Restructuring and Collective Redundances: The Trigger for Consultations According to the CJEU
by Kristina Abela
20/02/2025
Case C-589/22, J.L,O,G. and J.J.O.P. v Resorts Mallorca Hotels International SL, Judgement of the CJEU of 22 February 2024
KEY TAKEAWAY: Declaring large numbers of employees redundant entails compliance with strict procedures which employers cannot take lightly, or try to side-step.
The case unfolds like this: A struggling hotel company restructures, transferring operations of multiple establishments and staff to a new operator. Some employees take new job offers at the new operator, facilitated by the company. Shortly after, the company dismisses additional employees citing organisational and production reasons. Those dismissed argued that this restructuring was a tactic to avoid collective redundancy rules, but the company maintained that these exits were voluntary and therefore, should not count toward the threshold for “collective redundancies”.
The CJEU considered that the company knew that the transfer of the operations of its establishments would increase workload for the new operator, requiring more employees, so it asked some of its own staff if they were willing to transfer to the new operator. Consequently, it could foresee a reduced need for employees, roughly corresponding to the increased workload the new operator would experience.
Since the decision to dismiss was based on an analysis of its organisational and production reasons following both the aforementioned transfer and the employee departures, the company should have reasonably anticipated that it would need to reduce significantly the number of its workers, to align with the remaining workload.
The CJEU concluded that the obligation to consult employees’ representatives, depending on whether the threshold is satisfied, arises when the employer, in the context of a restructuring plan, is contemplating or planning a reduction of jobs that may exceed the relevant threshold, even before the employer is certain that the dismissals in fact will exceed the number specified in the relevant provision. This obligation is reinforced by the scope of the relevant EU legislation, which is that of preventing or reducing redundancies, a scope which incidentally, the employer sought to achieve when it encouraged its employees to seek employment with the new operator. For this reason, the employer should have contemplated the threshold at such earlier stages.
