The dismissal of the workforce due to the closure of the work center

Whether for economic, technical or organizational reasons, closing a workplace is not a tasteful dish for the employer or for your template.

The question that worries our clients the most is whether or not to start a collective redundancy procedure, especially if the activity of the company continues in the other existing work centers.

In this article we want to resolve existing doubts regarding the need to close a workplace, either due to its economic infeasibility or a prevailing need for business restructuring. In some cases, the dismissal of the workforce can be done through individual objective dismissals, while in other cases, the dismissal will occur after employment regulation file under article 51 of the Workers’ Statute.

When is it necessary to start a collective dismissal before the closure of a workplace?

To answer this question, we must first take into account the workforce of the company as a whole, and not that of the work center. Secondly, we must look at the thresholds set in article 51 of the Workers’ Statute, from which a collective dismissal procedure would automatically operate. These are:

1. 10 workers, in companies that employ less than 100 workers.
2. 10% of the number of workers in the company in those that employ between 100 and 300 workers.
3. 30 workers in companies that employ more than 300 workers.

By virtue of the above, collective dismissal will only be mandatory when the company exceeds the established thresholds.

In 2017 Sentence No. 506/2017 was issued by the Supreme Court, dated June 13, 2017 [Appeal 196/2016] in which The need for collective dismissal was analyzed in the event of a workplace closure with a total of 12 employees, the company having a workforce of 2,000 workers. For the High Court, it was not a collective dismissal, since the employing company, with a workforce of more than 2,000 workers, did not exceed the numerical thresholds established in the standard – 30 workers – nor in Directive 98/59, since the number of dismissals did not reach 20. Therefore, it ended up declaring the origin of the objective dismissal notified individually to each worker.

When can the company proceed with individual dismissal due to the closure of the workplace?

If we are clear about the above, the Company should not resort to collective dismissal if it does not exceed the specified thresholds.

In other words, if the limits indicated above are not exceeded, the Company should not resort to objective dismissal, as long as it is closed only the work center, without affecting the others and continuing with the business activity.

In this case, it will suffice to notify the workforce of the appropriate dismissal letter alleging the closure of the workplace and making available to the worker the amount of 20 days per year worked ( with a maximum of 12 months) belonging to the compensation for objective dismissal.

The individual objective dismissal must comply with the formalities of article 53 of the Workers’ Statute. These are:

• Communicate in writing to the worker expressing the cause of the dismissal.
• Make available to the worker, simultaneously to the delivery of the written communication, the indemnity of twenty days per year of service, prorating periods of time less than one year by month and with a maximum of twelve monthly payments. In the event that there is no liquidity and having alleged economic causes, under art. 52.c) of the Workers’ Statute, in addition to the closure of the workplace, the Company may stop paying the appropriate compensation, without prejudice to the worker’s right to demand the appropriate payment when the dismissal is effective.
• Grant fifteen days’ notice, computed from the delivery of the personal communication to the worker until the termination of the employment contract. Lack of prior notice will not mean the dismissal is unfair, but the Company must pay the 15 days together with the settlement and settlement document for lack of notice.

It should be noted that, despite claiming the closure of the workplace, this must be preceded by objective causes, whether economic, technical, organizational or production, it is not enough to claim only the closure of the workplace as a justification for dismissal.

And if the Company only has one work center?

If the Company only has one workplace and the cessation of activity is going to occur with extinction or disappearance of the contracting legal entity, the thresholds and limits change depending on the number of workers affected by the extinction.

• Company with more than five workers: For years the Supreme Court has been establishing that the figure of COLLECTIVE DISMISSAL is applicable when the termination of employment contracts affects the entire workforce the company provided that the number of workers affected is greater than five, when it occurs as a consequence of the total cessation of its business activity based on the causes that 51, ET. Collective dismissal is the only viable means in the legislation to put an end to an operation that is considered ruinous and whose permanence in the market is not possible.
• Company with five or fewer workers: In these cases, the cessation of activity and the termination of labor relations due to the termination of legal personality is a unilateral resolution conditioned to the judicial demonstration of the alleged causes, applying the procedures and requirements of the OBJECTIVE DISMISSAL.

It should be said that the jurisprudence has considered that the closure of the company is an effective extinctive cause by itself, that is, it is not necessary to prove some economic, technical, organizational or production causes as if what must be done in the case of collective dismissal. It will be enough to allege the closure of the workplace to justify the cause of the dismissal.

This is recognized by the Supreme Court Judgment of July 12, 2017 [Appeal no.: 32/2017] (which you can download at this link) indicating what following: We are in the presence of an effective extinction cause by itself – the extinction or disappearance of the contracting legal person -, although to enforce it -similar to what happens with force majeure- the corresponding procedure must be followed of collective dismissal.

Conclusions

1. The calculation to give rise to a collective dismissal procedure is the Company’s staff and not the workplace.
2. When the termination of employment contracts affects a single center or several, and the established thresholds are not exceeded, there is no place for the collective dismissal procedure as long as there is no cessation of activity business and continue with the activity in other centers. The correct path for these dismissals will be that of individual objective dismissal.
3. When the cessation of activity is going to occur with the extinction of the contracting legal entity, companies with six workers or more must resort to collective dismissal, on the other hand, those Companies with five or fewer workers must opt for objective dismissal notified individually to each worker.

Labor Law Department

07/10/2019