Ius Laboris - Economic and Organisational Dismissals guide

23 Feb 2016

Castegnaro Newsflash 23.02.2016

Lorraine Chéry

Ius Laboris, an international alliance bringing together law firms specialised in employment law, with CASTEGNARO as one of its founding members, is proud to announce a practical guide being placed online and explaining the procedure to follow and the issues to take into account in the event of dismissal based on economic reasons in 38 countries: Economic and Organisational Dismissals guide

Collective dismissal

In the judgement of 11 November 2015, the European Court of Justice (ECJ) interpreted the provisions of the Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (hereinafter “the Directive”).

In the case in question, 10 individual dismissals for objective reasons had been announced by a Spanish company. 27 other contractual termination took place during the 90 days prior to the last of the dismissals, of which in particular the expiration of fixed-term contracts, a voluntary departure of workers and a contractual severance following the unilateral amendment of an essential element of the employment contract to the employees’ disadvantage (25% reduction in fixed salary).

Mr. Pujante, who was dismissed for objective reasons, disputed the validity of his dismissal on the grounds that the employer ought to have respected the collective dismissal procedure, with the dismissal thresholds provided for in Spanish law having been reached.

By way of a reminder, with a view to determining the existence of a collective dismissal, according to the Directive in order to calculate the number of dismissals, deemed as such are the employment contract severances undertaken on the employer’s initiative for one or more reasons not inherent to the individual workers, on condition that the dismissals are five in number. Furthermore, according to the Spanish law, in companies employing between 100 and 300 workers, “collective dismissal” is understood to mean the severance of employment contracts due to objective causes, when during a 90-day period this severance affects a minimum 10% of the establishment's workforce.

In its judgement of 11 November 2015, the Court firstly declared that the employees engaged under fixed-term contracts should be taken into account in calculating the workforce in order to determine the thresholds of dismissals triggering the collective dismissal procedure. The Court nevertheless clarified that the severance of said fixed-term contracts could not be taken into account in order to determine the existence of a collective dismissal.

Furthermore, according to the Court, in view of establishing whether there is a case of a collective dismissal in the sense of the Directive, the condition that the dismissals number is at least five is not intended for employment contracts severances deemed as dismissals, but exclusively dismissals in a strict sense.

Lastly, the Court declared that the Directive should be interpreted in the sense that the fact an employer proceeds, unilaterally and to the worker's disadvantage, with a substantial amendment of essential elements of its employment contract for reasons not inherent to the individual, falls within the concept of “dismissal”, set out in article 1, section 1, first paragraph under a), of the Directive.

CJUE, 11 November 2015, Pujante Rivera, case C-422/14