Recently, there have been several contradictory court judgments in relation to the classification of the grounds for dismissal related to COVID-19. The issue to be resolved is whether the unjustified nature of a dismissal related to COVID-19 leads to the consideration of unlawful dismissal and can even be considered as null and void. The dispute has become particularly important, to the extent that the restriction of dismissal on grounds due to COVID-19 has been extended until January 31, 2021 by Royal Decree- Law 30/2020, of September 29, 2020 on social measures to protect employment.

The dispute originated with Royal Decree-Law 9/2020, of March 27, 2020, adopting additional measures, in labor and employment, to offset the effects of COVID-19, article 2 of which establishes extraordinary measures to protect employment in the following terms: “Force majeure and the economic, technical, organizational and production-related grounds justifying the suspension of contracts and reduction of working hours (COVID ERTE) cannot be regarded as grounds for the termination of employment contracts or dismissal.”

Royal Decree-Law 9/2020 therefore clearly rules out these grounds for dismissal, which has given rise in recent months to different court interpretations on what should be understood by the mentioned regulations as the non-justified nature of such dismissal and whether it involves the annulment of the dismissal proceedings.

The difference between the two classifications is highly relevant, given that annulment obliges the employer to reinstate the worker and pay his/her interim salaries, whereas unjustified dismissal provides for the option for the employer to compensate the worker with 33 days’ salary per year of service or reinstate him/her.

At the beginning of the month of July, Sabadell Labor Court 3 issued an important and controversial judgment that declared a dismissal null and void, as the grounds were related to COVID-19. The judge based her reasoning on the prohibition established in article 2 of Royal Decree-Law 9/2020, considering that the grounds for the termination of the contract were due to the situation resulting from the declaration of a state of emergency and therefore in breach of the legal provisions adopted by legislators in order to prevent the destruction of employment. In addition, the employment contract was temporary (and, in fact, unlawful) which meant that the company should have taken temporary measures (contract suspension) instead of structural measures (dismissal).

As a result of the judgment, at the beginning of September, 2020, there was news of another judgment by Barcelona Labor Court 26, considering that dismissal on the grounds of COVID-19 must be deemed as unlawful, however does not give rise to annulment and must therefore be declared as unjustified.

The main reason for the Barcelona Labor Court to reject the annulment of the dismissal is correct, in my opinion, given that under our labor and employment law, the grounds for annulment of dismissal are limited and especially reserved for “the most serious cases expressly specified by law and especially related to fundamental rights” and because “art. 2 of Royal Decree-Law 9/2020 does not introduce a prohibition, but rather states the grounds of force majeure or of a financial, technical, organizational or production-related nature resulting from the Covid-19 crisis that may justify an ERTE pursuant to the provisions of Royal Decree-Law 8/2020 cannot be considered as justified termination of an employment contract or dismissal. And dismissal without grounds is unjustified, but not null and void.

The same Barcelona Labor Court 26 recently sentenced a company to pay compensation amounting to 60,000 euros to a worker dismissed on unjustified grounds at the beginning of April during the of emergency and thus breaching article 2 of Royal Decree-Law 9/2020. The judge considered that the company acted with full knowledge that the dismissal was unjustified, as it was more in its interests to pay the severance compensation due to the short period of time the claimant had worked for the company. This is the reason for the decision to increase the severance compensation by ordering the company to pay nine months’ salary – equivalent to the mentioned amount of 60,000 euros- to the claimant, given that the statutory severance compensation payable was insufficient deterrence to breach the “prohibition” to dismiss.

We expect that there will be further judgments in relation to the termination of contracts during the restrictions on dismissal and hopefully, at some point, consistent criteria will become consolidated and therefore provide more legal protection and certainty.


Francisco Javier Navarro Arias

Garrigues Employment & Labor Law Department