As layoff procedures in Poland and Germany are anchored in the same EU Directive, their national regulations are similar in direction, but they still have their own flavor and local specificity.

Germany and Poland share similarities in their approach to group redundancies — such as thresholds and the importance of employee consultations. There are some key differences in the legal requirements, timelines, and powers of trade unions and works councils, however. Understanding these distinctions is essential for employers looking to navigate the redundancy process smoothly and to avoid legal pitfalls.

What qualifies as a group layoff?

In Poland, the thresholds depend on the size of the business. A collective dismissal occurs when an employer lays off within a 30-day period at least 10 employees in a company with more than 20 employees, 10% of employees in a company with over 20 and up to 300 employees, or at least 30 employees in a company with over 300 employees.

If an employer falls within the thresholds, they are required to follow more rigorous legal procedures, such as consulting with employee representatives, notifying the local labor office, and providing additional compensation. As a result, the layoffs can be more time consuming, legally complex, and costly for the company.

In Germany, the relevant relation is also between the size of the business and the number of employees to be terminated within a 30-day period: Where the employer employs more than 20 and up to 59 employees and dismisses more than five employees; where the employer has between 60 and up to 499 employees and dismisses 10% or more than 25 of the employees; where the employer has at least 500 employees and dismisses at least 30 employees or, finally, in large businesses/operations where the employer has more than 600 employees and dismisses at least 5% of employees.

Some cases of collective dismissals require closer attention than others. In both countries, it is important to remember that both terminations and mutual agreements count for the purpose of reaching the threshold for group redundancies. Moreover, it is not only definite terminations that trigger the procedure, but also collective alteration of work conditions, such as salary reduction.

A common way to reduce the headcount for purposes of collective dismissals is voluntary redundancy, as it offers employees the chance to leave the company on their own terms with severance packages. It may be a win-win and attractive option for employers and employees in financially troubled companies.

For employers in both Poland and Germany, the key to a successful voluntary redundancy is ensuring that the program is well-designed, legally compliant, and seen as a positive opportunity by employees. It should, however, be carefully drafted so as not to fall under the scope of statutory collective redundancies. Often, voluntary leave programs attract the “wrong” employees, namely the ones the employer wants to keep. So, it is important to set the right incentive for the employees while also implementing an employer’s option to object if they do not want an employee to leave.

Timing, costs & impact of social partners

When it comes to costs of group redundancies, it is not common in Poland to offer additional benefits, unless special circumstances occur, such as large-scale layoffs. In such cases, the most common additional benefit is extended severance pay or outplacement programs. Extended notice periods and/or outplacement programs can also be offered in Germany. And, what can be attractive for both sides is an option for employees to terminate their own employment early and receive the salaries owed until the end of their actual notice period as additional severance pay (so-called sprinter option). This incentive becomes very relevant and attractive when the employees quickly find a new job, because they can earn a double income. It is attractive for the company, too, because severance payments are free from social security contributions and the company can save money with this option.

Works councils, trade unions, and employee representatives play a vital role in influencing group redundancies. In Poland, the employers must consult with them regarding the planned redundancies. They also need to be notified and given a chance to negotiate the terms and conditions of the dismissals. Employers are required to negotiate in good faith and consider alternative measures to layoffs, such as redeployment and retraining. Works councils, trade unions, and employee representatives can delay the process and negotiate better terms, but they cannot completely block redundancies. That said, their involvement can influence severance packages or alternative measures, which employers must consider to avoid disputes. Employers in Poland should be prepared that group layoffs procedure may take several weeks.

Group redundancies – their timeline and form – are influenced by works councils, trade unions, and employee representatives in Germany, too. The duration varies from case to case and, obviously, depends on the extent of the measure. The biggest difference, though, is the existence or non-existence of a works council. Where no works council has been established, the measure usually takes approximately one or two months for preparation and implementation plus the employees’ individual notice periods. Where there is a works council in place, it usually takes much longer: at best, dismissals can be announced after two or three months. If an arbitration board (Einigungsstelle) is required for a so-called reconciliation of interests (Interessenausgleich) and a social compensation plan (Sozialplan), it can take six months or even longer until terminations can be issued plus the employees’ individual notice periods.

How to navigate the legal requirement and minimize risks?

It is important to describe the recommended practices for navigating the legal requirements and minimizing risks. In Poland, the recommended policy to achieve successful group layoffs is to be transparent. When employees are told the truth – clearly and openly – they are more likely to trust the process, even if it is difficult. Layoffs are an emotional and stressful experience, and transparency helps to reduce the unknowns. Without transparency, employees can fill in the gaps with assumptions and rumors, which may lead to anger, confusion, and dissatisfaction. In some cases, the lack of clarity could even result in legal action, such as claims of discrimination or wrongful termination, if employees feel they were not informed or treated fairly.

It cannot come as a surprise that these general principles are also relevant and applicable in Germany. Where there is a works council, it should be informed and included in the process early. Being trustworthy and appreciative will set the tone for further negotiations. After all, the employer depends on the works council’s cooperation for a timely implementation of the dismissals. Where there is no works council in place, employers should avoid its implementation, which would compel co-determination in the process of planning the mass layoff. This is done by announcing the business decision to the employees in due time before the employees can form a works council. Create a core team and take care that no details about the layoffs will be leaked or disclosed to employees beyond the core team.

Finally, following the thread, the practical advice we would like to give employers in Poland and Germany is to undertake actions in a transparent and well-prepared manner. This can actually improve a company’s reputation in the long term, especially when employees feel like they were treated with respect, even in a difficult time. Conversely, poor communication and disorganization can damage relationships with both former employees and the broader public.

In Germany, employers also need to keep in mind the so-called social selection process (Sozialauswahl). If only some employees are to be dismissed, the employer must carry out a social selection to determine which employees should be terminated. The social selection must be made only among comparable employees on the same hierarchy level. Criteria for social selection include length of service, age, support obligations and disability. The result of the social selection process does not always match the company’s plans, so particular care must be taken in advance to steer the process. As a result, a complete shutdown and termination of, for example, all 1,000 employees is usually easier than terminating just 100 out of 1,000 employees.