Collective Redundancies – What are they?

21 December 2020

Three hundred NetEnt employees, one of Malta’s most established gaming companies, were made redundant two weeks ago.

This took place after NetEnt was bought out by Evolution Gaming, another iGaming industry giant.

Last week, the General Workers’ Union (GWU) successfully filed for a temporary prohibitory injunction against these redundancies: effectively putting them on hold. 

The case has now been withdrawn and an agreement has been reached between the parties: each employee will now get an improved redundancy severance package.

After this, the topic of collective redundancies now occupies a place that is front and centre for many people.

Workers in large workforces are asking what their rights would be in such a situation. 

Q: What is a Collective Redundancy?

A : It is when massive redundancies are declared by an employer.

  • Ten or more employees in establishments normally employing 20 to 99 employees;
  • 10% or more of the number of employees in establishments employing 100 to  299 employees; and
  • 30 or more in establishments employing 300 employees or above

Q: What does the law in these cases

A: LN 428 of 2002, named the Collective Redundancies (Protection of Employment) Regulations, says that these dismissals would have to take place over a period of 30 days. 

Q: Is this a EU wide legal protection?

A: This is one of the two systems which are allowed by the EU Collective Redundancies Directive of 1998. The other one would consider the dismissal of more than 20 employees over 90 days as collective redundancies.

Q: Are there procedures that should be followed?

A: The main aim of the Legal Notice is to protect employment after all.

When considering collective redundancies, the employer should contact the employee’s representative in writing, keeping the Director of the Department of Industrial and Employment Relations in copy. Consultations should start no later than seven days after this written notification. 

If there is no unionised representative of the employees, then one should be elected by the employees by means of a secret ballot. 

Q: Could there be consequences of non compliance? 

A: Indeed! If a company is found to be in breach of their obligations by the Court, they are liable to a fine of not less than €1,164.69 for every employee made redundant.

Last week, the parties in the NetEnt redundancy declared that they had reached an agreement. This agreement saved forty jobs and improved the severance packages offered to the redundant employees. Apart from health benefit packages and maternity leave issues, an extra €750 will be given to each affected employee. This was well received by most of the 300 employees. 

Employment law is a delicate area of law. Partners and associates at AE’s Labour Law practice are trained to help you navigate these situations and to advise you about the legal and statutory requirements.