- Date:
- 22 May 2015
In a recent judgment, the EU Court ruled among other things that fixed-term or project-based contracts expiring according to their terms should not count towards the number of dismissals in an undertaking when determining whether the dismissals qualify as collective redundancies.
Under the EU rules on collective redundancies, which are implemented in Denmark by the Danish Collective Redundancies Act, the dismissals must be of a certain scale in order to qualify as collective redundancies within the meaning of the Directive. With regard to those quantitative criteria, one criterion is that there must be a certain number of dismissals. But should fixed-term contracts (on the basis of an agreed date, task or service) be included in this calculation of dismissals? This was one of the issues to be considered by the EU Court in this case.
The case concerned a Spanish employer which had two establishments, one in Madrid and one in Barcelona. Following a reduction in turnover, a number of employees were dismissed in both places. Some months after the first round of dismissals, a number of fixed-term contracts expired in the two establishments, and shortly thereafter an additional 12 employees were dismissed in the establishment in Barcelona and the remaining employees transferred to the establishment in Madrid. One of the dismissed employees issued proceedings against the employer for breach of the Spanish Collective Redundancies Act, including its relevant procedures.
As the case involved a number of issues requiring an interpretation of the underlying EU directive, the Spanish court referred a number of questions to the EU Court. For one thing, the referring court asked whether the fixed-term contracts should count towards the total number of dismissals and also whether it was relevant to the question what the cause of the dismissal was, when seen in relation to the purpose of the fixed-term contracts.
Fixed-term contracts should not count, unless …
The EU Court concluded first of all that according to the wording of the Directive, fixed-term contracts fall outside the scope of the Directive. One of the objectives of the Directive is to reduce collective redundancies and mitigate their effects, but this objective is not relevant for contracts which end because they expire according to their terms. It would therefore, the EU Court said, make no sense for the rules to apply to fixed-term contracts which expire according to their terms. However, the contract must expire because of its terms, and if the contract is terminated early, the termination of employment should count towards the number of dismissals.
Secondly, the EU Court concluded that the cause of the collective dismissals should not be a factor, the only qualitative requirement in the Directive being that the dismissal must not be related to the individual employees. In that case, the dismissal should not count towards the number of dismissals. Accordingly, the issue of whether the termination of employment is related to the specific task or service or agreed end-date will have no bearing on whether the dismissal should count towards the number of dismissals.
Norrbom Vinding notes
- that any fixed-term contracts (whether on the basis of an agreed date, task or service) which end should not count towards the number of dismissals so long as the contracts expire according to their terms; and
- that the provisions of the Directive must be taken as meaning that the cause of the dismissal as such should not be a deciding factor in determining the number of dismissals so long as the dismissal is not related to the individual employee.
