The "reparative" dismissal: this is the new compensation model proposed by Yolanda Díaz

The debate on the cost of dismissal has come to the fore again after the Minister of Labor and Second Vice President of the Government, Yolanda Díaz, has shown herself willing to make compensation for unfair dismissal more expensive.

Thomas Osborne
Thomas Osborne
16 February 2023 Thursday 08:28
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The "reparative" dismissal: this is the new compensation model proposed by Yolanda Díaz

The debate on the cost of dismissal has come to the fore again after the Minister of Labor and Second Vice President of the Government, Yolanda Díaz, has shown herself willing to make compensation for unfair dismissal more expensive. An issue on which the European Committee of Social Rights is expected to take a position soon after the lawsuit filed by the two main unions. A resolution that could open the door to the concept that Díaz has been considering introducing into Spanish legislation for some time: “remedial or restorative dismissal”.

But what does this new compensation model consist of? As explained by the minister in a conference of the Association of Economic Information Journalists (APIE) held at the end of October, the "remedial or restorative dismissal" is based on calculating the amount of compensation based on the personal and professional situation of the worker . Thus, "it will be different in view of the impact that the dismissal may have on people."

On this basis, it should be more expensive for the company to fire a 50-year-old worker without just cause than a 24-year-old worker, with a better chance of finding a new job. The minister considers that the current norm does not pay too much attention to the age of the workers affected by an unfair dismissal. Likewise, she considers that the problem of unemployment lies "in those over 45 years of age", a group with more than a million unemployed.

In her intervention yesterday in Congress, in which she reaffirmed that "dismissal is too cheap", the minister promised to modify the compensation if the European Committee of Social Rights determines that there is a breach of the European Social Charter. A treaty, ratified by Spain, which in its article 24 establishes that "all workers have the right to protection in case of dismissal". In fact, some judicial resolutions are based on this article, and on the provisions of article 10 of Convention 158 of the International Labor Organization (ILO), to extend the compensation of some employees to more than 33 days per year worked. This is the case of the pioneering sentence handed down at the end of January by the Superior Court of Justice of Catalonia (TSJC), which ruled that the legal compensation -of about a thousand euros- to a permanent worker who had been in the job for a few months it was clearly “insignificant” and did not compensate for the damage caused by the loss of employment.

Last March UGT filed a lawsuit against Spain with the European Committee of Social Rights for the low amounts of severance pay, which in the case of unfair dismissal is 33 days per year worked with a limit of 24 monthly payments. A situation that CC.OO also denounced months later. before the same body. Carlos Gutiérrez, head of studies and training of this union, considers that the regulation of dismissal without cause "neither repairs nor discourages companies from using it" and asks Yolanda Díaz for more specificity about his proposal. The union demands that a series of measures be adopted to ensure that compensation for unfair dismissal is based on a "restorative" and "dissuasive" model.

In this sense, he sees it necessary to restore the processing wages, those that the employer had to pay prior to the 2012 reform from the time the worker's contract was terminated until a court ruled whether the dismissal was legal or not. Likewise, he claims that the courts have the option of ordering the reinstatement of the workers. "Right now this only occurs in certain cases, such as null dismissals, but we want it to be established in many other situations," explains Gutiérrez.

In addition, it considers that the compensation of 33 days for years worked does not repair the loss of employment in certain cases. This can happen “when the contracts are of very short duration and, therefore, the compensation is very low”, although there are also other cases in which the amount is still insufficient for the union. For example, in cases in which a worker has been the victim of fraud by the employer "because he was hired as temporary when he had the right to be permanent", or in situations of injury or abuse or other types of damage.

For its part, the lawsuit filed by the UGT before the European body requires that the compensation be calculated based on the damage "that has been caused to the worker as a result of an illegal and unfair decision", details Fernando Luján, deputy secretary general for politics union of the organization. On the other hand, the lawsuit focuses on claiming that "sufficiently dissuasive compensation is set so that acts contrary to the labor legal system are not carried out or, if this occurs, they are sufficiently penalized."

Finally, the union admits that the modification of the severance pay was excluded from the negotiations of the last labor reform, although "there was no agreement" not to touch the issue again. And he adds: "It was one of the points that was not repealed from the 2012 reform, which reduced the compensation for unfair dismissal from 45 days with a limit of 42 monthly payments to 33 days with a limit of 24 monthly payments."