The Covid pandemic led to an attempt to limit job losses. However, as a result of governmental economic policies which have sought to increase the competitiveness of companies, the legal framework regulating labour relations in Spain has undergone a radical transformation in the last two decades.
In order to achieve this aim, it becomes necessary to lower production costs by reducing employment costs, and this is achieved through precarious hiring, either by modifying working conditions for the duration of the contract or by reducing the cost of dismissal through a multitude of rules that have made it increasingly easier and cheaper for employers to dismiss workers.
Written by Josep Conesa
Labour and bankruptcy lawyer
A clear example of 'easy dismissal' is objective dismissal, which consists of the termination of the contract by the employer when the following causes, regulated by law, occur:
Restructuring for economic, technical, organisational or production reasons are the most common cases dealt with by the Courts of Justice, occupying almost exclusive attention in judicial resolutions.
Dismissal on Economic Grounds:
Economic grounds involve the balance of income and expenditure, and are identified by a 'negative economic situation'. Rulings of the High Court of Justice of Catalonia 21/3/2000 and 4/1/2000 require a current, real and sufficiently serious state of crisis to be present in order to be able to terminate the position. In order to identify more specifically the particular state of crisis, some rulings equate it with the accumulation of consecutive losses over several financial years; other rulings accept a reduction in profits tas justification of an objective dismissal (Ruling 30/5/2000 of the High Court of Justice of Catalonia).
Technical Grounds:
Technical grounds involve an alteration or modification of the production process, introducing new methods that entail the restructuring of the company's own services or specialities, requiring prior investment due to the renewal of the capital assets used by the company, according to ruling 8/2/2000 of the High Court of Justice of Madrid.
In order to clarify this ground, the High Court of Justice of the Valencian Community established in its ruling 24/2/2000 that there must be a necessary, real and effective restructuring of the production teams, and an excess of personnel that negatively affects the occupational requirements of certain jobs.
Organisational Grounds:
Organisational grounds affect the systems or working methods of staff, by streamlining existing operational resources, without the need for corporate investment, in order to obtain better performance at lower cost.
Production Grounds:
Likewise, production grounds are associated with the difficulties that the external environment poses to the productive capacity of the organisation and, therefore, to the profitability of the company.
Objective Dismissal Procedure
The employer's adoption of the decision to terminate the employment contract must comply with the following requirements:
- Written communication to the worker stating the grounds for the termination.
- Making available to the worker, at the same time as the written communication is delivered, the compensation of twenty days' pay per year of service.
- Granting a period of fifteen days' notice, calculated from the delivery of the personal communication to the worker until the termination of the employment contract.
During the notice period, the worker, or his or her legal representative in the case of a disabled person who has one, shall be entitled, without loss of pay, to six hours' leave per week in order to seek new employment.
The classification by the judicial authority of the dismissal as null, fair or unfair shall give rise to the following effects:
- In the event that the termination of employment is fair, the worker shall be entitled to the compensation provided for, consolidating it if he/she has already received it, and shall be deemed to be unemployed for a reasons for which he/she is not responsible.
- If the termination is declared unfair and the employer proceeds to reinstate the worker, the worker shall be required to reimburse the severance pay received. In the event that reinstatement is to be replaced by financial compensation, the amount of the severance pay shall be deducted from that financial compensation.
Should the worker not agree with the stated grounds, or believe that they are alleged for the purpose of reducing the compensation that would correspond to an unfair dismissal, he/she may file a claim to that effect with the Social Court requesting that the dismissal be declared unfair. In such cases, it is advisable to seek the opinion and advice of a professional.
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Other Grounds for Dismissal:
1.- Incompetence of the Worker:
which must be discovered after the probationary period has expired, if it existed beforehand, it cannot be cited as grounds for dismissal at a later point in time.
2.- Failure of the employee to adapt to technical changes in his or her job.
For this to be grounds for dismissal, the changes must have been reasonable considering the worker's knowledge and at least two months must have been granted in order to adapt to the changes. The contract may be suspended (with the right to wages), for the necessary time, up to a maximum of three months, when the worker is offered a vocational orientation course.
3.- Termination of Positions:
This must be justified by economic, technical, organisational or production grounds, with workers' representatives having priority of permanence in the company. It is also essential that, in a period of 90 days, the redundancies affect less than 10 workers in companies with less than 100 workers, or less than 10% of workers in companies which employ between 100 and 300 workers. If this limit is exceeded, this would constitute collective dismissal, including in instances in which the company carries out the redundancies in consecutive 90-day periods in an attempt to evade this law.
Are you looking for information about other types of dismissals, such as disciplinary dismissals? Check out this article:
TYPES OF DISMISSAL AND LAYOFFS IN SPAIN
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