The Supreme Court allows dividing the payment of the agreed compensation in a collective dismissal

In a procedure defended by the ILP Abogados’ attorney, Esther Mateo, on July 22, 2015, the Supreme Court issued a ruling (RUD 2161/2014) whose decision was to validate the effectiveness of the payment in installments of the severance pay reached between the company and the legal representation of the workers during the consultation period of the collective agreement , in the framework of a collective procedure for the termination of employment contracts for economic reasons. 

 The Supreme Court takes as its starting point the content of Article 53.1.b) of the Workers’ Statute, according to which the employer “must make available to the worker, simultaneously with the delivery of the written notice of dismissal, the compensation of twenty days per year of service, with periods of less than one year being prorated by months and with a maximum of twelve months. When the termination decision is based on Article 52 c) of this Law, claiming  economic cause, and as a result of such economic situation the indemnity referred to in the preceding paragraph could not be made available to the worker, the employer, stating it in the written communication, may deferred to do so, without prejudice to the worker´s right to demand his payment when the termination decision becomes effective”, In its decision, the Court of Appeals reasons that if such provision admits the possibility that for economic reasons the payment of the severance payment may be deferred, without prejudice to the right of the employee to demand its payment, it is possible to conclude that the requirement to simultaneously communicate the termination with the provision of the minimum legal indemnity is not a necessary condition, but it admits exceptions for economic reasons. 

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And using this line of argument as a basis, transferring it to the collective dismissal procedures,  concludes that in collective bargaining, prior to a collective dismissal for economic reasons, it is possible to agree on a split in the payment of compensation, including the minimum amount, provided that the agreed postponement is not disproportionate, Otherwise, the right to collective bargaining, recognized in Article 37 of the Constitution, would be void of content if in the negotiation of collective terminations for economic reasons, negotiators were deprived of a tool as useful as splitting the payments to be made. 

 Following this reasoning, and using it as support the Court’s decision of June 2, 2014,  points out that Article 53.1.b) of the Workers’ Charter does not introduce a right of a necessary nature, and that through collective bargaining it is possible to agree to postpone the payment of compensation, since it is a collective bargaining agreement with similar effectiveness to that agreed in the collective agreement. 

 Undoubtedly, this is a sentence of great interest for the matter resolved, granting relief to those companies that, within the framework of collective extinction proceedings urged for economic reasons, are deprived of the possibility of paying the full amount of the compensations agreed upon due to liquidity problems, jeopardizing their viability, which is what the norm tries to avoid. 

If this article has been of interest, we also suggest you to read the following article published on our website: 

Dismissal Null, Dismissal Unfair and Dismissal Proceeding: Differences