Cecilia had been working as an accounting officer at a hotel in Las Palmas in Gran Canaria for 13 years when she was fired by her company. The reason for the sacking was the purchase of a new computer system capable of doing all her work and that of her team without stopping even for a break. This is not an isolated case. According to the Organisation for Economic Cooperation and Development (OECD), half of all jobs in Spain are at risk of disappearing or of significantly transforming due to automation. It’s a trend that has accelerated with the Covid-19 pandemic, which has led to historic falls in employment, especially in the tourism industry. According to the consultancy firm McKinsey, the pandemic and automation could destroy up to seven million jobs in Spain.
However, attempts to replace workers with machines have come up against an unexpected obstacle: judges. In the past few months, several sentences have ruled that a worker cannot be fired because a company has introduced new software or a robot that is more efficient. These rulings, however, have been met with a certain degree of controversy given that the judges’ arguments were based more on socio-economic grounds, rather than legal ones. For example, in the case of Cecilia (a fictitious name used in the sentence), the court in Las Palmas ruled in her favor, arguing that the company’s reason for the firing – to improve productivity – was “not sufficient to justify the dismissal.”
According to the consultancy firm McKinsey, the Covid-19 pandemic and automation could destroy up to seven million jobs in Spain
The judge explained that if he had sided with the company, the ruling would be “reducing workers’ rights in order to increase business freedom” – an outcome he viewed with concern. “Automation will lead to job losses among at least 35% of the active population,” the ruling stated, adding that the welfare state prioritizes “the public interest in maintaining employment.”
The company defended its decision to sack Cecilia on Article 52.b of the Workers’ Statute, which regulates layoffs for technical reasons as long as they are made when a business changes the means or instruments of production. This provision is “very abstract,” says Ignacio Moratilla, a partner of the law firm Lexpal Abogados, and does not provide clear solutions when it comes to balancing the different interests at stake. This means that it falls to judges to solve a much bigger problem.
Montserrat Alonso, a partner at the law firm Sagardoy Abogados, understands that courts must take economic circumstances into account, but questions whether layoffs should only be permitted if a company has financial problems. According to Alonso, it’s obvious “that a business introducing technology, because it’s walking a tightrope and needs to reduce costs, is not the same as one that does so to become more competitive.” But, she says, innovation is crucial to many companies, and in the long run, improved productivity helps to maintain jobs. “If measures can only be taken when there are losses, there will end up being more dismissals than what there would have been if action had been taken in time,” explains Alonso.
Antonio Aloisi, professor of IE Law School, highlights that case law indicates that job cuts must be reasonable and proportional. In other words, there “must be a causal link between the introduction of a new technology and the need to eliminate the job position,” he explains.
This was the argument Madrid’s High Court used to rule in favor of nine employees who were sacked from a printing company, which replaced them with two much more advanced pressing models. The magistrates ruled that the dismissal was unfair given that the business did not provide data showing “the need to reduce manual labor to, for example, work the apparatuses.” Indeed, the judges believed that the increase in the volume of production would increase the need for more staff.
But while judges and courts can put up obstacles to the very real risk of workers being replaced en masse by robots, it has limited power. Like in the aforementioned cases, the only thing courts can do is make it more costly to fire workers by declaring dismissals as unfair – they cannot save jobs, because the grounds for sackings are established by law.
Experts believe that legal reform is the best way to strike a balance between protecting jobs and incentivizing development and technological development in companies. “Spanish regulation must offer criteria about when a job can and cannot be eliminated by the introduction of new technology,” says Moratilla.
Without legal reform, the digital gap between businesses in Spain will widen, he explains, arguing that big companies “that have the economic muscle to face the cost of layoffs” will modernize, while small ones, with fewer resources, will be left behind.
English version by Melissa Kitson.