Pujante Rivera v Gestora Clubs Dir SL and another

The ECJ has held that the definition of “redundancy” in the European Collective Redundancies Directive (the Directive) is wide enough to include resignations where the employer has unilaterally made a significant change to essential elements of an employee’s employment contract, for reasons unrelated to the individual, which cause them substantial detriment.

Facts

The Spanish company Gestora Clubs Dir SL (Gestora) dismissed 10 employees between 16 and 26 September 2013 on objective grounds. Mr Pujante Rivera was one of these employees. During the 90 day period preceding the last of these dismissals, an additional 22 contracts were terminated for various reasons. These terminations included a resignation by an employee which was in response to Gestora’s reduction of her salary by 25%.

Mr Pujante Rivera brought proceedings against Gestora challenging the validity of his dismissal. He alleged that his redundancy was invalid as Gestora had failed to carry out a collective redundancy process. He put forward that, if account had been taken of the terminations which occurred in the 90 day period before and after his own redundancy, the necessary threshold for collective consultation was satisfied.

The Spanish national court stayed the proceedings and referred a number of questions to the ECJ regarding the interpretation of the Directive. One of these questions asked whether an employee’s resignation in response to an employer’s significant unilateral variation of a contract to their detriment amounted to a redundancy for these purposes.

Outcome

The ECJ held that the Directive does cover a situation where an employee resigns as a result of unilateral and significant changes by their employer to essential elements of their contract for reasons not related to them as an individual and which are to their detriment.

The ECJ noted that the Directive does not expressly define the concept of “redundancy”. However, as the purpose of the Directive is to afford workers greater protection in the event of collective redundancies, it can be said to include any termination of an employment contract not sought by the worker and, therefore, without his consent.

The ECJ also noted that in the present case, the worker resigned and so could be said to have sought her own termination. However, termination of the employment relationship arose from the unilateral change made by her employer to an essential element of her employment contract for reasons unrelated to her personally.

The court stated that “redundancy” should not be given a narrow definition for these purposes. Excluding employees from the protection of the Directive whose contracts are terminated  in circumstances such as those in the proceedings would alter the scope of the Directive and deprive it of its full effect.

Points to note

It has long been established that the definition of “redundancy” under the Directive has a much wider meaning than redundancy for the purposes of statutory redundancy. This decision has now confirmed that the wide definition of “redundancy” also includes resignations where an employer has unilaterally made significant and detrimental changes to essential elements of an employee’s employment contract for reasons not related to them as an individual.

The decision shows that even when an employer considers that they have reached an agreement with an employee, the Courts are prepared to look beyond this to see why such an agreement was needed in the first place. Employers should therefore ensure that they are careful when commencing any redundancy exercise and or variation of terms and conditions to ensure they do not fall foul of the collective consultation obligations.