Background

The Supreme Court analysed the requirements which allow companies to execute redundancies based on economic reasons, the so-called objective dismissals. This ruling rejected the appeal judgment, ratified its jurisprudence and declared that in this kind of situation, when the company proves serious economic losses, it shall be entitled to eliminate specific work positions due to economic reasons.

Facts

In this case, the Company justified the dismissals in order to reduce staff expenses, due to the serious economic losses suffered in the last years. The Labour Court declared these dismissals unfair and in addition to proving the economic losses, the Company were also required to demonstrate that the dismissals helped to stave off the crisis situation. The Company therefore had the burden of proof as to whether the measures which had been adopted were reasonable to overcome the economic difficulties. The High Court of Justice upheld the ruling of the Labour Court.

Effect on employers

Current adverse economic environment can justify redundancies to the extent that financial statements reflect economic losses but an employer must also demonstrate that the dismissals will relieve the financial crisis.

Judgment of the Labour Chamber of the Supreme Court of 11 June 2008