In the application of article 51 of the Workers' Statute, collective dismissal is understood to be the termination of employment contracts based on economic, technical, organisational or production causes when, in a period of 90 days, the termination affects at least:
- Ten workers, in companies that employ less than one hundred
- Ten percent of the number of workers in the company in those that employ between one hundred and three hundred workers.
- Thirty workers in companies that employ more than three hundred
Collective dismissals throw up obstacles for all of those who face them, both the employers taking the hard decision to dismiss employees, and the staff who see their jobs affected. If you are looking for a labour lawyer in Spain with expert knowledge and a wealth of experience of navigating employment law and dismissal procedures more specifically, we at Conesa Legal are in the perfect position to help you.
First, let’s take a look at the collective dismissal procedure in more detail, so that you have an idea of what to expect:
Collective dismissal procedure
REQUIREMENTS:
- Reference period : 90
- Economic, technical, organisational or production
- We have to check the number of workers in the company who are affected.
COLLECTIVE DISMISSAL PROCEDURE:
- Notification to constitute ´commission of representatives´ (negotiation committees)
The employer must notify the employees and the labour authorities of its intention to commence the consultation period for a collective dismissal and provide 7 days for the constitution of a negotiation committee (the notice period will be 15 days in the event that they do not have elected workers representatives). The consultation period automatically commences at the expiry of this period. The negotiation committee or the commission of representatives will be involved in the negotiation process on behalf of the employees during the consultation period in a collective dismissal proceeding.
- Notice to commence the consultation period
The employer notifies the legal representatives and labour authority of the start of the consultation period and provides certain documents which demonstrate the need to carry out the collective dismissals.
- Labour Authorities
The Labour authority will mandatorily obtain a report from the Labour and Social Security Inspection to determine whether the grounds alleged by the employer are actually well founded.
- Consultation period
Consultation period must last for at least 30 calendar days (if there are fewer than 50 workers, it will be 15 days).
During the consultation period, the parties must negotiate “in good faith” and with the intention of reaching an agreement. Failure to do so can lead to dismissals being declared void.
The employer is under an obligation to consider alternatives or measures which are aimed at avoiding or reducing the effects of dismissal during the consultation process. Such measures may include: redeployment, transfer, training, re-training, etc.
Once the consultation period is over, the employer must communicate the decision taken (with or without agreement) to the legal representatives and the labour authority and may start implementing dismissals, even if no agreement has been reached.
The employer must offer the individual employees the severance payment agreed during the consultation or, if no agreement has been reached, compensation must be calculated on the basis of 20 days’ per year of service with a cap of 12 monthly payments (fair dismissal compensation).
DOCUMENTS REQUIRED AT THE TIME OF NOTIFICATION OF DISMISSAL
In instances in which economic grounds are alleged as the primary cause for conducting the collective dismissal action, the document requirement is more extensive and onerous.
However, in any case, the employer must provide, to the employees' legal representative body, the following information at the time of notification (or prior to commencing consultation):
- Specification of the cause or ground for initiating the dismissal proceedings;
- Number and professional categories of the employees affected by the collective dismissal action;
- Number and professional categories of the employees normally employed during the last year;
- Anticipated time frame for the execution of the dismissals;
- Criteria taken into account during the selection of dismissed workers; and
- List of the representatives within the negotiation commission or in the event that the commission has not been constituted, information conveying the lack thereof.
A copy of the above listed information must also be sent to the competent labour authority along with the application and the notice. In addition, the employer must send a report detailing the grounds for commencing a collective dismissal action in Spain – this is a key document requirement.
In companies employing more than 50 workers, an accompanying plan for mitigating the consequences of the dismissals for the affected employees must be provided.
IMPORTANT PRIOR CONSIDERATIONS FOR THE EMPLOYER
The employer must, prior to initiating a collective dismissal action, consider the following:
- Worker’s representatives have priority of permanence and may be the last to be dismissed;
- The selection of workers to be dismissed must be based on objective However, any such criteria chosen by the employer which may be considered discriminatory shall be void.
- If the collective dismissal affects more than 50 employees, the employer must offer an outplacement plan which will be monitored by the labour authorities and will have cost implications.
CONSEQUENCES OF NOT FOLLOWING THE COLLECTIVE DISMISSAL PROCEDURE
Under the provisions of Spanish Labour law, if the legal procedure for collective dismissals is not followed, the individual redundancies will be declared void (DESPIDO NULO). As a result, the employer will be obligated to reinstate the employees. Additionally, the employer will have to pay the affected employees the salaries that they accrued from the date of termination until the judgment notification.
CHALLENGE COLLECTIVE DISMISSAL ACTION: LAWSUIT
A collective dismissal may be challenged before the labour courts in Spain by means of a collective claim or individual claims by the affected employees.
- Collective Claim
The affected employees, as well as the employees’ representatives or unions will be entitled to challenge the terminations within 20 working days from the date of the agreement or from the notification to the employees’ representatives of the termination decision.
The legal/union representatives may file a claim against the redundancy alleging:
- There are no legal grounds for the redundancy; and/or
- The procedure has not been duly followed; and/or
- There has been fraud, coercion or abuse of law; and/or
- That the termination has breached fundamental rights
- Individual Claim
Individual claims may be submitted within 20 working days once the 20-day period established for the collective claim has elapsed. It is worth noting that a challenge by the legal representatives/union will freeze any individual claims from the affected employees.
- Labour Authority
The labour authority may bring an action against the collective dismissals carried out by an employer when it considers the actions to be:
- Based on fraud, coercion or abuse of law; or
- Lacking in grounds or legal motivation, such as in cases in which the employer has improperly obtained a benefit as a result of the collective dismissal action.
COSTS
Collective dismissals involve various costs related to the action. Depending on the particular circumstances and facts of the individual case, some or all of the following costs may apply:
- Redundancy compensation: either as per compensation legally payable (same as in cases of fair objective dismissals: 20 days of salary per year of service), or as agreed between the parties during the consultation, or as may be directly ruled by the courts in case of an adverse outcome of a challenge.
- Social security payments: for affected employees over 55 years old, the employer should finance certain amounts by signing an agreement with the Social Security until such employee reaches 61 years old (economic causes) or 63 years old (other causes). It's named "Convenio especial para trabajadores sujetos a procedimientos de despido colectivo que incluyan trabajadores con 55 o más años (ERE)."
- Contributions to Public Treasury: if employees over 50 years old are included within the collective dismissal, and provided certain requirements are met, the employer may be obliged to make an economic contribution to the Public Treasury. Amounts of contributions required will depend on individual circumstances determined by law.
- Legal
Labour lawyers for collective dismissal in Barcelona and wider Spain
Lawyer for collective dismissal
Conesa Legal is available to answer any questions you have about the collective dismissal procedure and its legal ramifications. Because our employment lawyers, economists and social security experts have already helped a multitude of employers and staff to navigate the world of collective dismissals, we have a deep understanding of both sides of the employment relationship and the legal positions of all involved. This allows us to not only explain and practice the law, but also anticipate the actions of the other party and the Courts.
