Remus Codreanu, Kinstellar: “We see a growing tendency of employees requesting material and moral damages following business restructurings”

“Business restructurings are very widespread during this period, some are brutal, but unfortunately necessary. Essentially, restructuring a company means eliminating positions from the company’s organizational chart for real, serious and objective reasons.

From our practice in this field, which is in-depth, we believe that two aspects must be taken into account essentially so that the company does not have problems later in court when employees challenge the decision: 1) there must be a well-founded business analysis. This may mean that the analysis considers improving some of the company’s financial parameters, but it may also be about other aspects for efficiency (for example, the digitalization of a company’s internal processes may mean that some jobs are redundant). 2) this analysis of the elimination of positions must be very concrete, very focused on the positions that are being eliminated,” Remus Codreanu, Partner, Kinstellar said during People Empowering Business Forum organized by The Diplomat-Bucharest.

“In practice, we have seen many dismissals that were based on general phrases like “the company is losing money”, “we need to avoid losses, so we are eliminating positions X, Y, Z”. It is not at all advisable to have general formulations, but we must be very specific regarding the respective positions when talking about restructuring and dismissals.

If we carry out a restructuring/dismissal that does not comply with the coordinates mentioned earlier and the employee files an appeal, the court will cancel the dismissal, which will expose the employer to a series of negative consequences, primarily compensation, salary rights updated throughout the process, from the date of dismissal to the date of the court decision. This means 12-18 gross monthly salaries that must be paid to the employee. In addition, if the employee requests it, he will have to be reinstated in the position he held prior to the dismissal. This means that, if we want to fire that employee, it will be even more difficult to do so in the future. If we want the employee to leave voluntarily, in addition to compensation, we must also pay the so-called leaving bonus for signing the agreement on amicable termination of cooperation.

In court practice, we see a growing tendency of employees requesting material and moral damages following business restructurings. We have seen claims for damages of 200,000 euros, 800,000 euros in such situations.”