Top court annuls job cuts of company that partly operated in undeclared cash

The Spanish Supreme Court has overturned a layoff plan by Aragonese metal firm Curbimetal because the company failed to inform labor representatives during negotiations on its proposed labor force adjustment plan (ERE) that part of its business was conducted on the black market.

The court ruled that while a company that performs some of its dealings under the table is not barred from letting workers go, Curbimetal did not act "in good faith" in hiding this fact from the labor force.

Curbimetal filed an ERE on June 25, 2012 that involved sacking 38 workers, half of its workforce, on the basis of falling sales - one of the so-called objective clauses for dismissals included in the labor reform of February 2012. Company officials and labor representatives negotiated the plan for a month but failed to reach an agreement. On July 27, Curbimetal informed the works committee of its intention to proceed with the layoffs, so labor representatives lodged a lawsuit against this.

Company officials and labor representatives  negotiated the plan for a month but failed to
reach an agreement

The company had argued that its revenues had fallen from 24.9 million euros in 2007 to 12.9 million in 2011 and that this downward trend had continued in the first half of 2012. In October 2012, the company went into voluntary receivership. On that basis, Curbimetal seemed to have justified the ERE under the rules of the 2012 reform. However, during the court hearing it was shown that the company also had black-market operations. Since 1999, Curbimetal had met the orders of a number of clients who paid for the goods in cash, in operations that were not recorded in the company's books.

The Supreme Court has informed the Tax Agency of these under-the-table operations.