In Spain, dismissal is regulated in the Workers’ Statute and in the Law regulating Labour Courts.
Among other reasons for ending an employment relationship, the law provides for dismissal based upon financial, technical, organisational or production causes.
In Spain, unlike in other countries, the entrepreneur enjoys a large degree of freedom when selecting an employee and the position to be eliminated, without having to evaluate the impact on the personal circumstances of each employee that dismissal brings with it. Notwithstanding the above, the ending of an employment relationship cannot arise from discriminatory motives or infringe upon the basic rights of the employee, likewise, as an exception, the right of employee representatives to stay in their posts always prevails, as a consequence of carrying out such post.
With this in mind, what are understood to be financial, technical, organisational and production causes for dismissal are set forth in the following:
Financial causes: said causes arise when the company is undergoing a negative economic situation, which is understood to take place when:
– The company suffers losses. Said losses do not necessarily need to be continuing, or of great severity, however, they do need to be current.
– Future losses are forecast. Said prevision arises if taking into account the current economic situation and the available future data, it is possible to forecast that the company may incur losses. This reason for dismissal is difficult to prove, since it is based upon assumptions and hypothesis regarding the future.
– There is a persistent decrease in income. Said situation arises if during three consecutive quarters, the level of ordinary income or sales of each quarter is less than that registered in the same quarter of the previous year. For this reason it is possible that a company, in spite of earning profits, is considered to be in a negative economic situation and that, thus, there is a just cause for the termination of one or various jobs.
Technical causes: concur when the company adopts new instruments or means of production, which make certain positions dispensable. Mainly, said cause arises when the company automates procedures, which were previously carried out manually.
Organisational causes: concur when changes take place in work or organisation systems of the company, such as the reorganisation of departments or the closing of a specific work centre.
Production causes: arise when changes in the demand for the products or services of the company occur. Among others, it may be understood that said cause concurs when the number of orders received decreases significantly and continuously, resulting in an imbalance between the needs of production/rendering of services of the company and the workers available.
Even if it is not necessary for a business owner to provide full proof of the alleged causes, arguments and indications, which justify the causes should be provided.
Finally, it is important to underline, that in order to evaluate the concurrence of the majority of the objective grounds for dismissal set forth above, it is necessary to carry out a detailed and individual analysis of the company in question.
Vilá Abogados
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27th February 2015
