- The case shows how a workforce cut can be carried out at a stroke, with emailed notices and access cut off.
- In Spain, collective dismissal requires a consultation period and notice to the labour authority, with thresholds by company size.
- Companies must take care over cause, documentation and procedure, because a badly handled dismissal can be unfair or void.
On 4 November 2022 Twitter began a mass layoff affecting about half of its workforce of some 7,500 employees, according to outlets such as ABC News; Bloomberg put the number affected at about 3,700. It happened a week after Elon Musk completed the purchase of the company. Employees learned by email and many had their access to internal systems cut.
Musk attributed the decision to the company’s losses, which he put at more than 4 million dollars a day, and said that everyone affected would receive three months’ severance, 50% more than US law requires. The episode is American, but it raises a practical question for any European business owner: how to carry out a workforce reduction lawfully and in an orderly way.
Collective dismissal in Spain
The Workers’ Statute treats as collective dismissal the termination of contracts for economic, technical, organisational or production reasons that, within ninety days, affects at least ten workers in companies with fewer than a hundred, ten percent of the workforce in those with between a hundred and three hundred, and thirty workers in those with three hundred or more. It is also collective when it affects the entire workforce and that exceeds five workers.
The procedure begins with notice to the workers’ representatives and the labour authority and the opening of a consultation period of up to thirty calendar days, fifteen in companies with fewer than fifty workers. During that time the company must negotiate in good faith on the possibility of avoiding or reducing the dismissals and softening their effects, providing the documentation that supports the causes. It then communicates its final decision.
Severance and risks
Statutory severance for dismissal on objective grounds, including collective dismissal, is twenty days’ salary per year of service, up to a maximum of twelve months’ pay. If the dismissal is declared unfair, it generally rises to thirty-three days per year, up to twenty-four months, and the employer may choose between paying compensation or reinstating. Individual agreements or agreements reached in the consultation period can improve those amounts.
The risks of getting it wrong are real: a collective dismissal can be declared void if the consultation period is not respected, if the required documentation is missing, if fundamental rights are infringed or if dismissals are split up to avoid the thresholds. Voidness requires reinstatement and payment of the wages not received. That is why the cause, the documentation and the sequence of steps must be handled carefully from day one.
What to review
A company foreseeing an adjustment should start by documenting its economic or production situation rigorously, analysing less drastic alternatives, such as reduced hours, temporary suspension of contracts, mobility or cuts in other costs, and assess with labour-law advice the timetable, the selection criteria and the total cost of the operation, including indirect costs.
It is also worth thinking about internal and external communication, protection of sensitive information and support for those who leave, because the way it is done affects the company’s reputation and the mood of those who stay. This is general information about the Spanish legal framework; each case requires specific analysis and professional advice.
Adjusting a workforce is an economic decision, but the law also turns it into a procedure with safeguards.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
