Dismissal due to business reasons in Spain
| Autor | Manuel Luque Parra - Anna Ginès i Fabrellas |
| Páginas | 42-52 |
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Redundancies and dismissals due to business reasons in the Spanish legal system have increased exponentially afther the 2012 labor reform. The Royal Decree 3/2012, February 10, and Law 3/2012, July 6, on urgent measures to reform the labor market (2012 labor reform, hereinafter) introduced major changes in, among others, the legal regulation of redundancies and dismissals due to business reasons. Specifically, as is it well known, the elimination of the administrative authorization prior to a collective dismissal and the redefinition of the economic, technical, organizative and productive reasons that allow a dismissal. The aim of the legislator, according to the preamble of the RD 3/2012 and Law 3/2012, was to facilitate dismissals -eliminating the employer’s pressure to reach an agreement with the worker’s representatives so as to obtain the administrations authorization- and restrict the judicial review in regard to the concurrence of the above business causes.
Notwithstanding the above, as a result of these changes introduced in the legal regime of collective redundancies, there has been a multiplication of judicial decisions regarding the interpretation of the new definition of economic causes, the proporcionality principle, the scope of corporate liability in case of holdings or business groups, the definition of good faith in the context of the consultation period with workers’ representatives, the formal requirements of the consultation period, the designation of affected workers, etc.
In this context, the aim of this article is to briefly explain the regal regulation of redundancies and dismissals due to business reasons in the Spanish legal system, as well as present some of the recent judicial and doctrinal debates regarding this issue.
The Spanish legal system allows dismissals due to business reasons, distinguishing between economic causes and TOP causes (technical, organizational or productive). As mentioned, the definition and regulation of these causes has, in recent years (specialy as
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a result of the 2012 labor reform), evolved so as to facilitate the concurrence of these causes.
Article 51.1 of the Worker’s Statute (ET, hereinafter) defines these causes as follows:
· Economic causes: It is understood that economic causes concur when the results of the company derive a negative economic situation, in cases such as the existence of present or expected losses, or the persistent decline in the level of ordinary revenues or sales. In any case, the decrease is considered persistent if for three consecutive quarters the level of revenues or sales each quarter is lower than in the same quarter of the previous year. Therefore, due to this definition, a company with benefits but with expected losses or a decline in revenues or sales during three consecutive quarters can legally procede to a dismissal for business reasons.
· TOP causes: It is understood that exist technical causes when changes occur, among others, in the field of the means or instruments of production; organizational reasons exists when changes occur, among others, in the field of systems and working methods or the organization of production; and productive causes exist when changes occur, among others, on the demand for the products or services the company intends to place on the market. According to these definitions, it is clear that, nowadays, in Spain it is not difficult for a company to allege TOP causes so as to procede with a dismissal.
In spite of the legislators aim to reduce judicial control in regard to the concurrence of the business cases, recent judicial decisions of multiple Spanish Courts have stated that for a collective dismissal to be legal, the mere concurrence of causes is not enough, requiring the existence of proportionality between the company’s economic situation and the entity of the collective dismissal and a functionality relation between the alleged cause and the workers selected to be affected by the dismissal. Specifically, for the redundancy to be legal there must conccur three requirements: (i) existence of cause, (ii) proporcionality between the alleged cause and the number of dismissals and (iii) functionality relation between the cause and the selected workers (decision of the Spanish Supreme Court of March 26, 2014).
In the Spanish legal system, accordint to the Supreme Court’s doctrine, when the cause alleged by the company is an economic cause, it is required that this cause affect the entire company and not just the work center where the dismissal occurs. On the
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contrary, if the alleged causes are TOP, the rule is more flexible and it allows the technical, organizational or productive mismatch to affect only the wokplace where it is needed to perform the dismissal, without requiring that cause to concur in the rest of the company.
The explanation is simple: it is understood that the dismissal due to economic reasons seeks a reduction in labor costs (reactive dismissal), while the dismissal due to TOP cause is understood as a preventive dismissal (defensive dismissal) that tries to avoid arribing at a negative...
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