This article examines the issues surrounding collective dismissals and addresses the main questions that commonly arise in this context. One of the key questions is when a dismissal qualifies as a collective dismissal and what legal obligations this entails for the employer.

First of all, it is important to clarify what is meant by a collective dismissal.
Not every simultaneous termination of several employment contracts automatically constitutes a collective dismissal. Therefore, in certain circumstances, it will not be necessary to follow the specific procedure established for this type of dismissal.

In accordance with Directive 98/59/EC and the Spanish Workers' Statute, a collective dismissal occurs when employment contracts are terminated for economic, technical, organisational or production-related reasons.
In addition, a minimum number of employees must be affected in relation to the company's workforce for the terminations to qualify as a collective dismissal.

The different statutory thresholds are set out below:

 

If a company carries out successive dismissals within a ninety-day period with the intention of circumventing the statutory thresholds indicated above, and the terminations affect fewer employees than those thresholds, the dismissals may be deemed to have been carried out in circumvention of the law and, consequently, declared null and void, unless new grounds arise that justify the subsequent terminations.

In these circumstances, it will be necessary to carry out a collective dismissal procedure (ERE). This is a complex procedure that frequently raises questions for both employers and employees.

Below, we summarise the most important aspects to make the procedure easier to understand.

 

1. Establishment of the employee representative committee, deadline for its establishment, consultation period and notification to the labour authority.

Before the dismissals are carried out, an employee representative committee must be established, consisting of no more than thirteen members. The committee must be formed within a period of between seven and fifteen days, depending on whether any of the affected workplaces have no legal employee representatives.

Once the committee has been established, the employer will formally commence the consultation period by sending the corresponding notice to the employees' legal representatives. At the same time, the company must notify the competent labour authority that the procedure has commenced.

The labour authority acts as the supervisory body for the procedure, ensuring that the collective dismissal is conducted in accordance with the law, that employees' rights are respected and that potential abuses are prevented.

The notification to the labour authority must be accompanied by a detailed explanatory report setting out the grounds for the procedure, together with the following documentation:

• Written request for the works council's report, which must be issued within a maximum period of fifteen days.
• A copy of the notice sent by company management to the employees or their representatives informing them of its intention to initiate a collective dismissal procedure.
• Identification of the employee representatives who will form part of the negotiating committee or, where applicable, evidence that no such committee exists.
• An external outplacement plan where the procedure affects more than fifty employees.
• The proposed timetable for implementing the dismissals.
• The objective criteria used to select the affected employees.

2. Period de consultas

The consultation period will last no more than thirty calendar days. In companies with fewer than fifty employees, this period is reduced to fifteen calendar days.

The consultation period may end earlier if the parties reach an agreement or if it is established that reaching an agreement is impossible.

The parties may also replace the consultation period at any time with a mediation or arbitration procedure.

Once the consultation period has ended, the company must notify the labour authority of the outcome of the negotiations.

For an agreement to be reached, it must be approved by a majority of the employees' legal representatives or, where applicable, by a majority of the members of the employee representative committee.

During the consultation period, the parties must in all cases consider ways of avoiding or reducing the collective dismissals, as well as measures aimed at mitigating their consequences through accompanying social measures, such as outplacement plans, training programmes or other equivalent measures.

Failure to comply with these obligations may result in administrative liability.

3. Conduct of the procedure

Once the consultation period has ended, the company must notify the labour authority of the outcome of the negotiations. Within a maximum of fifteen days from the final meeting of the consultation period, a copy of the agreement reached must be submitted or, if no agreement was reached, the final decision to proceed with the collective dismissal, together with the terms on which it will be implemented.

After receiving this notification, the labour authority will request a report from the Labour and Social Security Inspectorate. The report will examine the content of the company's notification and the conduct of the consultation period and must be issued within fifteen days following the end of that period.

4. Notification of the collective dismissal

If no agreement is reached during the consultation period, the company will notify each affected employee individually of their dismissal. In all cases, at least thirty days must elapse between notification to the labour authority of the commencement of the consultation period and the date on which the dismissal takes effect.

5. Challenge before the labour courts and severance compensation

Both employee representatives and affected employees may challenge the employer's decision concerning the collective dismissal before the labour courts.

In these cases, the statutory minimum severance compensation is twenty days' salary for each year of service. Periods of less than one year are calculated on a pro rata monthly basis, and the compensation may not exceed an amount equivalent to twelve months' salary.

As explained above, the collective dismissal procedure is complex and requires strict compliance with the employment legislation in force. Incorrect handling of the procedure may result in administrative penalties, the procedure being declared null and void, or unnecessary delays that may adversely affect both the company and the employees concerned.

For this reason, it is advisable to obtain advice from lawyers specialising in employment law from the outset.

At Sander Santos & Partners, SLP, our team of lawyers specialises in collective dismissals (ERE), corporate restructuring procedures and Spanish employment law. We will be pleased to advise you and represent your interests throughout the entire procedure.

Author:

J. Francisco Santos Postigo
Lawyer
CEO, Partner, Director Labour Law
info@sspartners.es
Tel: (+34) 951 12 13 06
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