Spain: Collective dismissals based on objective grounds

Evidence of the cause for dismissal, compliance with information or documentation obligations

The High Labour Court of Madrid rendered two decisions, on 30 May 2012 (415/2012) and 11 July 2012 (542/2012), regarding the evidence presented as to the founding grounds for dismissal and on the documentation and information requirements in the context of collective dismissals.

In addition to the new wording of the economic grounds for collective dismissal (as mentioned above), the purpose of the consultations period has also been modified. As a result, there is no longer a need to negotiate on the grounds of dismissal, only on the consequences of the dismissals. However, the good faith required in the course of negotiations, which is linked to the information and documentation required by law and now also by Royal Decree 1483/2012, of 29 October, on collective proceedings (such as current annual accounts, criteria used by the company in choosing the affected employees and positions, etc.), remains untouched as a guiding principle of consultations with the workers representatives.

According to the court, the company failed to provide proper evidence of its losses and the required documentation, which was too generic and not sufficiently accurate. According to the court, the company's failure to provide the required documentation and its intransigence during the negotiation process showed a lack of good faith on its part.

The Higher Court of Madrid has therefore declared those two collective dismissals null and void on the basis that the company's duty to inform the workers' representatives before and during the consultation period was not sufficiently fulfilled.

However, the Spanish Labour Court has in the meantime rejected a claim lodged against a collective dismissal (decision 142/2012, dated 21 November 2012). The court rejected the claim on the basis that the collective proceedings had been properly lodged, despite the fact that workers' representatives' preferential right to employment had been violated as this did not amount to sufficient grounds to annul the entire proceedings. Furthermore, the court considered that the company had sufficiently proven the claimed economic and production-related grounds for dismissal as the company's overall economic situation was clearly negative and the positions made redundant were reasonably linked to the losses detected.

These differing conclusions are not evidence of the courts using different criteria when assessing the different cases, they merely highlight the significance of a case-by-case study and the judicial control exerted when assessing the grounds and the lawfulness of collective dismissal proceedings since the Labour Reform entered into force. Before the Labour Reform came into being, judicial control was wielded by the Labour Authority, which was then responsible for authorising – or otherwise – the collective dismissal. However, that body now has a different role.

Bad faith in negotiations and rendering the consultation period devoid of purpose

In addition to decision 415/2012 dated 30 May, in which Higher Court of Madrid declared a collective dismissal null and void, the Spanish Labour Court has also declared a collective dismissal (decision 162/2012 dated 15 October) null and void due to bad faith on the part of the company during negotiation process. In this case, the company notified the affected employees of their dismissal when the compulsory consultation process with the workers' representatives had not yet finished.

Labour courts agree that good faith during the negotiation process is a priority and a requirement for the consultation process to have a successful outcome.

Generic criteria in choosing employees for dismissal

The Higher Court of Cataluña, in its decision 13/2012, dated 23 May, declared a collective dismissal null and void, as the company failed to properly express the criteria it had used to choose which employees it would be making redundant. The company failed to notify the professional categories of the affected employees and that, according to the court, constitutes a breach of the purpose of the negotiation process. Moreover, the dismissals were not individually notified to the affected employees at the end of the consultation process.

Inadequate level of negotiation

In its decision 90/2012, dated 25 July, the Spanish Labour Court declared null and void a collective dismissal that had been partially negotiated for each of the company's work centres.

As consultation processes in collective dismissal scenarios must be conducted in a single process for the entire company, the court understood that the partial negotiations breached the purpose of the consultation process in this context.

Although Act 3/2012 and Royal Decree 1483/2012 of 29 October on collective proceedings expressly allows different negotiation processes being conducted per work centre, this court's decision seems to exclude that possibility.