When a job move feels like a job cut, EU court says it counts

(CN) — Move jobs overseas, fire the workers who refuse to follow and call it absenteeism: Europe’s top court ruled Thursday that such dismissals can still count as collective layoffs.

Egenergy, a manufacturer of power generators with more than 15 employees, closed a facility near Naples in southern Italy and moved production to the island of Sardinia, hundreds of miles away across the sea. Workers who refused to uproot their lives and relocate were later dismissed for failing to report to the new site. The company said that was absenteeism, but workers insisted it was really a collective layoff dressed up as something else.

The Court of Justice of the European Union largely agreed with the workers, concluding that employers cannot avoid collective layoff protections simply by making a drastic change to working conditions and then firing employees who refuse to accept it.

Under EU law, companies planning large-scale layoffs must first inform and consult workers’ representatives. Those safeguards are designed to give employees a chance to understand why jobs are being cut and whether alternatives exist before dismissals take effect.

Whether those dismissals should be treated as misconduct or redundancies ultimately landed before EU judges. Egenergy maintained the workers lost their jobs because they refused a lawful transfer order and stayed away from work for more than 30 days. The workers argued that relocating jobs to another island after shutting down the original facility left them with no realistic choice.

Luxembourg sided with the workers, writing that “the termination of an employment contract for one or more reasons not related to the individual worker concerned, effected by the employer following the worker’s refusal to comply with the employer’s unilateral decision to transfer the place of work to a site away from the original site, comes under the concept of ‘redundancies’.”

Italian courts had already split from the company’s view. A Naples court declared the transfers and dismissals unlawful and ordered the workers reinstated, finding that the move would seriously disrupt family life and social ties. Egenergy appealed, prompting the Naples Court of Appeal to seek guidance from Luxembourg on how EU collective layoff rules apply in such circumstances.

Judges said workplace location is often an essential part of an employment contract because changing it can carry significant economic and practical consequences. Here, the transfer was permanent, followed the closure of the original facility and required workers to relocate to another island. Those circumstances pointed to a substantial change in a fundamental term of employment rather than an ordinary workplace reassignment.

The court also rejected the argument that such dismissals could be excluded from redundancy calculations because Italian law uses a lower threshold than EU law to trigger collective dismissal procedures. Excluding them, the judges said, would weaken worker protections and undermine a uniform EU-wide understanding of what counts as a redundancy.

Andrea Allamprese, an associate professor of labor law at the University of Modena and Reggio Emilia, said the judgment closes off a potential loophole for employers seeking to avoid collective redundancy obligations.

“An employer cannot avoid the obligations linked to collective redundancies simply by imposing a substantial and unilateral change to a fundamental term of employment and then treating the workers’ reaction as a personal choice,” Allamprese said. In his view, the ruling recognizes that when workers are effectively forced to choose between uprooting their lives and losing their jobs, the resulting terminations may still be attributable to the employer’s business decision rather than to the workers themselves.

But the ruling may travel much farther than the workers ever did.

For Silvia Rainone, a senior researcher at the European Trade Union Institute in Brussels, the significance of the ruling lies in the court’s continuing effort to clarify one of the most technical questions in EU labor law: which job losses count toward the thresholds that trigger collective dismissal protections.

“The ruling brings further clarity to the EU notion of redundancies and to the calculation of the thresholds that trigger the directive’s protective framework,” she said. By applying that reasoning to a permanent relocation hundreds of kilometers away, the court confirmed that such terminations count like direct dismissals when determining whether consultation and notification obligations apply.

Lawyers for both sides did not immediately respond to requests for comment.

The workers have not won their case yet. The dispute now returns to Naples, where Italian judges must apply the EU court’s interpretation to the facts before them. One thing, however, is no longer up for debate: Luxembourg’s reading of EU law is binding.

Courthouse News reporter Eunseo Hong is based in the Netherlands.