Spain: Collective dismissals: application and interpretation of the procedural and substantial legislation on collective terminations approved by the Government in 2012.

21 November 2014

Over the first semester of 2014 both the Central and the Supreme Court in Spain have issued several judgments declaring null and void the collective dismissals carried out by Companies well-known in the market  on the basis of the lack of correct application and interpretation of the new regulation.

Some of the Company's whose collective termination decisions have been declared as null and void are Coca Cola Iberia Partners, S.A. (National High Court, 12 June 2014), Panrico S.A.U. (National High Court, 16 May 2014) or the Public Entity Radio Television Madrid (Supreme Court, 26 March 2014).

In such judgments the Courts have shed a light on the:

  • Importance of the criteria used by the Company to determine the list of affected employees:  companies must specify the selection criteria used to include employees in the collective termination. The criteria must justify the utility loss of the employment contracts that will be made redundant and allow judicial control (those generic and imprecise may render the termination null and void).
  • Period to execute the termination decision: Spanish Law does not provide for a required period on which the employer has to execute the terminations; however, this does not allow companies to agree on terminations to be implemented in a distant future (in 2 or 3 years' time) as this may imply the lack of cause to ground the termination.  
  • Groups of Companies: negotiation at company group level is only possible if it constitutes a company group for employment purposes (deemed as the employer). In Coca Cola's case, the company did not inform the workers representation of its constitution as a company group (taken prior to the decision of restructuring) breaching the principle of good faith and rendering the terminations null and void.

This article is part of the Southern Europe Employment Law Update for December 2014

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