In recent weeks, two changes to regulations regarding labour disputes have come into effect which can significantly impact the situation of employers parting ways with employees.
The first change relates to the rules regarding court fees that the parties must bear in the case of a legal dispute between an employee and an employer. The second change pertains to the so-called securing of the action in labour proceedings.
Although these changes directly concern typically procedural regulations, we believe that their implementation will affect the assessment of the risks that employers must undergo before dismissing employees, both in the case of individual separations and in reorganisations resulting in the necessity of laying off a larger number of employees.
1. Court fees
Under new regulations that came into effect at the end of September 2023, employees are no longer required to pay a court fee at the initiation stage of a legal dispute with the employer, for example when filing an appeal against dismissal or termination of an employment contract.
Previously, the employee was exempt from the obligation to pay this fee only in cases where the claim did not exceed 50,000 PLN. Above 50,000 PLN the employee was required to pay a court fee, usually equivalent to 5% of the total amount sought.
From the end of September, the amount that the employee is claiming from the employer before the labour court is irrelevant. According to the new regulations, the obligation to pay a court fee will only arise when filing an appeal against the ruling of the first instance court, provided the dispute value exceeds PLN 50,000 (the court fee is then calculated on the excess above this amount). No court fee is payable at the initial stage of the court proceedings, regardless of the amount of the claim.
This change to the regulation makes it easier for employees to pursue their case in court, whereas for employers it eliminates the previous safeguard protecting against high claims, often groundlessly inflated at the pre-trial stage.
2. Securing of the action
The second change relates to an employee’s request to declare the termination of an employment contract ineffective and, if the contract has expired, to reinstate the employee.
Up until now, if the court found the employee’s request to be justified and issued a ruling on the ineffectiveness of the termination or reinstatement, as a rule the execution of that judgment only took place after it had become final. In cases where the employer contested such a ruling, the execution was only possible after the appellate proceedings had concluded, provided that the second-instance court upheld the obligation to reinstate the employee. Considering the time it takes to resolve disputes before labour courts, in practice, the judgment ordering reinstatement often became meaningless for the employee.
Under the new regulations, when the court rules on the ineffectiveness of the termination or reinstatement, at the employee’s request, it will impose the obligation to continue employing the employee until the proceedings are legally concluded. Furthermore, if the termination of the employment contract concerns an employee specially protected from dismissal, at the employee’s request the court will provide protection by ordering continued employment until the proceedings are legally concluded. It should be emphasised that if such a request is submitted, the court will act somewhat automatically. The court can only refuse to provide such protection in cases where the claim is manifestly unfounded.
In practice, this can cause significant difficulties and additional financial burdens for employers who will have to maintain the employment of the dismissed employee during legal proceedings, even if the employee’s claim eventually turns out to be unjustified.
While the impact of the new cost regulations can only be assessed after some time, the changes regarding the obligation to continue employment during the legal proceedings necessitate companies to carry out a broader analysis of the risks associated with parting with employees.
