The Court concludes that the Spanish legislation is contrary to Directive 98/59/EC on collective redundancies. The latter applies, in the event of the employer’s retirement, if the thresholds of redundancies provided for are reached and cannot be assimilated to the situation of the death of the employer.
We would like to inform you of an important judgment issued by the Court of Justice of the European Union (CJEU), where it is stated that the rules of Directive 98/59/EC on collective redundancies also apply in cases of retirement of the employer, provided that the thresholds of redundancies foreseen are reached. This judgment of 11 July 2024, Case C-196/23, followed a referral from the Spanish court (specifically, the High Court of Justice of Catalonia), which had to decide on the validity of the termination of employment contracts following the retirement of an employer.
The retirement of an employer led to the termination of 54 employment contracts
The facts refer to the retirement of an employer which led to the termination of 54 employment contracts in force in the 8 work centers of his company. Specifically, 8 female employees challenged the irregular dismissal they considered they had been subjected to. Their claim was dismissed. The Spanish court hearing the appeal must rule on the validity of the terminations of the employment contracts.
Spanish legislation contrary to Directive 98/59/EC on collective dismissals
Spanish legislation provides for a procedure for consulting the employees’ representatives in the event of collective redundancies. However, this procedure does not apply in cases where the termination of employment contracts is due to the retirement of the natural person employer. However, the Spanish court wondered whether this exclusion was in conformity with the EU Directive on collective redundancies. It therefore turned to the Court of Justice to resolve its doubts on this issue.
Judgment of the CJEU
The Court of Justice recalls, first, that the main objective of the Directive is to ensure that collective redundancies are preceded by consultation of the workers’ representatives and information of the competent public authority. It adds that, according to settled case law, there is collective redundancy within the meaning of the Directive when employment contracts are terminated without the consent of the workers concerned.
Consequently, it considers that the Spanish legislation is contrary to the Directive. Indeed, the latter applies, in the event of retirement of the employer, if the thresholds of redundancies provided for (For a period of 30 days: a number of redundancies at least equal to ten in workplaces normally employing more than twenty and less than one hundred workers; a number of redundancies at least equal to 10% of the number of workers in workplaces normally employing at least one hundred and less than three hundred workers; a number of redundancies at least equal to thirty in workplaces normally employing at least three hundred workers. For a period of ninety days, several redundancies at least equal to twenty, regardless of the number of workers usually employed in the workplaces concerned. For the purpose of calculating the number of dismissals, the termination of employment contracts due to the initiative of the employer will be assimilated to dismissals.
The Court of Justice specifies that this case cannot be assimilated to that of the death of the employer – in relation to which the Court of Justice has already held that the Directive is not applicable (Judgment of the Court of Justice of 10 December 2009) – since, unlike a deceased employer, the retiring employer can, in principle, carry out consultations aimed, in particular, at avoiding terminations of employment contracts or reducing their number or, in any case, mitigating their consequences.
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