Written by Josep Conesa
Employment and insolvency lawyer
Article 2 of Royal Decree-Law 9/2020, of 27 March, adopting supplementary measures in the employment sphere to mitigate the effects of COVID-19, provides that:
"force majeure and the economic, technical, organisational and production grounds relied upon to justify the contract suspension and working-hours reduction measures provided for in Articles 22 and 23 of Royal Decree-Law 8/2020, of 17 March, shall not be deemed to justify the termination of the employment contract or dismissal."
What the courts say matters more than what Conesa Legal says.
Our reading is that Articles 52 and 54 of the Workers' Statute remain in force, and that economic, technical, organisational and production (ETOP) grounds for terminating contracts therefore continue to exist. Indeed, a recent ruling has held a dismissal to be fair on the basis that the company's "hard figures" indicated that it was in a negative financial position, that prohibiting dismissal by employers runs counter to EU law, and that the fair dismissal must accordingly be declared. We attach a link to the ruling:
However, it is very likely that employment judges will interpret the grounds relied upon as being the same as those invoked in ETOP Temporary Layoff Procedure (ERTE) proceedings — that is, grounds directly linked to COVID-19.
HOW LONG DOES THE BAN ON DISMISSALS LAST?
Article 2, which prohibits dismissals, will remain in force until 31 January 2021, as provided by Article 6 of Royal Decree-Law 30/2020, of 29 September.
It is becoming increasingly clear that what began as a temporary situation is turning into a permanent one — yet it is impossible to know whether the Government will extend this deadline, given that legislation is being enacted at the last minute through a rapid succession of Royal Decree-Laws.
Is a dismissal due to COVID null and void or unfair?
Our view is that any dismissal found to be linked to COVID will be declared UNFAIR.
This is because the doctrine of the Supreme Court establishes that where there is no legal ground for terminating the employment contract, or where the actual reason does not fall within the categories defined as grounds for nullity, the applicable classification is unfair dismissal, not null and void dismissal. See the ruling of the Supreme Court dated 29 February 2001 and that of 5 May 2015, both of which affirm that a dismissal lacking valid grounds, or whose grounds do not fall within those classified as giving rise to nullity, must be deemed unfair.
Moreover, the newly enacted Article 2 of Royal Decree-Law 9/2020 does not specify that such dismissals must be NULL AND VOID. It provides that COVID-related grounds will not justify the validity of a dismissal or termination of contract. In our view, since the provision does not expressly prohibit dismissal or declare it null and void, a dismissal based on COVID-related reasons should be classified as UNFAIR rather than NULL AND VOID.
THE REALITY IN CERTAIN EMPLOYMENT TRIBUNALS:
Many rulings from Employment Tribunals are finding that such dismissals constitute unfair dismissal (see the ruling of Employment Tribunal No. 3 of Sabadell, dated 6 July 2020).
One particularly controversial decision — the ruling of 6/07/2020 of employment tribunal 26 of Barcelona — held that additional damages beyond the statutory unfair dismissal compensation may arise and must be awarded to the employee. Notably, the court quantified those damages at €60,000 — compared to a statutory compensation of just €4,000 — on the basis that the employee had uprooted their life in Argentina to come and work in Spain, only to face a dismissal the judge considered to be linked to COVID.
CAN Temporary Layoff Procedure (ERTE) AND Temporary Layoff Procedure (ERTE) ETOP PROCEDURES BE EXTENDED?
Temporary Layoff Procedure (ERTE) procedures were automatically extended until 31 January 2020.
Article 3 of Royal Decree-Law 30/2020, of 29 September, on social measures in defence of employment, allows the extension of an active Temporary Layoff Procedure (ERTE) ETOP (based on economic, technical, organisational or production grounds), provided that agreement is reached during the consultation period.
Accordingly, the extension must be negotiated under the same conditions as the original Temporary Layoff Procedure (ERTE) ETOP (7 days), and must be notified to the relevant labour authority.
PROCEDURE FOR EXTENDING AN Temporary Layoff Procedure (ERTE) ETOP:
- Notification to employee representatives of the start of the consultation period
- Notification of the start to the Generalitat de Catalunya (Catalan regional government)
- 7-day consultation period
- Notification of the conclusion to the Generalitat de Catalunya, whether or not an agreement has been reached
WILL I LOSE MY SOCIAL SECURITY BONUSES IF I PROCEED WITH dismissal?
If you have used a Temporary Layoff Procedure (ERTE) on force majeure grounds, please refer to the link on Social Security exemptions 
CONCLUSION:
It is worth recalling that the explanatory memorandum to Royal Decree 9/2020 — the first measure introduced to mitigate the effects of Covid-19 — makes clear that the intention is to ensure that temporary layoff procedures do not become permanent contract terminations:
"the objective being that the grounds referred to in Articles 22 and 23 of Royal Decree-Law 8/2020, of 17 March, are not used to introduce disruptive employment measures — namely, the termination of employment contracts — but rather temporary measures, which are ultimately those that best respond to a cyclical situation such as the present one."
The right course of action will depend on the specific needs of each company. However, given the current circumstances and the practical reality at first instance before the employment courts, the most advisable approach may be to extend any existing Temporary Layoff Procedure (ERTE) through to 31 January 2021, and to prepare any objective dismissals or collective dismissal proceedings required, with a view to implementing them from 31 January 2021 onwards.
This is our view, which we offer subject to any better-reasoned legal analysis… provided there are no further legislative surprises along the way…
Find out how a Collective Dismissal Procedure (ERE) is processed at this link...
