In its judgement number 732/2023 of 10 October 2023, Appeal 3103/2021, the Supreme Court ruled on a recurrent matter that usually arouses great interest, this time it refers to the casuistic resulting from eliminating a job based on objective dismissals. In this respect, as we will see further below, the Supreme Court eventually admitted the appeal (cassation) for unification of doctrine lodged against the judgement of the High Court of Justice of Valencia, hence overturning and revoking it, and finally ruled that the objective dismissal was fair.


What process took place in the respective courts related to this case until it reached the Supreme Court?
 

The dispute arose in 2020, when the company dismissed an employee for economic reasons, such employee having performed, among other duties, those of chief financial officer since 2006 and immediately recruited another person to replace him.
 

The judgement of the lower court ruled by the Labour Court number 16 of Valencia fully dismissed the claim and ruled that the objective dismissal was fair. 
 

After that, the judgement of the Labour Division of the High Court of Justice of the Community of Valencia of 8 June 2021, Appeal 667/2021, overturned the disputed ruling and, by partially admitting the claim, ruled the dismissal was unfair.
 

Replacement vs. elimination; the analysis and arguments of the Supreme Court.
 

The worker in this case, who was dismissed after the aforementioned recruitment, handled the financial management and also performed administrative duties.
 

The Supreme Court considered that hence there was not a mere advance replacement of a worker for another but reorganisation of human resources, which was unquestionably included in the actions of an employer’s freedom to organise the company’s human resources.
 

Therefore, a worker was recruited, which took place a month and a half before the plaintiff was dismissed, to the position of organisational manager and was assigned duties to coordinate departments, and tasks related to finance, human resources and systems. After such recruitment, the dismissed worker undertook the financial management and performed administrative duties so it could not be considered a mere advance replacement of one worker for another but reorganisation of human resources, which was included in the actions of an employer’s freedom to organise the company’s human resources.
 

The company dismissing another eight workers for the same reasons and the fact it belonged to a commercial group, expressly categorised as non-pathological, and that, prior to the dismissal, the company was purchased by other companies in the group that changed the organisational chart of the human resources department also serve to weaken any sign of discrimination.
 

The assessment of the specific circumstances in the life of the company, in principle, must be conducted by the employer, normally exceeding the judicial scope of control of the objective dismissal, since it is a control of the legality of the specific dismissals in the case, limited to deciding on the reasonability thereof by applying the standard of conduct of a good employer that cannot become an overall or joint assessment of the company’s staff policy.
 

What impact did the objective reason, i.e. economic, have on the justification that the dismissal was fair?


In this case, the Chamber considered that the company’s needs related to managing its staff did not allow it to be deduced that this would limit the replacement of some employment contracts for others but was an update of the economic reason that affected the dismissed worker’s job, i.e. economic reasons, and since there was no factual element to allow it be sustained that, with a minimum prima facie basis, instead of eliminating a job what was intended was to replace one employee for another; therefore the dismissal decision was not lacking reasonability, since the corporate action was within its freedom of management and, in any case, it was the worker who was the one who had to prove the lack of reasonability.
 

Conclusions and final decision of the High Court.
 

The appeal being admitted implied the objective dismissal was ruled fair due to having proven the economic reasons for it, which also affected other workers even though, due to the special internal features of the company’s management, a new worker had been recruited that ended up undertaking, among others, the duties performed by the dismissed worker.n“The worker dismissed in this case after the aforementioned recruitment carried out the financial management and performed administrative duties. Therefore, it was not a mere advanced replacement of one worker for another but a reorganisation of human resources, which was unquestionably included in the actions of an employer’s freedom to organise the company’s human resources. It is also shown that the defendant dismissed another eight workers for the same reasons as the plaintiff and it also formed part of a company group, expressly categorised as non-pathological and, prior to the dismissal involved in this case, the respondent was purchased by other companies in the group that changed the organisational chart of the human resources department. As stipulated in our judgement of the Supreme Court of 15 October 2003, appeal (cassation) 1205/2003 for unification of doctrine, applied in this case as a reference, the assessment of these specific circumstances of the life of the company, in principle, must be conducted by the employer, normally exceeding the judicial scope of control of the objective dismissal, since it is a control of legality of the specific dismissals in the case, limited to deciding on the reasonability of this by applying the standard of conduct of a good employer that cannot become an overall or joint assessment of the company’s staff policy. Moreover, in the case we are examining hereby, the needs of the company related to managing its staff means we cannot deduce that it merely replaced some employment contracts for others.
[…]
Having been proven that the update of the economic reason affected the plaintiff’s job, no violation was committed of the fundamental right of any worker whose contract was terminated for economic reasons and since there is no factual element that would allow it to be sustained, with a minimum prima facie basis, that instead of eliminating a job what was intended was to replace one employee for another, the decision on dismissal analysed hereby cannot be considered to lack reasonability, since the company’s actions were included in its freedom of management and, in any case, it was the plaintiff that must prove such lack of reasonability by means of providing evidence of the facts with the required precision, since the company has complied, in principle, with the burden it held to prove the existence of the reason and its connection with the termination measure adopted”. 

 

Author: Alejandro Alonso, Labour lawyer at RSM