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In judgment 699/2018 of July 2, 2018, the Spanish Supreme Court, in a plenary session, ruled that workers in the process of a collective dismissal cannot contest the legitimacy of the alleged grounds in their individual proceedings if the consultation period has ended in an agreement.
Following the labor law reform in 2012, collective dismissals can lead to two types of proceedings:
- Collective proceedings: when contested by the workers’ legal representatives or by the labor unions, or by the labor authorities (or even by the company itself, when it has not been contested by the former, seeking a declaratory judgment (acción de jactancia) that the decision is in line with the law).
- Individual proceedings started by the workers involved (article 124.13 Spain’s Labor Court Act).
The act specifies that collective proceedings (both the court judgment and the court agreement) have claim preclusion effect over individual proceedings. Therefore, as it was already clear that where there was a judgment in collective proceedings affirming the grounds put forward by the company, those grounds could not be contested in subsequent individual proceedings. However, the act does not stipulate what happens if an agreement is reached during the period of consultations with the workers’ legal representatives (and no collective challenge is raised because the agreement is supported by all the representatives). The judgment considered here addresses precisely this uncertainty and denies the possibility of using individual proceedings to contest grounds that have already been accepted by the workers’ representatives in the agreement concluding the consultation period.
The court came to its decision on the basis that, although the law (article 51 Spanish Workers Statute ) does not expressly include the presumption that an agreement concluding the consultation period validates the grounds, it does establish suspension of contract and reduction of working hours (article 47 Workers Statute) and release from the collective bargaining agreement (article 82 Workers Statute) in the case of procedures that substantially alter working conditions (article 41 Workers Statute); thus there is no justification for different treatment in situations of that kind. The decision is based on the following arguments:
- Systematic and purposive analysis of the entire body of law, e.g., all these situations receive unitary treatment under the Spanish Insolvency Act.
- In setting the rules for individual proceedings, article 124.13 Labor Court Act does not refer to contesting the grounds for collective dismissal.
- As established in article 124 Labor Court Act, collective proceedings do expressly provide for the possibility of bringing a claim against the legitimacy of the legal grounds relied on by the company while also barring collective proceedings from calling into question the rules regulating priority of employee retention (which can only be done in individual proceedings). Therefore, the lawmakers’ intent was for collective proceedings to address the basis for the grounds giving entitlement to dismissal, which affect all the workers equally, while reserving strictly personal issues for the individual proceedings.
- The effect of allowing the grounds accepted by the workers’ representatives in an agreement to be contested in individual proceedings would be to discourage coming to agreement, which is the essential purpose of the consultation period.
- It would act to counter litigiousness and contribute to the principles of expeditious process and legal certainty, avoiding the proliferation of many individual proceedings on the presence or absence of cause in collective dismissals, which could lead to conflicting decisions.
- The right of the workers concerned to effective judicial protection is not infringed, because accepting the legal grounds in the agreement reached during the consultation period comes under collective bargaining without entering the realm of each worker’s indefeasible individual rights.
- A contrary conclusion could infringe the company’s right to effective judicial protection, with the company facing several proceedings with the same cause of action. All the more so when the Supreme Court has already ruled that companies cannot seek a declaratory judgment (acción de jactancia) when the consultation period has ended in an agreement approved by all the workers’ representatives because there would be no opposing party in the legal proceedings.
We highlight that five senior judges dissented, indicating that the issue was quite controversial.
This judgment doubtless encourages companies to reach an agreement with the workers’ legal representatives during the consultation period of a collective dismissal, as this would curtail subsequent litigation in the individual proceedings and avoid conflicting judgments on the same issue: the legitimacy of the grounds for the collective dismissal.
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