The 2022 labour reform regulates hiring, contract models, teleworking, and flexible working hours.
This new legal framework maintained the dismissal model from the 2012 reform, which the EU says puts workers at an economic disadvantage because their personal social situation is not considered. Thus, it requires companies to pay more for compensation.
Europe wants more expensive firings. UGT sued the State for unfair dismissal, and the European Committee of Social Rights (ECSR) of the Council of Europe responded. The Committee writes that current Spanish regulations violate article 24.b of the European Social Charter, which Spain signed, by 13-1.
Spain’s fixed pay. This would nullify Spain’s fixed compensation legal security. The 2012 reform established a quota for unfair dismissal compensation using this scale.
Spanish unfair dismissal compensation is 33 days’ salary per year with a maximum of 24 monthly payments, increasing to 45 days for years worked before the 2012 reform. This scale helps companies estimate the cost of firing employees.
European proposal leaves decision to courts. Unlike the Spanish model, the European regulations consider other personal and family factors of the dismissed employee, such as the fact that a 60-year-old will have more trouble finding a job again than a 20-year-old.
Judges must evaluate each case’s personal circumstances and determine compensation under this measure. In statements to El Economista, Madrid High Court of Justice magistrate Ignacio Moreno González-Aller warned that this measure could leave a gap too wide that could economically asphyxiate the company due to the ageing workforce in our country.
Spain has case law. Last July, the ruling was announced. UGT called for a negotiation table between social agents (unions and employers) and the government to legalise the European Committee of Social Rights ruling in Spanish regulations. “It would be reasonable that after July 29, the Government, employers and unions sit down to make an adaptation to Spanish legislation through Social Dialogue that allows compliance with a binding resolution,” the union says in a statement.
Our country has case law to comply with this European Social Charter article until then. The High Court of Justice of Catalonia (TSJC) ruled that the “compensatory” payment for an unfair dismissal was “insignificant” and lacked deterrence, citing the European directive.
No law change is planned by the government. Government opinions vary. The Government told the Vox parliamentary group that it has the tools to comply with article 24.b of the European Social Charter and will not change the Spanish regulations.
Yolanda Díaz, the second vice-president and Minister of Labour, disagreed. “It is one more element that will be susceptible to reform and that will be done, as always, at the social dialogue table and in accordance with European legislation,” she told El Pas.
Company legal uncertainty. With the Spanish tax model, companies can estimate the cost of firing employees and act accordingly, even negotiating additional conditions. In this case, the CEDS says “the maximum limits set by Spanish legislation are not high enough to compensate the damages suffered by the victim in all cases and to be a deterrent for the employer.”
Since the dismissal amount is known in advance, companies can provide funds, nullifying the deterrent effect. ElDiaro.es reported that the employer cannot determine the severance pay as it loses its deterrent value, according to UGT general secretary Pepe Álvarez.
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