Sacking workers on the cheap with a judge’s blessing

Two days after Spain’s far reaching labor reform came into law on February 12, Antonio Vega fell victim to it. At 9.50am on February 14, the company he worked for handed him a letter justifying his dismissal on the grounds that its revenues had fallen for three consecutive quarters.

Redur Transporte, which declined to give its version of events, had been looking for some time to get rid of Antonio, he explains. In December, it had offered him a severance package of somewhat more than 20 days’ wages for every year he had been with the firm. He refused the offer. He wanted the 45 days he was entitled to under cases of unfair dismissal as stipulated by the law prior to the reform.

“When I saw [Labor Minister Fátima Báñez] explain the reform on the TV, I knew what was going to happen,” he laments. Redur was now in a position to sack the 36-year-old because one of the so-called objective clauses allows a company to get rid of workers by paying them compensation of 20 days’ wages for every year worked up to a maximum of 12 months’ pay if its sales have fallen for three quarters in a row.

That is not the only sweeping change. The reform also does away with the so-called practice of “express dismissal” under which companies wanting to fire workers without having to go through a court could assume the dismissal was unfair at the cost of paying more compensation. Some 60 percent of sackings were carried out this way last year. The reason it is called express is that companies want a quick settlement to avoid paying the so-called procedural wages a dismissed worker is entitled to up to the time a judge rules on their case.

“Before there was a 90-percent chance of a judge not ruling in favor of a company,” explains Alberto Nadal of the Spanish Confederation of Business Organizations (CEOE), the country’s biggest employer group. “But with the disappearance of express dismissal, the situation is more uncertain, and lends itself more to a negotiated settlement between the company and the employee.”

However, José Luis Aramburu of the UGT labor union has a different take on the situation. “With the establishment of cheap sacking, the role of the legal process is greatly reduced,” he argues. A magistrate with years of experience in labor law takes a similar line. “They have reduced us to notaries. Now, if the revenues of a company fall one euro, even though it continues to make profits and remains solid, it is treated no differently from one that is making losses. It’s no longer up to us to decide whether the decision is reasonable or not.”

The disappearance of express dismissal as a result of the reform would appear to lend itself to more cases being fought out in the law courts. “That will be the case because there will be more firing,” another magistrate says. “Litigation is going to increase, above all because the reform does away with prior authorization of the public administration in the case of mass layoffs,” says Martín Godino of the Sagardoy, firm of lawyers, which specializes in labor cases.

All of the sources consulted for this article agreed that the preferred option for companies to lay off workers would now be with 20 days’ wages, citing objective causes. The judge cited in this article argues that this initially could lead to an increase in sacked workers taking their former employers to court to seek higher compensation. “But later when people realize there is not much they can do, it will cease to be an option,” he adds.

Antonio Vega is one of those people who will be going to court to seek higher compensation. “I’m preparing it; I have 20 working days to do so.” Vega wants the court to recognize that he has been unfairly dismissed. If he wins his case, the compensation he will receive up to the time of his dismissal will be on the base of 45 days per year of service, and thereafter at 33 days as now laid down in the reform in cases of unfair dismissal. Vega, however, will no longer be entitled to procedural wages unless the judge takes his side and orders the company to reinstate him.

This is one of the aspects of the reform that has been most heavily criticized. “Procedural wages disappear because express dismissal has disappeared,” says Godino. “Before, time played on the side of the worker as a result of express dismissal. Now, it is on the side of the company.”