Dismissals: the prohibition which in fact was not one

After the passing of Royal Decree-Law 9/2020, of March 27, 2020, article 2 of which provided that “force majeure and the economic, technical, organizational and production reasons providing the basis for the measures of suspension of contracts and reduction of working hours provided for in articles 22 and 23 of Royal Decree-Law 8/2020, of March 17, 2020, cannot be considered as justifying the termination of employment contracts nor dismissals”, certain sectors of opinion announced the good news of the alleged prohibition of dismissal. According to the more extreme opinions, during the pandemic dismissals were simply eradicated, employers being entitled to adopt only temporary solutions that maintain the employment relationship. According to the more nuanced opinions, the presence in a decision to terminate of circumstances that that could be traced back to those arising from the pandemic, was sufficient to declare the dismissal null and void.

Numerous judgments of the high courts of justice follow this line of interpretation, although the majority of the case law favored the unfairness of the dismissal arising from reasons attributable to the pandemic. This is the line endorsed by the Plenary Session of the Fourth Chamber of the Supreme Court which, in a judgment of October 19, 2022 (841/2022), has established the criterion for interpretation of the above-mentioned article 2, as meaning that its infringement does not render the dismissal null and void but rather unfair. This important judgment (issued in a case handled by counsel from Garrigues) contains, in any event, rulings of great interest, not only in relation to the past but also with a view to the future of our employment relations and to certain questions that may be raised in the future.

What is important about the Supreme Court judgment, in my opinion, is its assertion (point five of the legal grounds, section 2) that the legislation in dispute contains a “decriminalization, a neutralization of the grounds for termination”, not in any case a prohibition of dismissal. “The meager legislative drafting”, according to the Supreme Court, “does not prohibit the termination of contracts, but rather removes the coverage of the dismissal due to business difficulties”. In other words, the true objective of the legislation is that dismissals for objective reasons or collective dismissals which, in the absence of such legislation, would be fair or lawful, cease to be fair or lawful in the terms regulated by it. The purpose of the statutory provision, therefore, if we follow the court’s reasoning, is that dismissals which, without the exceptional legislation passed due to the pandemic, would be objectively justified, cease to be justified. What is provided for in the legislation is the treatment of potentially justified dismissals, which, due to a decision of parliament, in the exceptional situation arising from the pandemic, cease to be justified. However, the legislation does not change the concept, and the treatment, of unjustified or unfair dismissals.

Before, and after, Royal Decree-law 9/2022, unfair dismissals and void dismissals are subject to the same legal treatment. No legislative change occurs in this respect. Of course, there is no basis in any case for the creative interpretation adopted by the judgment overturned by that of the Supreme Court that the legislation provided job protection, in the face of the pandemic, similar to that reserved for fundamental rights. This is so for the sound reasons spelled out by the Supreme Court among which I wish to emphasize the equating of the right to work (article 35 of the Spanish Constitution) with freedom of enterprise (article 38). Both provisions, according to the Supreme Court, are included in the same section of chapter two of title I of the Constitution, and therefore “it does not seem that there can be an inappropriate alteration of rank or of protection between them, although parliament gives weight to one or the other as it adopts its decisions”.

All of this is very rightly summarized in the assertion in the judgment (point five of the legal grounds, section 3) that “Royal Decree-law 9/2020 does not contain a genuine prohibition of dismissal, but rather a temporary restriction of its fairness; during that time frame, so to speak, the applicability of the provisions regarding the aforementioned grounds for dismissal for objective reasons, collective dismissal or due to force majeure has been suspended”. Dismissals in violation of fundamental rights, in the terms recognized by the case law, and recalled by the judgment at hand, are still null and void. The presence of dismissals without a “proven reason, whatever the reason relied on by the employer (or even the absence of any reason), leads to unfair dismissal”, whose legal rules are also still the same. The change lies in the fact that dismissals which, without the provisions of article 2, would be considered fair, may become unfair if the reasons on which they are based are those referred to in the provision (arising from the pandemic).

The latter is subject to an important qualification. The Supreme Court explains, relying on the judgment of the same chamber of March 16, 2022 (239/2022) (in a cassation appeal also handled by Garrigues), that article 2 of the Royal Decree-law 9/2022 “is not applicable when the origin of the economic or production reasons justifying the dismissal had commenced before the pandemic and arose from a structural or sectoral crisis, but not from the health crisis”. Therefore, despite the decriminalization, in the words of the Supreme Court itself, carried out by the above-mentioned article 2, “if the employer proves the existence of a structural situation, it can decide on a collective dismissal” (or, it should be added, dismissal for objective reasons).

A final comment: the Supreme Court reaffirms the case law regarding the unfairness of dismissals for no reason. A dismissal for no reason must be considered unfair and not null and void, and this complies with the alternative remedy provided for in article 10 of Convention 158 of the International Labor Organization (ILO), which expressly provides for compensation as a possible consequence of the breach of the principle requiring that reasons are given for the dismissal. Although the Supreme Court does not consider it, because it was not raised in the case, it must be concluded that Spanish legislation in this respect also complies with article 24 of the European Social Charter, which provides for the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief. The sufficiency of the compensation provided by Spanish legislation in cases of unfair dismissal can be disputed (as is done in the complaint brought by the labor union UGT to the European Committee of Social Rights), but not their options regarding the classification of dismissals and the instruments provided to address their unfairness.