In a ruling that sets case law in Spain, the Supreme Court ruled that counting unit criteria to undergo a collective dismissal procedure under the Workers’ Statute Act is the total number of employees in the workforce instead of only those employees located in the affected location.

The decision is extraordinarily useful and sheds light on the statutory dilemma that companies have faced: while European Directive 98/59 sets forth the working place as a reference unit of counting, Section 51.1 of Spain’s Workers’ Statute Act provides that all employees in a company be counted.

Thus, the Supreme Court approved a company’s decision not to meet the legal requirements of a layoff (Spanish term of art ‘Expediente de Regulacion de Empleo’ or ‘ERE’) and found that 27 employees who were dismissed based on an individual basis were properly terminated. Because the 27 employees did not exceed the 10% threshold of the total workforce, an ERE was not needed. In addition, grounds for the reduction in force were found sufficient due to the employer’s failing financial health.