The labour market reform of February 2012 – in the context of an enormous unemployment rate of more than 25 percent – was a necessary attempt to modernize the Spanish labour market’s structure, both from the individual and collective point of view. However, in practice, it is not being fully applied by judges, who, at the end of the day, should be the ones who make the legislation effective.
Official statistics confirm that many Spanish companies followed strategies of reducing hours and/or wages, as well as collective redundancies (ERE) to try to improve their economic situation and keep the highest possible number of workplaces.
However, the reaction of Labour Courts is quite different. While the implementation of reduced working hours or wages is generally accepted, what happens when it comes to the collective redundancies?
This uncertainty leads us, as legal advisors, to recommend two completely different strategies depending on our clients. If we advise the company that wants to maintain its business, we have no choice but to suggest reaching an agreement in the consultation period. However, when we advise the employee, there are two options: if the company is going to close, we would advise him to charge anything he can while the entity is still active; whilst if the company is going to continue with its business activities, we would advise the employee to follow any necessary negotiations – including going to the Court – as it is mostly probable that the company will have to accept our economic proposal
This is particularly the case after recent decisions of the Supreme Court (case of Spanish TV channel Telemadrid) and the National High Court (case of Tragsa). The general impression is that choosing a collective redundancies (EREs) strategy – even if the company has enormous loses – might not be accepted by Spanish courts that do not necessarily follow the spirit of labour reform and apply their own subjective criteria that make their final decisions very difficult to predict.
Ignacio Aizpuru is a Partner at AC&G Asesores Legales. He can be contacted at email@example.com