Dismissals in Covid’s time

Many companies have been affected by this health and economic crisis, and as a consequence their employees have also been affected. Also, in response to this crisis, the government approved at the end of March a series of measures prohibiting layoffs due to Covid; all of this to alleviate the negative effects of this pandemic.

This does not mean that employers cannot fire. But it will be considered unfair dismissal and this means that the compensation to the employee will be higher. In other words, if firing for economic reasons used to cost 20 days of severance pay per year of work, it would now cost 33.

However, on June 6, 2020, the Social Court number 3 of Sabadell issued the first ruling that supports Article 2 of Royal Decree-Law 9/2020, of March 27, adopting complementary measures in the labor field to mitigate the effects of the Covid.

This norm establishes the express prohibition of dismissal on grounds of force majeure, as well as for economic, technical, organizational and production reasons derived from the expansion of Covid-19.

In this sense, the judge not only ruled out that the dismissal was appropriate, but also rejected its inadmissibility and directly annulled it, forcing the company to reinstate the worker and pay her the processing fees. Therefore, the dismissal of an employee was declared null and void. Hence, a controversy arose around this issue.

What does the law say?

Article 2 of Royal Decree-Law 9/2020, of March 27, sets forth an extraordinary measure for the protection of employment.

Dismissals due to Coronavirus-related causes, whether for technical, organizational, economic or productive reasons, will not be a cause for dismissal. This complementary measure to mitigate the effects of Covid-19 will be maintained for the time being until September 30, pending approval of its extension until the end of the year.

This does not mean that dismissals are prohibited in Spain, but that neither the State of Alert nor Covid-19 can be put forward as a cause for dismissal.

The dilemma is whether an employer fires a worker, is the firing appropriate, unfair or void?

The dilemma arises if an employer fires a worker. In most cases, and according to existing case law, the dismissal can be declared unfair and the company will have to pay compensation to the employee. Specifically, the company will have to pay a compensation of 33 days (and not 20 as in an objective dismissal) per year worked.

Therefore, companies could lay off, but it would be more expensive.

It should also be borne in mind that the employer may dismiss a worker for disciplinary reasons when the causes may be based on the fault attributable to the worker, and the characteristics of seriousness and transcendence must concur.

No dismissal or unjustified dismissal in the time of covid?

The Royal Decree does not specify how these dismissals should legally be in times of Covid; so we would be facing a situation that gives rise to the impropriety of the prohibited dismissals and not to the nullity of the same, although the latter is a possibility.

In fact, we have seen this nullity approved in the sentence of last July 6, the Social Court No. 3 of Sabadell, declared null a dismissal linked to Covid-19. Despite the fact that the rule does not say anything about whether these dismissals should be improper or void, the court opted for the latter option.

The fact of qualifying a dismissal as null and void or otherwise improper has great consequences not only for the employer, but also for the employee.

When a dismissal is determined to be null and void, the employer is being forced to reinstate the worker, paying him/her the wages owed to him/her for the time he/she was “fired.

As a result, the Court’s decision on the aforementioned ruling made numerous headlines. However, a great majority of them defend that said sentence will be revoked in a higher instance with the opinion that the dismissal with cause in these circumstances should be considered unfair.

It must not be forgotten that the causes for declaring the dismissal null and void are assessed, and that the Supreme Court has been determining that dismissal without cause (or unjustified dismissal) must be declared, in most cases, unjustified, but not null and void, reiterating the sentence of February 29, 2001 where it was established that “When there is no legal cause for the termination of the contract and the real cause is not among those typified as determining the nullity of the dismissal, the applicable qualification is that of unjustified dismissal and not that of dismissal”.

ISSUES TO CONSIDER

Likewise, it must be taken into account that the companies that have applied ERTE due to force majeure or objective causes derived from Covid-19 and have applied the exonerations on Social Security contributions for the employees affected by this measure, have the commitment to maintain employment for a period of six months from the date of resumption of the activity.

The only exceptions to this commitment:

• Companies that are at risk of competition and accredit it, can apply an objective dismissal for economic, organizational and production causes.
• If a worker behaves in any of the ways set forth in Article 54 of the Workers’ Statute, the company may dismiss him or her in a disciplinary manner, which does not entitle him or her to compensation.

If the dismissal is not declared unjustified by a judge, it does not count towards the company’s commitment to maintain the level of employment.