The Supreme Court rejects increasing compensation for unfair dismissal

MadridThe Supreme Court (SC) rejects additional increases to compensation for unfair dismissal. Specifically, the plenary session of the Social Chamber of the SC, which met this Wednesday, concluded that the current compensation for unfair dismissal provided for in the Workers' Statute "cannot be increased through judicial means with other amounts," as the high court reported in a press release. Thus, it concludes that additional compensation cannot be decreed that exceeds the maximum amount set in the Workers' Statute.

Pending the full ruling, which will be published in the coming days, the Supreme Court indicates that the possibility of increasing this compensation through judicial means would constitute a violation of Convention 158 of the International Labour Organization, as well as the Revised European Social Charter. In fact, in its ruling this Wednesday, the Supreme Court focuses on this latter regulatory framework and indicates that it only states that the compensation "must be adequate." A phrase that, in the judges' opinion, is "vague."

Despite the high court's decision, the Ministry of Labor maintains that its intention is to reform compensation for unfair dismissal. "While respecting judicial decisions and awaiting the final content of the ruling, it is worth remembering that Spain has ratified the European Social Charter," indicate sources from the ministry headed by Yolanda Díaz (Sumar). The same sources assure that the central government "will fully guarantee compliance [with the European Social Charter] and implement the coalition government's program and its commitment to reforming dismissal."

The government agreement between the PSOE and Sumar includes a commitment to establish "guarantees for workers in the event of dismissal, complying with the European Social Charter and reinforcing the causality of termination of employment." Specifically, the Ministry of Labor is considering taking into account the dismissed worker's personal and work-related circumstances. However, this was a matter that was set aside during the negotiations for the 2021 labor reform.

Currently, this compensation is 33 days' salary per year worked (45 days in cases prior to the 2012 PP reform), with a maximum of 24 monthly payments.

Second ruling

However, the Supreme Court's decision comes as no surprise. The high court upholds the ruling issued in December of last year, when the plenary session of the Fourth Chamber had already "unanimously" stated that Spanish compensation for unfair dismissal "cannot be increased through judicial means" without violating the ILO Convention. In this new ruling, the Supreme Court considers the European Social Charter. It also considers that these are not two directly applicable mandates, but rather "programmatic declarations, open to interpretation, that would require legislative intervention."

The majority unions, CCOO and UGT, have led the fight to strengthen this compensation in Europe and, in fact, "regret" the Supreme Court's ruling. Following their demands, the European Committee of Social Rights determined that the current Spanish compensation "does not comply with European law because it is not sufficiently dissuasive." The Committee of Ministers of the Council of Europe also approved a recommendation addressed to the Spanish government recommending that it review the compensation so that it truly acts as a dissuasive measure for employers and effectively repairs the harm caused to the worker.

On the other hand, the employers' association has never wanted to hear about the issue. After the Supreme Court's decision, the president of the CEOE, Antonio Garamendi, did not hesitate to celebrate the ruling: "Women, legal security," he stated this Wednesday.

"Adequate" compensation

The Supreme Court also recalls that the Constitutional Court has stated that the current compensation provided for in Spanish law "is adequate compensation." "This legal formula has provided legal certainty and uniformity for all workers, who are compensated equally upon job loss," the Supreme Court states.

In Spain, compensation in the event of unfair dismissal may not exceed 33 days' pay per year of service, with a maximum of 24 monthly payments. In the case of dismissal for objective reasons and collective dismissal for economic, organizational, technical, or productive reasons, the maximum limit may not exceed 20 days' pay per year worked, with a maximum limit of 12 monthly payments.