Nullity of collective dismissal and freedom of enterprise

The "liberalization" of collective dismissals, with the suppression of prior administrative authorization for their execution, was carried out, in our legal system, following an inappropriate parallelism with the regulation of individual dismissals. The emphasis is placed, by the legislator -and in this wake are placed, reinforcing its features, administrative practice and judicial doctrine-, on the causes that can legally justify collective dismissal and on the judicial control of the same. Causality and control, together with economic compensation (compensation for those dismissed), are fundamental elements on which the regulation of collective or economic dismissals is based. Suffice it to note that the treatment that can be given by judicial decisions to collective dismissals is, mutatis mutandi, that of individual dismissals: the dismissal can be judicially classified as lawful (fair), not lawful (unfair) or null and void.

This regulatory approach is at the origin of the high level of litigation surrounding corporate restructuring processes and of the numerous problems that have arisen in connection with the judicial control of dismissals. If a priori administrative control was replaced by a posteriori judicial control, this was done without taking into account the particularities of collective dismissals. If in individual dismissals what is at stake is a breach of contract (or the concurrence of supervening circumstances particularly onerous for the continuation of the contractual relationship), in collective dismissals other factors come into play, entirely removed from the vicissitudes of contractual compliance, such as, above all, the freedom of enterprise, on the one hand, and the defense of employment on the other.

As regards the freedom to conduct a business, it cannot be said that the legislator has been very sensitive to its requirements. The Spanish legislation, which substantially transposes the European directive (Directive 98/59/EC), ignores the fact that the latter focuses, without questioning the freedom of enterprise, on guaranteeing, on the occasion of collective redundancies, respect for procedures for informing and consulting workers in order to deal with employment problems, in particular through the adoption of (accompanying social) measures aimed at reducing the scope of the redundancies or alleviating their consequences. The Community regulation, as has recently been recalled (Navarro Nieto, Medidas sociales de acompañamiento y mantenimiento del empleo), seeks to establish a (participatory) procedure to be respected for the execution of company decisions, without calling into question the freedom of enterprise and the power to decide on collective redundancies that is inherent to it (some time ago, the CJEU stated, in a 1995 judgment, that "the Directive has as its exclusive purpose the partial harmonization of collective redundancy procedures, and is not intended to restrict the freedom of undertakings to organize their activities and structure their personnel department in the manner which appears to them to be most suited to their needs"). When judicial control of the causes of collective dismissal is not limited, as is the case here, to the verification of compliance with formal or procedural requirements, but extends to the assessment of the adequacy, reasonableness or proportionality of the measures adopted by the employer, or to the subsistence and intensity of the causes alleged to justify them, the door is being opened to a much more intense judicial control of corporate decisions, which can severely limit, or nullify, the freedom of enterprise.

For this reason, as the recent trend in judicial doctrine (in emblematic rulings on the nullity of collective dismissals) clearly shows, the aim has been to condition corporate decisions and strengthen their judicial control. The protection of employment, the defense of the social interests affected by corporate restructuring processes, has been placed in the hands of the judges, forgetting that "the social judge is not the best solution in the management of employment" (Navarro Nieto).

In its extreme manifestation, this has sometimes led to the configuration of administrative and judicial intervention in collective dismissal procedures as being aimed at avoiding, at all costs, the execution of the dismissals and the adoption of the planned corporate restructuring measures. This is neither a reasonable approach nor in accordance with European regulations. The latter always bears in mind that collective or economic dismissals are based on the freedom of enterprise and that it is not a question of denying this freedom but of conditioning its exercise through participatory procedures to pay adequate attention to social interests (employment and reindustrialization policies) and individual interests (training actions, outplacement, economic compensation). The perspective that has prevailed among us (and which has also conditioned the trade union attitude which, on many occasions, has no other negotiating approach than that of opposing any dismissal) has led, among other things, to the fact that the central element in collective dismissal processes has been that of compensation. The discussion on the amount of severance pay has left outplacement processes, training policies to facilitate the return to the labor market and other social support measures in the dark.

If we add to all this the inadequate regulation of the judicial qualification of dismissals and their consequences, it is easy to conclude that the entire legal treatment of collective dismissals should be reviewed. In particular, the figure of nullity of the dismissal should disappear in the case of collective dismissals. Not only because of the judicial excesses that it allows (it has even been argued that the nullity of the dismissal is based on the absence of good faith on the part of the company, since it always had the intention of dismissing; but alma de cántaro, if the company had no intention of dismissing, what would be the reason for a collective dismissal), but, above all, because of the situations that it provokes. Non-compliance with collective dismissal procedures can be sanctioned in various ways, but, in most cases, the enforcement of a judgment of nullity of a collective dismissal could not be done without violating the freedom of enterprise.

In this regard, the order of the Audiencia Nacional, Sala de lo Social, 23/21, dated March 5, 2021, is very interesting. The order asks whether a judgment of nullity of a collective dismissal can be enforced in its own terms, to which it responds taking into account the right to free enterprise (Article 38 of the Spanish Constitution), the freedom of establishment in the Community sphere (Article 49 of the TFEU), and the fact that the resumption of the productive and labor activity "is an organizational decision that is the exclusive responsibility" of the company, in exercise of the "constitutionally recognized right to freedom of enterprise". Therefore, the order considers that we would be in the presence of a "personal obligation to do", that is, "an obligation to do that is not susceptible to be carried out by a third party at the expense of the defendant", so that its refusal "to reinstate the workers in their previous working conditions must be equated to the legal impossibility of readmission". Since the reopening of the production facilities "depends on a decision to be adopted by the defendant in the free exercise of its freedom of enterprise and establishment, not being susceptible of being replaced by any activity of the court, we must conclude that there is a legal impossibility of readmission in its own terms", which leads the Court to the application of article 286 of the LRJS, declaring the termination of the labor relationship of the workers, with the payment of an additional indemnity of 15 days per year of service (with a maximum of 12 monthly payments).

As we can see, everything results in an increase in the cost of business decisions and employment protection is once again limited to the indemnity aspect. This justifies the revision of the regulations on collective dismissals, and above all of the figure of the nullity of such dismissals.