The Supreme Court has ruled, in a judgment delivered on October 17, 2016, that for the purposes of determining the existence of a collective layoff, the reference unit must be the company, if the thresholds established in article 51.1 of the Workers’ Statute are exceeded at the company as a whole, and establishments that normally employ more than 20 workers, if the dismissals performed at any one of those establishments exceed those thresholds.
In the examined case, the Supreme Court concluded that there had been a collective layoff on the basis that 27 individual dismissals had occurred over a 90 day period, at a single establishment employing 77 workers, even though the company as a whole employed 3,100.
More precisely, the Supreme Court confirmed the ruling in the Basque high court judgment of May 21, 2015, after concluding that, for the purposes of determining the existence of a collective layoff, the thresholds in article 51.1 of the Workers’ Statute needed to be calculated twice:
- Once, to determine whether the thresholds are exceeded at a single establishment. The judgment clarified that “establishment” for the purposes of a collective layoff must be interpreted within the meaning of article 1(1) of Council Directive 98/59/EC, that is, an establishment normally employing more than 20 workers.
- And a second time, for the company as a whole, in accordance with article 51.1 of the Workers’ Statute.
The judgment has thereby completed the supreme court’s case law by adding the establishment as a reference unit for a collective layoff, if the thresholds established in article 51.1 of the Workers’ Statute are exceeded at a single establishment employing more than 20 workers.
A reminder is needed here that article 1(1) of Council Directive 98/59/EC stipulates establishments employing more than 20 workers, rather than the company, as the reference unit for calculating the thresholds for collective layoffs. The Spanish lawmakers, however, laid down a system of thresholds found in article 51.1 of the Workers’ Statute, stipulating the company as the reference unit for collective layoffs.
The Judgment of the Court of Justice of the European Union of May 13, 2015 ruled that national legislation which establishes the company and not the establishment as the sole reference unit is in breach of article 1(1) of Council Directive 98/59/EC.
Accordingly, since the Directive’s mandate on imposing the establishment as the reference unit for collective dismissals is, in the words of the judgment being studied, “clear, resounding and categorical”, and bearing in mind that it is not expressly excluded in article 51.1 of the Workers’ Statute, the Supreme Court interpreted that this article had introduced an improvement with respect to the Directive, by extending the calculation of the thresholds to the company as a whole.
As a result, the Supreme Court finished by saying that the current wording of article 51.1 of the Workers’ Statute must be adapted, in the light of the Directive and of the judgment interpreting it, in order to clarify that it applies not only when the established thresholds are exceeded at the company as a whole, but also when they are exceeded at any one of the company’s establishments, taken individually, if they employ more than 20 workers.
Garrigues Labor and Employment Law Department
