In previous articles, we have discussed the different ways that an employer may terminate labour relations with its employees.
Since 2012, after the labour reform and because of the serious economic crisis that Spain suffered, many companies had to make such contractual terminations based fundamentally on accredited economic circumstances.
We will not discuss again the meaning of a negative economic circumstance but will focus on what happens when a company loses its biggest or only customer and consequently must completely stop its activity.
The loss of the biggest or the only customer, which leads to the complete cessation of an employer’s activity, must be authenticated to allow the employer to terminate its employees’ labour contracts as objective dismissals following Articles 51 and the following articles of the Workers’ Statute.
For an employer, the loss of its biggest or its only customer means an irrevocable and continuous decrease in its usual income or sales, and consequently, it will lead to a negative economic situation which will, according to the previously noted articles, justify those dismissals.
In that regard, the Superior Justice Court of Catalonia delivered its judgment on 16 October 2014, stating that the letter and consequently the judgment refer to the decrease in customers, which contrary to the notice of appeal, clearly has a relationship with every worker of the company as far as a decrease in customers and sales leads to less activity, lower income and eventually to a loss-making situation. In such cases the same level of production and the same number of workers that existed before those circumstances took place are unnecessary.
The number of workers affected by the measure will determine whether there is an individual or a collective dismissal
It will be a collective dismissal if the measure affects the thresholds fixed in Article 51 of the Workers’ Statute. In the case of a company made up of five or fewer workers, the dismissal for objective causes, even if it affects the entire staff, must be made individually.
If you need additional information regarding dismissals due to cessation of activity in Spain,
