Dismissals in the Public Sector

From an employment law perspective, we have watched the crisis unfold like a great wave sweeping through sector after sector, banking, construction, industry, retail, and so on. Now it is the turn of the public administration which, facing the same pressures, is looking to employment legislation for solutions, much as private businesses do when confronted with economic difficulties.

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Written by Josep Conesa

Employment and insolvency lawyer

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In this context, a number of recent rulings from employment tribunals have rejected the argument that public administrations may terminate employment contracts on objective grounds grounds, that is, for technical, economic, organisational or production-related reasons, under Article 52(c) of the Workers' Statute, where the terminations are individual in nature. These decisions also lend support to the line of case law that equally denies public administrations access to the collective redundancy procedure under Article 51.

That body of case law is based on the reasoning that the Workers' Statute, when referring to objective dismissal or collective dismissal, speaks only of a company and not of a public administration. Consequently, concepts such as: company results, negative economic situation, actual or projected losses, sustained decline in revenue, viability, competitive market position, changes in claim, and so on, can only apply to a company, and not to a public administration.

It remains to be seen how the High Courts of Justice will rule today, given a somewhat inconsistent body of prior case law on the point. It should be noted that there are rulings, including those of the High Courts of Justice of Andalusia of 25 April 1997 (AS 1997 3855), Catalonia of 2 October 1998 (AS 19984195), Extremadura of 18 May 1998 (AS 19985528), and Andalusia of 9 May 1997 (AS 19973860), that have upheld the validity of contract terminations on one or more of the grounds mentioned above.

The fact is that public administrations employ both civil servants and salaried staff, and the latter are governed by the Workers' Statute and by the Basic Statute of Public Employees. Both pieces of legislation should be considered when addressing this issue and analysing whether the restructuring procedures carried out by public administrations in relation to their staff are lawful.

In this regard, both statutes allow public administrations to hire staff under an employment relationship, acting as an "employer or employer" in the broadest sense of the term. Accordingly, where no administrative or statutory provision specifically governing that employment relationship exists to prevent it, in accordance with Article 1.3(a), the administration should equally be able to terminate such relationships in accordance with, and I stress this, the rules governing the relationship between the parties.

Beyond the objective grounds referred to above and the complications they may entail, there is another situation in which a public administration may clearly terminate an employment contract, whether individually or collectively: the situation set out in Article 52(e), which allows for the termination of open-ended contracts entered into for the execution of specific public plans and programmes, where no stable funding allocation exists and financing is provided through annual budgetary or extra-budgetary appropriations derived from ring-fenced additional income, when the relevant appropriation is insufficient to maintain the contract in question. In such circumstances, there is no legal doubt as to this objective ground for contract termination by a public administration.

Given the current economic outlook, the Generalitat de Catalunya (the Government of Catalonia) may well have been among the first to act, and it is possible that the central government will follow suit. It is therefore essential for both public administrations and public employees to be well advised and supported by the best specialists in order to protect their respective interests, as both sides have a defensible position depending on how matters have been handled, and these disputes very frequently end up before the courts.

Given Bufete Conesa Asociados' specialisation in employment law, we are well placed and ready to assist readers who wish to obtain further information or have any questions on this matter.