The Economics of Redundancy Compensation
A reduction of the workforce — economic, technological or organizational changes necessitating it — is a lawful ground for termination of an employment contract (Article 47), but dismissal on this ground is tied to monetary obligations: two alternative regimes of prior notice and compensation (Article 48) and the final settlement (Article 44). This page assembles precisely the redundancy package: what the employer must pay, which variant to choose and within which deadlines.
Two Alternatives: Notice or Buy-Out
On termination on the redundancy ground the law gives the employer two options (Article 48). The first: to give the employee preliminary written notice no less than 30 calendar days in advance — in which case the compensation must be no less than 1 month's remuneration. The second: to give notice no less than 3 calendar days in advance — in which case compensation of no less than 2 months' remuneration is paid. The first variant saves money at the cost of time, the second spends money to save time: the right choice depends on budget and operational needs. In both cases the obligation arises together with the sending of the written notice, and the actual amounts are calculated from the individual contract.
The Final Settlement — a 7-Day Deadline
Upon termination of the employment relationship the employer is obliged to make the final settlement no later than 7 calendar days after termination, unless otherwise defined by the contract or the law (Article 44). The final settlement means the calculation of salary, compensation for unused leave and other accruals up to the last working day. Within the redundancy package this means that the reduction amount is supplemented by everything that remains unaccrued at the moment of termination — and this calculation has a statutory 7-day deadline.