Employment and pensions

The Supreme Court rules out the possibility of reviewing the concurrence of the justifying reasons for collective dismissals terminated by agreement through individual lawsuits

Published on 23rd Nov 2018

The Fourth Chamber, in its judgment of July 2, 2018 (No. 699/2018), unifies the interpretations of the High Courts of Justice on the matter. The Supreme Court reinforces the value of the agreements reached between the company and the employees' representatives in the consultation period, preventing that, by means of individual challenges, the concurrence and justification of the causes of the dismissal may be questioned.

The case considered by the Supreme Court originates in a collective dismissal produced by organizational and productive causes, which occurred in the School of Music and Dance of the City Council of Ciempozuelos in 2013. The mandatory period of consultations between the employees' representatives and the company ended with an agreement, in which the former recognized the concurrence of the causes invoked by the company to justify the dismissal and the company promised to pay compensation of 33 days of salary per year worked with a maximum of eighteen monthly payments.

Despite the existence of the agreement, various employees decided to challenge the collective dismissal through individual demands, considering that the causes alleged by the company did not exist. These demands were dismissed by the Social Court and the High Court of Justice of Madrid, who considered that the challenge to the causes of dismissal, in processes finalized with agreement, corresponds exclusively to the collective representation of the employees. According to this interpretation, the individual challenge of collective dismissals is limited to cases of fraud, deceit, coercion or abuse of rights (allegations by which the agreement is contested) and issues of an individual nature that have not been subject to challenge by the representation of the employees (who dispute the origin of the dismissal of the affected employee).

In the presence of contradictory rulings between the High Courts of Justice on the scope of the individual challenge, the plaintiffs present a cassation appeal for the unification of doctrine before the Supreme Court.

According to the thesis defended by the appellants, the refusal on the part of the courts to review the causes of dismissal by means of individual claims introduces a non-existent limitation in the legal regulation of collective dismissal. Therefore, it supposes the violation of article 51 and of Additional Provision 16 of the Worker’s Statute ("WS") and the improper application of articles 124 and 122 of the Law Regulating the Social Jurisdiction (LRSJ). To this understanding, none of these precepts, in regulating collective dismissal, introduces any limitation to the individual challenge of dismissal. Articles 41.1, 47.1 and 82 WS, which in regulating collective substantive changes in working conditions, expressly state that "when the consultation period ends with an agreement, it will be presumed that the justifying causes concur and can only be challenged before the competent jurisdiction for the existence of fraud, fraud, coercion or abuse of right in its conclusion". In this way, extending this limitation to collective dismissal procedures would entail a restrictive interpretation of the right to effective judicial protection, enshrined in article 24 of the Spanish Constitution.

Finally, the judgement of the Plenary of the Fourth Chamber rules against the claimants, considering that the legal regime for challenging collective procedures is unitary, and therefore the limitations of articles 41, 47 and 82 WS should be applied with equal extension to collective dismissal, since it is about employer's actions with the same collective scope of affectation.
In this interpretive line, the Court recalls, art. 64 of the Insolvency Act (Act 22/2003, July 9) unilaterally regulates all these collective situations of business crisis, even depriving the insolvency judge –not only the employees individually considered – of the possibility of reviewing the concurrence of the causes justifying the collective dismissal assumed in the agreement, unless it acknowledges the existence of fraud, deceit, coercion or abuse of right.

Finally, the Supreme Court reasons that, allowing the individual challenge of causes would discourage the achievement of these agreements, which are the main aim of the consultation period. This would mean that the agreements would be nothing but empty rhetoric. as it implies questioning the actions of the employees' representatives, contradicting the general principle of repercussion of the acts of the representatives in the legal sphere of those represented. Likewise, it would increase the feeling of legal insecurity and litigation, derived from the existence of several individual processes discussing the concurrence of the causes of the same collective dismissal in the same company.

In any case, it should be remembered that this ruling does not exclude the possibility of challenging all collective dismissals ended with agreement. When the agreement has been adopted in violation of the legal rules governing collective dismissal, and conceals fraudulent actions to the detriment of the employees, the possibility of the contestation for fraud, deceit, coercion or abuse of right is open.

The judgements counts on the particular votes of five dissenting magistrates, which shows the controversy of the issue and the manifest possibility of variation in the future, as well as the need to analyse each case in a concrete manner.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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