Age as a selection criterion in collective lay-off proceedings
It is not unusual to find reports in the press of collective lay-off proceedings in which older employees are among the groups hardest hit. It was this that led to the approval of the so-called “Telefónica amendment” which, in short, requires companies generating profits who make collective lay-offs affecting a certain volume of workers aged over 50 to make an economic contribution to the Public Treasury.
This practice was eventually challenged in the courts based on the understanding that the use of age as an objective criterion in the selection of workers to be affected by a collective lay-off was by nature discriminatory.
The conclusion reached by the Constitutional Court in its judgement of April 13, 2015 was that if cost saving is the reason given by the company for selecting older employees, then such criterion is discriminatory since the selection of workers based on age alone imposes upon the persons affected a disproportionate sacrifice. If, however, the decision to select the company’s older employees is based on the understanding that the impact on this group will be less harmful than with other employees because they are entitled to greater welfare protection, then the criterion is valid. Conversely, if the older employees who the company decides to lay off are not entitled to greater welfare protection, then the criterion applied may be considered invalid.
The Constitutional Court recalls in this respect that according to the provisions of the Workers’ Statute, when workers aged 55 or over are affected by a collective lay-off proceeding, the company is required to pay contributions for the financing of a special agreement with the Social Security authorities which enables the worker to remain registered with the Social Security system, meaning that his/her future benefits are not affected. Similarly, in the specific case analyzed by the Constitutional Court, the company had also envisaged more beneficial economic conditions for terminations of contracts with its older employees.
In conclusion, a selection criterion for the purpose of collective lay-off proceedings based solely on the older age of certain workers is only to be considered valid when such workers will subsequently be entitled to greater welfare protection than other workers affected.
Garrigues Labor Law Department