Formal shortcomings in objective dismissals that may cause an unfair dismissal and a subsequent higher severance payment

VolverAt Belzuz Abogado's Labor Law Department we would like to analyse a recurring problem, especially after the generalisation of the application of these objective dismissals after the latest labour reform; what are the formal shortcomings problems when communicating them that may cause an unfair dismissal and, all of that, despite and regardless of the Company having actual legal grounds to pay a lower severance payment.

Whenever a employer has to set about this kind of objective dismissals, it departs indeed from the saving need in the severance payment to employees, based on economical, technical, organizational or production reasons that may enable the application of a lower severance payment of 20 days' salary per year of service, compared to the 33 days' salary per year established for unfair dismissals.

Obviously, the first formal requirement is producing a written communication to the employee, expressing the cause, although this requirement, in no real sense, differs from the communication in a disciplinary dismissal, because it must include the same requirements of detailed facts, effective date and, ultimately, the necessary information that enables the employees to defend themselves against such decision, if appropriate.

We, as labour lawyers, understand that the problem arise from purely formal requirements, which, if not complied with, determine the unfair dismissal; these consist on making effectively and simultaneously available the severance payment set up on article 53 of Statute of Workers Rights and on making exact the amount of such a severance payment.

The Statute of Workers Rights requires that, at the delivery of the written communication or dismissal letter to employees, the severance payment of 20 days' salary per year of service is simultaneously available to employees, with periods of less than one year being prorated by month, and up to a maximum of twelve months. Here the term “simultaneously” is key and means at the same time of the dismissal letter delivery and, even when the dismissal effective date may be 15 days later.

Thus, for instance, the Supreme Court had an opportunity to allege unfair dismissal in several occasions in the absence of a simultaneity requirement while delivering the severance payment, without a subsequent remedy as stated in the Supreme Court Ruling of 26 July 2005, being the case law so demanding on the compliance of simultaneity that we may adduce unfairness in an objective dismissal by the Supreme Court when the severance payment via bank transfer was ordered three days after the delivery of the dismissal letter (STS 23/04/2001).

On the other hand, the other troublesome formal requirement is the need of an “exact” severance payment amount, which means it must be correctly calculated in accordance with the legal parameters of seniority and salary, unless there is an excusable error in such a calculation.

With regards to the “excusable error”, we had a chance to comment on a important rule by the Supreme Court in our Belzuz Abogados’ Newsletter of September 2015 (see the reference article at www.belzuz.com), although, for this article purposes, it is interesting to sum up the Supreme Court case law regarding excusable errors.

We consider that, based on case law, the error excusability must be analysed in every particular case focusing in factors such as its quantitative aspect or its legal complexity when calculating the severance payment, and always under the existence of good faith when making that error.

Thus, for instance, the Supreme Court has deemed excusable the following scenarios: when the High Court of Justice is the one correcting the severance payment that the instance court deemed exact (STS 24/4/2000); the low amount difference in severance payment linked to the salary complexity (STS 26/12/2005); in cases of legal complexity when calculating cases of stock option inclusion or complexity in bonuses or incentives calculation (STS 26/01/2006, STS 28/02/2006), or when in the dismissal process the existence of a higher professional category was determined and it was recognised on the agreement (STS 17/02/2009).

Likewise, it is also interesting to give some examples of cases that the Supreme Court has deemed as inexcusable errors leading to unfair dismissal, such as: not computing the employee’s seniority from a previous internship agreement (STS 04/10/2006); not taking into account many prior temporary agreements with employment agencies that determined the existence of a employment relationship as a whole (STS 15/11/2007); when in a business subrogation the previous seniority was not taken into account (15/04/2011); not taking into account the assessment of a residence paid in kind, for calculation purposes (STS 05/02/2014), or even, it was deemed inexcusable and, therefore, unfair, not deeming the days of the last worked month as a full month (STS 06/06/2014).

To sum up, as Labour lawyers based in Spain, we wanted to address briefly an issue that is still controversial before the courts and that has a great economic significance in the amount of severance payments and therefore, we recommend an appropriate professional legal advice, both for companies when addressing objective dismissals, and employees that are subject to them.

Pedro-Gomez-Rivera  Pedro Gómez Rivera

Director del Departamento de Derecho laboral | Madrid (España)

 

Belzuz Abogados SLP

La presente publicación contiene información de carácter general sin que constituya opinión profesional ni asesoría jurídica. © Belzuz Abogados, S.L.P., quedan reservados todos los derechos. Se prohíbe la explotación, reproducción, distribución, comunicación pública y transformación total o parcial, de esta obra, sin autorización escrita de Belzuz Abogados, S.L.P.

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