Dismissal for objective reasons as the main cause of termination of contract at present.

The company must provide the employee with a letter of dismissal in which the reasons for dismissal are duly justified. Simultaneously to the delivery of the letter, the company must make available to the employee the amount corresponding to the compensation, which will be 20 days per year of service worked, as well as the documentary justification of the alleged causes.

It is important to bear in mind that in the event that this compensation is not made available to the worker, the lack of such compensation will determine the unfairness of the dismissal unless the company in the dismissal letter itself justifies the lack of cash necessary to pay the compensation, but this must be accredited.

Our experience is that judges tend to be restrictive in accepting this exception.

In our Law Firm, when we advise on this type of dismissal, and the client is a company, together with the letter of dismissal we usually accompany a copy of bank statements that adequately justify the lack of liquidity necessary to meet the amount of compensation.

Conversely, when the client is the employee, and the company has not provided the documentary justification, we use it against them.

With regard to dismissal for economic reasons, the company may base its dismissal on the existence of economic losses as well as a decrease in turnover for three consecutive quarters.

Just as in the case of economic causes it is quite positive, as the Judges when they see the existence of losses duly accredited in documentary form, it is not so positive in the case of dismissals based on decreases in turnover, despite the fact that the Workers' Statute expressly provides for it.

We have had experience in which, despite the fact that the cause of the drop in turnover was clear in view of the documents provided at the trial, mainly corporate tax, annual accounts and even accounting reports, the judges, if the company had no losses, have not accepted the cause of dismissal alleged by the company, declaring the dismissal to be unjustified.

As we said before, in cases of objective dismissals, if there are no formal reasons that could determine the unfair dismissal, our experience is positive in these cases.  In the case of defending the company, we try to provide as much official accounting and tax documentation as we have available. We usually provide forms 201, 303, 390, 110, 190 as well as the annual accounts.

In many cases, and as long as the economic circumstances of the company allow it, being able to provide an accounting report or an auditor's report usually helps the judge to understand the reality of the alleged cause.

One point that is often overlooked is the possible existence of a group of companies. We must bear in mind that if there has been an undifferentiated provision of services for several companies, which is more common than it seems, the concurrence of the negative economic cause must affect the companies in the group. It is not valid, as in many cases we have been presented with, both in defence of workers and companies, that the company that hires the worker has very negative results, and the rest of the companies or group companies have positive results.

In these cases, the judges will resort to the figure of the group of companies and may declare the dismissal unjustified.

In addition to dismissal for economic reasons, which is currently the most common alleged cause, there are also dismissals for organisational and production reasons, which we will discuss in another article of our blog, although we anticipate that judges are much more restrictive in estimating the existence of such causes.

Contact our employment lawyers in our firm who will be able to advise you on this and other matters related to employment law.