Sponsored briefing: The calculation of individual dismissals under Directive 98/59/EC

In these turbulent times we are experiencing in the workplace, with a constantly changing legislative framework, the Spanish legal landscape was recently altered by the judgment handed down on 11 January 2020 by the Court of Justice of the European Union (CJEU), on collective redundancies (case C-300/19).

Whereas, just before the summer, news was appearing in the Spanish general press and specialised media of local court rulings rendering null and void terminations of employment contracts, where they were based on loss of business linked to Covid-19, now, this judgment handed down by the CJEU in Luxembourg has opened a new possibility for rendering null and void individual dismissals, linked to a tightening of the criteria used to calculate collective redundancy thresholds, under Directive 98/59/EC on the approximation of the laws of the member states relating to collective redundancies.

In the judgment handed down on 11 January 2020, the CJEU rules on the request for a preliminary ruling filed by Barcelona Labour Court number 3, in relation to the method used to calculate the maximum number of employment contracts that can be terminated on objective grounds without the employer being obliged to begin the consultation period required for a collective redundancy procedure pursuant to Directive 98/59/EC.

The specific lawsuit giving rise to the preliminary ruling was brought by an employee who, after being dismissed on objective grounds, sought a declaration that her termination was null and void, claiming that the number and time thresholds envisaged in Directive 98/59/EC and in article 51 of the Spanish Workers’ Statute implementing it had been surpassed (given that, in the 90 days following the termination of her contract, all of the company’s employees had left the company).

Under article 51 of the Workers’ Statute (Estatuto de los Trabajadores or ET), ‘collective redundancy’ means the termination of employment contracts on economic, technical, organisational or production grounds where, over a period of 90 days, the termination affects a certain number of workers, measured by reference to the total number of workers at the company or workplace (provided that, in the latter case, the workplace normally employs at least 20 workers).

Article 51 also provides that where, in successive periods of 90 days, and in order to circumvent the collective redundancy procedure, a company terminates a number of contracts lower than the thresholds indicated in that article and without there being any new grounds justifying such action, those new terminations must be deemed to be made in circumvention of the law and held null and void.

Since 2012, the Labour Chamber of the Spanish Supreme Court had laid down case law interpreting article 51 ET and Directive 98/59/EC (specifically, since the judgment of 23 April 2012) according to which, in order to determine whether or not collective redundancies existed, all dismissals occurring over the 90-day period preceding the day on which the specific contractual termination in dispute took place were to be calculated.

Based on this interpretation, dismissals taking place over the 90-day period following the dismissal in dispute could only be taken into account if the employer had staggered the contractual terminations before and after the dismissal in question, with the fraudulent purpose of circumventing the number and time thresholds imposed by the law and thus avoiding the procedure and protections required for collective redundancies.

The Spanish court thus defended the impossibility of calculating the 90-day period using a movable or ‘bidirectional’ method that simultaneously considered contracts terminated over the 90-day period preceding and the 90-day period following the termination in dispute. Dismissals occurring in successive periods of 90 days could only be taken into consideration if there was evidence, based on logical rules, of the existence of fraud.

Now, the judgment handed down on 11 November 2020 jettisons this position, in line with the conclusions of the Advocate General.

The CJEU affirms that there is no provision pursuant to which dismissals can be calculated only retrospectively or only prospectively (counting only dismissals preceding, or only those following, the dismissal in dispute). To do so, in the opinion of the court, could limit the protections guaranteed by Directive 98/59/EC, which would apply to a lower number of dismissals.

Thus, the CJEU declares that the reference period for deciding whether an individual dismissal should have been carried out as part of a collective redundancy procedure can be any consecutive 90-day period, however calculated, during which that individual dismissal took place and during which the highest number of dismissals were made by the employer, and will therefore not be limited to a calculation of only those contractual terminations preceding the dismissal in question.

This decision will doubtless have a notable impact in times such as these in which new restructurings are imminent.