What can the court examine in the case of termination due to organizational changes?

The Labour Code sets out the grounds, on which an employer may give notice to an employee. One of them is the so-called organisational change (according to Section 52(c)), which results in such a change in the internal relations of the company that it is no longer necessary for the employee to continue to perform his or her job in order to ensure its effective functioning. In the case of a challenge to an employer’s termination under § 52(c), the court does not normally assess the economic expediency of the organizational change or the employer’s motives, but only whether the organizational change was genuine.

The Supreme Court in its judgment No. 21 Cdo 3710/2020 took a different step. It held that an employer’s decision to make organizational changes, the real (hidden) reason for which is dissatisfaction with the employee’s performance, is inadmissible. In doing so, it actually indirectly imposed on the lower courts the obligation to examine the employer’s motives, and de facto made them a condition for the validity of the organisational change: “... it is unacceptable that the said condition, even if the employee’s performance is rightly assessed by the employer as unsatisfactory, should be the basis for the decision to make organisational changes.” Moreover, the Supreme Court came to that conclusion after having itself ascertained the facts of the case, and in a different way from that found by the regional and district courts. The role of the Supreme Court is not to establish the facts, but to correct the decisions of the lower courts and to unify their decision-making practice. 

The plaintiff challenged this decision before the Constitutional Court, where she also succeeded. The Constitutional Court in its ruling No. IV. ÚS 2349/24 confirmed that the Supreme Court should have assessed only the legal merits of the case, not the facts. The findings of fact of the Court of Appeal cannot be reviewed in the proceedings before the Supreme Court. If the regional and district courts decide, on the basis of their findings of fact, that the organisational change has been implemented (i.e. that it is real), the Court of Appeal may revise their findings of fact only if it finds serious flaws in the evaluation of the evidence. The lower courts were thus forced to follow the legal opinion of the Supreme Court, even though it was based on a factual version that the Court of Appeal itself had constructed. Thus, they had to contradict their initial findings and decide completely to the contrary without supplementing the evidence.

What does this imply for practice? The Constitutional Court has confirmed the approach taken in previous case law, which separates the assessment of the fact of the organisational change from the unacceptable assessment of the effectiveness of the organisational change or the employer’s motivation for adopting the decision on the organisational change. At the same time, the Constitutional Court rejected the procedure of the Supreme Court, which created a new version of the facts.

If there are several concurrent reasons for which an employer could give notice to an employee, the employer may, given their legal equality, choose any one of them. It is important that the employer is always able to prove conclusively that the organisational change has been made, i.e. that it is real – not fictitious.