Experts in spanish labour regulation - Employment collective dismissal

PROCESS AND NEGOTIATION OF COLLECTIVE DISMISSALS

WHAT ARE THE ESSENTIAL FORMALITIES IN A REDUNDANCY FILE?

Firstly, we must consider the thresholds for collective dismissal to ensure we follow the correct procedure and avoid invalid dismissals if this channel is not used.

Secondly, it is not necessary for the consultation period to end with an agreement. If it is deemed that there is no legally founded cause (economic, organizational, technical, and/or production), the referred Collective Dismissal Redundancy File can be challenged before the Social Jurisdiction (as we will explain at the end).

Before addressing the formalities, note that although the ERE is usually initiated by the company, it can also be initiated at the workers' request (which we will refer to in the penultimate point). When the ERE file is initiated by the company (most cases), the employer must comply with the following formalities:

THE PROCEDURE BEGINS WITH:

• Opening a consultation period through a written notice to the legal representatives of the workers.

Prior to the company's communication of the start of the consultation period, the representative commission of the workers must be constituted. For this purpose, the company must notify the workers or their representatives of its intention to start the collective dismissal procedure. The maximum period for this constitution is seven days from the date of communication by the company's management of its intention to start the procedure, unless some of the affected work centers do not have legal representatives of the workers, in which case the period is fifteen days.

• Simultaneous communication to the competent Labor Authority of the opening of the consultation period, with a copy of the notice addressed to the workers' representatives.

• Communication to the Labor Authority of the outcome of the consultations at the end of the period.

Phases of the collective dismissal procedure:

a. Communication

b. Consultation period

c. Processing

A) WHAT STEPS TO FOLLOW IN THE BUSINESS COMMUNICATION FOR AN ERE?

The employer will direct the opening communication of the consultation period to the legal representatives of the workers and simultaneously send a copy to the labor authority.

Content of the business communication:

• An explanatory report of the motivating causes of the procedure.

• Documentation supporting the indicated cause(s) depending on the type:

  • Economic cause: annual accounts for the last two complete financial years, including the balance sheet, profit and loss account, changes in equity statement, cash flow statement, financial report, and management report or, where applicable, abridged financial statements, audited in the case of companies required to conduct audits, as well as provisional accounts at the start of the procedure, signed by the administrators or representatives of the requesting company, among others.
  • Technical cause: technical reports certifying the occurrence of technical causes due to changes in production means and instruments.
  • Organizational cause: technical reports certifying the occurrence of organizational causes due to changes in work systems and methods or production organization.
  • Productive cause: technical reports certifying the occurrence of productive causes due to changes in product and service demand.

• Number and professional classification of the affected workers, as well as the workers employed during the last year. If the collective dismissal affects more than one work center, this information will be broken down by center, and where applicable, by province and autonomous community.

• A written request for a report from the workers' legal representatives as referenced in article 64.5.a and b of the Workers' Statute before the implementation of the employment regulation measures proposed by the employer.

• Information on the composition of different workers' representations in the company, about work centers without unitary representation, and, where applicable, minutes related to the attribution of representation to the commission mentioned in article 27 of R.D. 1483/2012.

• Copy of the communication addressed to the workers or their representatives by the company's management of its intention to start the collective dismissal procedure.

• Representatives of the workers who will form the negotiating commission or, where applicable, indication of the lack of its constitution.

• In companies conducting collective dismissals affecting more than fifty workers, an external relocation plan.

• Expected period for the dismissals.

• Criteria for selecting the affected.

• Obligation to sign a special agreement with social security for those over 55 (article 51.9 ET).

• Obligation to contribute to the Public Treasury.

B) WHAT IS THE DURATION OF THE CONSULTATION PERIOD IN COLLECTIVE DISMISSALS?

The duration will not exceed 30 calendar days or 15 days in the case of companies with fewer than 50 workers. The period will be deemed concluded regardless of the elapsed time if the parties reach an agreement or, in any case, when the parties declare it impossible to reach an agreement.

The company and the legal representatives of the workers must negotiate in good faith with a view to reaching an agreement. The consultation will be conducted by a single negotiating commission. If there are several work centers, it will be limited to the centers affected by the procedure; it will consist of a maximum of thirteen members representing each party. The workers' representatives must state in their constitution minutes that they constitute a collegiate body regarding the formation of their will and the binding nature of their decisions.

At the end of the consultation period, the employer will communicate the result to the labor authority.

The employer and the workers' representation may agree at any time to replace the consultation period with the mediation or arbitration procedure applicable in the company’s scope, to be developed within the maximum period for the consultation period.

The labor authority will ensure the effectiveness of the consultation period and may issue warnings and recommendations to the parties without paralyzing or suspending the procedure. Also, the labor authority may carry out mediation activities during the consultation period at the joint request of the parties to seek solutions to the problems posed by the collective dismissal. Similarly, it may perform assistance functions at the request of any party or on its initiative.

The agreement will require the majority of the legal representatives of the workers or, where applicable, the majority of the members of the workers' representative commission, provided that, in both cases, they represent the majority of the workers of the affected center(s).

C) HOW IS THE CONSULTATION BETWEEN THE COMPANY AND WORKERS CARRIED OUT IN AN ERE?

Upon receiving the communication, the labor authority will inform the managing entity of unemployment benefits and request a report from the Labor and Social Security Inspectorate on the company's communication details and the consultation period's development. The report must be issued within an unextendable 15-day period from the notification to the labor authority of the consultation period's end and will be incorporated into the procedure.

The labor authority will ensure the effectiveness of the consultation period, issuing warnings and recommendations without paralyzing or suspending the procedure. After the consultation period, the employer will communicate the result to the labor authority within 15 days from the date of the last consultation meeting. If an agreement is reached, a full copy will be provided. Otherwise, the final collective dismissal decision and its conditions will be communicated to the workers' representatives and the labor authority.

After notifying the representatives, the employer will individually notify the affected workers of the dismissals under the terms established in article 53.1 of the Workers' Statute. However, at least 30 days must have elapsed between the date of the consultation period opening communication to the labor authority and the dismissal's effective date.

The legal representatives of the workers will have priority in remaining with the company. Collective agreements or agreements reached during the consultation period may establish priority for other groups, such as workers with family responsibilities, older workers, or disabled persons.

WHAT ACTIONS CAN WORKERS TAKE AGAINST A COLLECTIVE DISMISSAL INITIATED BY THE COMPANY?

When the ERE is initiated by the workers, the communication must contain at least:

1. An explanatory report of the reasons for initiating the procedure.
2. Evidence deemed appropriate to prove the harm caused by the lack of opening the ERE, for example, and, where applicable, the communication made to the employer and the response, as well as the documentation provided to them.
3. List of affected workers.
   
   

WHAT ARE THE STEPS TO CHALLENGE A COLLECTIVE DISMISSAL DECISION BEFORE THE SOCIAL JURISDICTION?

The workers' representatives can challenge the employer's collective dismissal decision before the social jurisdiction through the action provided in article 124 of Law 36/2011, of October 10, regulating social jurisdiction. Affected workers can also challenge their dismissal through the individual action provided in Law 36/2011. However, filing the representatives' lawsuit will halt individual actions until its resolution.

The labor authority can challenge agreements reached during the consultation period if it deems they were achieved through fraud, deceit, coercion, or abuse of rights, or if the unemployment benefit managing entity has reported that the agreement aims to obtain benefits for affected workers improperly.

For specific advice on managing a collective dismissal, do not hesitate to contact our labor lawyers specializing in dismissals, to guide you on your particular situation:

Labor Lawyer Josep Conesa

We specialize in collective conflicts; get informed or download our guides on the minimum matters that must be agreed upon in a company collective agreement and a sectoral collective agreement.