Out-Law / Your Daily Need-To-Know

Polish lawyer Anna Gwiazda outlines the essential steps when restructuring a business in Poland

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    What does Polish employment law require of employers when it comes to restructuring a business in Poland? How will this affect the employees? What are the employer’s obligations? These are important questions if you're a business with a presence in Poland where, just like the rest of the world, businesses are striving to survive the pandemic. We’ll come on to that shortly but first some background. Last spring, in response to the pandemic, the Polish parliament introduced various employment-related measures aimed at protecting workplaces and protecting employers who met certain criteria. That package was called the ‘Anti-Crisis Shield’ and has been updated regularly ever since with measures designed to help businesses survive, and protect jobs. The measures have included being able to change employment terms and conditions to reduce salaries and reductions to working hours with pay reduced on a pro rata basis. The changes can be implemented by individual agreement with employees, or under a collective agreement, or in certain cases, they can be made unilaterally by the employer. So these are really quite far-reaching measures, in response to Covid-19, designed to help protect businesses, save job and avoid redundancies. However, where that doesn’t help enough, and redundancies are necessary, Poland’s collective redundancy laws kick in and, as with many countries in Europe, the employer is entitled to terminate employment contracts for what the legislation describes as ‘economic reasons’ and, of course, the pandemic has created plenty of scope for that. So have the government’s measures worked? One of our best-friend firms is based in Warsaw - law firm Kochanski & Partners. Anna Gwiazda is a labour law specialist at the firm. This is what she had to say on that:

    Anna Gwiazda: “The Polish labour market in March 2020 and six months later, are two different worlds. Within a few miles the coronavirus outbreak has completely changed the map. Numerous businesses have already had to take tough decisions on reducing the labour force. huge changes and employment restructuring can also be expected in the last quarter of the year. Many employers say that the financial support offered by the state has proved insufficient, and not only regarding the amount of funding, but also due to the bureaucracy, late payment of funds and overly complicated legal regulations. Consequently, solutions designed to help maintain jobs are proving to be ineffective. This is why I would like to share with you some tips regarding restructuring.” 

    Anna goes into more detail on all of those points in her article ‘The Polish Labour Market Beyond Covid-19’ and we have put a link to that in the transcript of this programme for you. It provides a great insight on the impact of Covid-19 on Polish businesses and the risks employers are having to manage right now. 

    Earlier in the year Anna was one of the lawyers who was going to join us in hosting a webinar on this subject with a focus on restructuring across a number of different countries of Europe but, because of the pandemic, we had to cancel that event unfortunately. Nonetheless all the lawyers were keen to adapt and the result is a series of programmes we are releasing as HR Guides over the coming weeks, covering each of those countries, hearing from lawyers based in each one. The theme of the webinar was to set out 5 do’s and 5 don’ts when it comes to restructuring a business. So let’s hear from Anna on restructuring in Poland. First the 5 do’s:
    Anna Gwiazda: “Five things to do and five things not to do when restructuring in Poland. If you have benefited from state aid offered in connection with COVID-19 and, in particular, if you have received financial subsidies for job retention, before beginning a restructuring process verify what restrictions with respect to employment restructuring apply to you. Make sure that the respective restructuring process is well timed. Employment restructuring can be time consuming, especially if requiring mandatory consultation with employee representatives. Restructuring of companies with employee numbers above a certain threshold may trigger the collective redundancy process which usually takes up to two months and requires a number of steps to be taken, including negotiations with employee representatives and notification of public authorities. Include the planned restructuring in your financial forecast and secure an appropriate budget for restructuring. Restructuring that results in dismissals requires the payment of accumulated financial allowances, including severance payments over a short period of time. A rash decision on the restructuring made without careful thought may lead to loss of financial liquidity by the employer. Take care of proper communication with employees - in many cases it is a legal obligation. In each case, proper communication with employees may minimise the risk of disputes. The nature of the reorganisation impacts on the level of necessary consultation. Don’t forget to prepare documentation of employment restructuring with due care. This may enable the company to protect itself from potential claims as employment courts closely scrutinised documentation and the consultation process and any deficiencies or inaccuracies in the documentation may result in expensive and lengthy employment court proceedings. 

    Five things not to do when restructuring. Do not forget to properly plan and document all stages of the restructuring. Such documentation may be then presented before the court in case of a dispute. Remember that in most cases the burden of proof is on the employer and not on the employee. Do not overlook the reasons for the reorganisation. False or misleading reasons may adversely affect the entire restructuring process. Do not forget that the employer should be properly represented in the restructuring process, the scope of the authorization should be verified. Also do not apply selection criteria for dismissals that may be considered discriminatory. Determining the correct criteria for selecting employees for dismissal is a cornerstone of a fair restructuring process. And the last point. Do not overlook trade unions and other employee representatives within the restructuring process. Where reorganisation of a business impact on employees the law requires that employees be consulted prior to the change. Failure to involve employee representatives in the process may cause the entire restructuring process to be questioned, even if other formal requirements have been met.”

    You can find more about Anna and the service she provides by visiting the firm’s website - Kochanski & Partners based in Warsaw. You’ll also find a list of publications including that article by Anna called ‘The Polish Labour Market Beyond Covid-19’. Well worth reading.

    LINKS
    - Link to website of Polish law firm Kochanski & Partners