employment relationship under modified conditions.

Employers are sometimes forced, when they are in economic difficulty, to offer modification-leave to all or some of their employees, in particular by proposing salary cuts or a reduction in their working hours.

When employees refuse to accept the changes proposed by means of a modification-leave, the situation is delicate. If the number of employees who refuse the proposed changes is higher than the legal thresholds, the mass redundancy procedure will not have been respected. The employer is exposed to heavy financial consequences.

Economic dismissal

If the economic dismissal does not meet the legal criteria for mass redundancy, the employer has more freedom. As a general rule, the employer may dismiss the employee for economic reasons, provided that he respects the notice period.

The situation is more delicate when the employee is pregnant, ill or has a fixed-term contract. The fact that the employer has proven economic reasons for dismissing him or her does not mean that he/she does not have to respect the legal provisions on protection against termination at an inopportune juncture.

By definition, a dismissal for proven economic reasons is not wrongful. However, the employer cannot use this reason to hide a real abusive reason for termination. A dismissal upon return from maternity leave for restructuring reasons may be abusive if the latter reason is not proven.