Download article in original language : ES9802244FES.DOC
Recent reforms of the labour market in Spain propose new forms of institutional control over dismissal for objective reasons, through collective bargaining. However, a December 1997 subsectoral local agreement in the Vilafranca del Penedès wine-making sector has revealed certain constraints on the power of workers' representatives to negotiate and monitor dismissal.
One of the criteria for which the termination of open-ended employment contracts is allowed in Spain is what is known as "dismissal for objective reasons" (despido por causas objetivas). These reasons may be economic, technical or organisational, or related to production.
In Spain, dismissal is not the most common way of terminating employment - this is because of the high percentage of temporary contracts that are used to adjust employment levels, since they can be terminated at no cost. Nevertheless, dismissal is a controversial topic because of its indeterminate regulation in law. Not surprisingly, this means that it is difficult to specify the reasons for "objective" dismissal because it is difficult to reconcile the economic and production interests of the employers with the workers' right to job security, especially in a country in which flexibility in workforce levels is used as a key element in making production more flexible.
Representatives of the CC.OO and UGT trade unions and the Independent Union of Workers of the Winemaking Industry (Sindicato Independiente de Trabajadores de la Industria Vinícola, SITIV), along with employers, signed a subsectoral and local collective agreement for the wine-making industry of Vilafranca del Penedès (Catalonia) in December 1997. It covers the three-year period from January 1996 to December 1998, and is important not because of any specific impact that it will have at its own level, which at the moment seems to be very limited, but because it sets a precedent and exemplifies certain developments in labour relations.
Issues covered by the agreement, which was reached after one and a half years of negotiations, include dismissals for objective reasons. The parties have not only agreed on the definition of the objective reasons that will be considered as justifying the termination of new permanent contracts, but have also set up mechanisms through which workers' representatives will be able to obtain information about and monitor the application of these rules. This categorisation through collective bargaining of situations defining "objective reasons", and the establishment of processes of union intervention in dismissals, are important since they are completely new areas in collective agreements at levels higher than the company. The objectives of these measures are the same ones that are repeatedly stated in the 1997 intersectoral "April agreements" on labour market reform (ES9706211F): on the one hand to reduce temporary employment and promote permanent employment; and on the other hand to encourage greater flexibility in the management of the workforce "to preserve the viability of the companies".
Specifically, the wine industry agreements states that the economic reason that will justify dismissals is a 15% decrease in the turnover of a company in comparison with the previous year. This specification greatly simplifies the definition of the "negative situation" of a company which, under the law, constitutes the economic reason for dismissal. By basing the definition on a single factor (turnover) the agreement introduces an automatic approach to dealing with a situation that is due only to the coming together of many different factors. Furthermore, the specified reason does not necessarily mean that the company is in crisis - that is to say that it has losses that threaten its viability.
Secondly, the agreement defines the technical, organisational and production reasons which justify dismissals as: automation to replace manual or semi-manual processes; subcontracting of any activity - except the main one - for a minimum duration of one year; redefinition of markets involving the restructuring of the sales staff; and the redefinition of processes that involve an objectively proven need to reduce the workforce. These are criteria which are arguably based more on business convenience than on necessity and, again, they imply a degree of simplification which may lead to them being considered automatic.
It may be considered surprising that the agreement does not require or mention: alternative measures prior to dismissal: limits on the percentage of dismissals; proportionality between the situation and the dismissals; future guarantees for the continuity of the business; or specific commitments to employment continuity. The agreement does provide for the creation of a "job pool" (bolsa de trabajo), though experience in this area does not show this mechanism to be a true guarantee. There is also a general commitment by the companies covered to convert temporary jobs into permanent ones, though this should not rule out the use of temporary employment in times of need. Finally, the agreement refers to carrying out studies on possible redeployment, though there is no obligation to do so.
Under the agreement's monitoring procedure, employers are obliged to provide figures on turnover and data on the introduction of technological innovation, subcontracting and market position over the previous three years. However, such data are not seen by commentators as providing sufficient documentary evidence as to whether or not these measures preserve the viability of the company.
Trade union participation is also specified, involving the legal representatives of the workers of the affected company, or the joint negotiating committee (comisión mixta) of the agreement in the absence of the former. However, specific mechanisms for settling disputes have not been established.
The text of the wine-making agreement concerning dismissal for objective reasons is based on the "April agreements" labour market reform. Besides amending provisions relating to the reasons for and cost of this type of dismissal, the agreements introduced the possibility of a new control procedure, and this has opened up new and old disputes over termination of contracts.
The reform adds a new section to Art. 85 of the Workers' Statute, which creates new areas for collective bargaining. Specifically, it allows for bargaining on procedures covering ways to provide information about objective dismissals and monitor their implementation. This is a provision that could involve an increase in the autonomy of the bargaining parties and become a further step towards reducing the influence of the labour courts in Spanish industrial relations.
Up to the present, the dismissals process has been dealt with through the courts, and the lack of detail in the law has given a wide margin of interpretation to judges as to whether or not the reasons alleged by the employer are justified. The amount to be paid in compensation by the employer varies greatly from one case to another, which has led to serious criticism of the courts' intervention, particularly amongst employers. In February 1998, in the inaugural speech of his new term of office, the president of the CEOE employers' confederation called the laws on dismissal a straightjacket on entrepreneurial decisions that should be eliminated, and argued that judges should not be responsible for deciding the validity of the reasons and the reasonableness or appropriateness of dismissals (ES9802248N).
Placing collective bargaining at the centre of labour relations and encouraging the development of extrajudicial mechanisms for solving disputes are two objectives of CC.OO and UGT. The new provisions introduced by the April agreements have thus been interpreted as a chance to extend the negotiating capacity and involvement of workers' representatives in determining employers' decisions. In particular, they allow specific procedures for union intervention in the regulation of dismissal for objective reasons.
Though it is based on the new legislation and on their own principles of action, the Vilafranca del Penedès wine-making agreement has provoked critical reactions within the trade unions. They disagree with the deal's provisions on the reasons for dismissal and consider that it offers insufficient guarantees. The unions have always been against any bargaining on the reasons for dismissal that may lead to automatic procedures. They propose negotiating these reasons cautiously, according to the business activity in question, without simplification, and above all providing for firm union participation procedures in deciding whether such reasons actually exist. They also propose using dismissal as a last resort, and negotiating alternative measures and guarantees of reinstatement if the difficulties in question are overcome.
The wine-making agreement reveals the complexity of agreements on dismissal at a time when unemployment rates are high and so the chances to redeploy those dismissed are slight and the influence of worker representatives over the procedures is weak.
The simplification of the reasons justifying dismissal, and the reduction in costs that this involves, greatly facilitate the process of dismissal for employers. If this type of measure involved job creation and more widespread use of permanent contracts for new recruits, it would represent an improvement for those currently entering the labour market whose contract can be terminated without justification and at no cost. Nevertheless, it remains doubtful whether making termination of contracts easier is a good way to prevent the widespread use of insecure labour as a major competitive factor in Spanish companies. At present, there is little job creation and most of the jobs created are insecure.
Similarly, to classify the reasons for dismissal is to enter problematic terrain unless there are strong representational structures, especially if, as in the wine-making agreement, the reasons are not only specified but also automatically triggered. The need for union involvement in specifying the reasons for dismissal may be questioned. It should not be forgotten that though Spanish trade unions have extensive experience in bargaining at a sectoral, regional or company level, they do not always in practice have sufficient power to play an active part, since the production structure is made up largely of small and medium-sized companies in which the autonomy of the parties often means unilateral power for employers. (Clara Llorens Serrano, QUIT)