The implementation of collective redundancies is mainly regulated by law and the National Collective Bargaining Agreement, which imposes some procedural steps prior to implementing any such decision.
Three main issues must be considered regarding the preparation and implementation of a collective social plan:
- Drafting an information document containing all essential elements
regarding the decision to restructure, its motivation, its implementation and the measures taken by the employer to minimise any adverse impacts on employees;
- Circulating the information to staff representatives, discussing it with them and collecting their comments and choices about measures taken to implement the restructuring (i.e., the measures adopted to minimise the number of dismissals); and
- Implementing the restructuring plan, by obtaining the required authorisations as the case may be, notifying employees of their terminations and paying termination indemnities.
Employer who expects to terminate at least 20 employees, five of which due to business related reasons, all within a 90-days’ period, is obliged to duly consult the works council / union commissioner in order to possibly reach an agreement to save the employees and / or limit the number of terminations. The employer is obliged to provide the works council / union commissioner with written information concerning the reasons for termination, total number of employees, number, professions and positions of employees who are supposed to be terminated, election criteria for such employees, amounts and way of calculating their severance payments and measures undertaken to prevent such terminations. Employer is obligated to consider and explain all possibilities and suggestions that may lead to avoidance of terminations. Also, the Croatian Employment Agency needs to be informed about the previously mentioned points and consultations with the works council / union commissioner.
The statutory provisions regarding mass dismissals apply where the employer – within a time period of 30 days – gives notice for reasons unrelated to any particular employee and affecting:
- at least ten employees at a business normally employing between 21 and 99 employees; or
- at least 10% of the employees at a business normally employing between 100 and 300 employees; or
- at least 30 employees at a business normally employing more than 300 employees.
The provisions governing mass redundancies do not apply in the event that business operations have ceased by court order or mass redundancies have occurred due to bankruptcy or a composition agreement with assignment of assets.
Prior to giving notice, the employer must consult the employee’s representative body or the employees, and at the same time notify the cantonal labour office in writing of the planned mass dismissal. these bodies have consultation rights only. Neither the employees nor the cantonal office are able to block a mass dismissal.
The employer is obliged to enter into social-plan negotiations if it (i) usually employs at least 250 employees and (ii) intends to terminate at least 30 employees within 30 days for reasons that are unrelated to an individual employee. Notices given over a longer period but based on the same operational decision must be added together.
The employer negotiates:
- with the employee associations that are party to the collective employment contract if a party to this collective employment contract;
- with the organisation representing the employees; or
- directly with the employees if they have no representive organisation.
An arbitral tribunal will establish a social plan by way of an arbitral award if such negotiations fail.