Supreme Court annuls first mass lay-off plan since labor reform introduced

Spain’s Supreme Court has confirmed an earlier ruling by a lower court that threw out a labor force reduction plan (ERE) because the company that filed it failed to provide the necessary documentation and did not act in good faith.

This is the first ruling by the Supreme Court on an ERE since a labor reform was passed in February of last year making its cheaper and easier for companies to sack workers by citing economic, technological or operational reasons.

Madrid-based industrial manufacturer Talleres López Gallego filed an ERE affecting 28 workers just 11 days after the new labor reform came into effect alleging economic reasons for the layoffs. However, the Supreme Court ruled that the company had failed to hand over the necessary documentation to back up its assertion.

The Supreme Court also confirmed the Madrid High Court’s earlier ruling that the company did not sit down to negotiate the layoffs with labor representative in good faith, failing to budge from its initial offer of compensation of 20 days’ salary for very year worked, the minimum established by the law.

“This attitude does not constitute a spirit of negotiation, a process characterized by its dynamic of making concessions of working toward solutions and agreement opinions,” the ruling said.