An dismissal due to loss of turnover in Barcelona may be lawful even where the company is still making a profit, provided there is a genuine economic reason and the requirements of the Workers' Statute are met. The fall in income must be properly evidenced, and the termination measure must have a reasonable connection to the company's situation.
At Barcelona Laboral, we specialise in Employment Law and advise companies and employees on objective dismissals on economic grounds. Before implementing or challenging the measure, we analyse income trends, accounting documentation, the role affected, the dismissal letter, compensation and collective dismissal thresholds.
Quick answer: an economic reason exists where there are current or anticipated losses, or a persistent decrease in ordinary income or sales. The law considers the decrease persistent where, for three consecutive quarters, ordinary income or sales in each quarter are lower than in the same quarter of the previous year. There is no minimum percentage decrease established by law.
When a dismissal due to loss of turnover can be made in Barcelona
Losses or a persistent decrease in income
An economic reason is not limited to a drop in sales. Article 51 of the Workers' Statute covers current or anticipated losses, as well as a persistent decrease in ordinary income or sales.
Before taking any steps, make sure that the dismissal on economic grounds is properly substantiated. At Barcelona Laboral, we analyse your case and tell you exactly how to proceed to minimise legal risks.
If the company relies on this second route, the legal benchmark is three consecutive quarters compared with the same quarters of the previous year. The company does not need to be operating at a loss, nor is there a minimum decrease of 10%, 20% or 30% established by law.
For example, a company that remains profitable but has continuously reduced its ordinary income may have an economic reason if it meets the legal requirements and can evidence them.
How we prepare an objective dismissal on economic grounds
1. We analyse the financial documentation
At Barcelona Laboral, we review the available accounts, balance sheets, profit and loss accounts, quarterly income or sales trends, tax returns and any company documentation that can evidence the situation relied upon.
There is no fixed list of documents that must be used in every individual objective dismissal. The required documentation depends on the precise reason claimed and the company's circumstances.
2. We establish the connection between the reason and the role
It is not enough to show that turnover has fallen. There must also be a reasonable relationship between the economic situation and the decision to eliminate or reorganise the specific role.
The company has organisational discretion, but the decision cannot be arbitrary, discriminatory or unrelated to the reason claimed.
3. We assess whether there is a risk of collective dismissal
Before processing a dismissal due to loss of turnover in Barcelona, we check how many terminations on economic, technical, organisational or production grounds have taken place or are planned within the legal reference period.
Formal requirements for an objective dismissal on economic grounds
Written letter stating the reason
The company must provide written notice stating the reason for the termination. It is not enough to use generic wording such as “falling turnover” or “restructuring”. The letter must contain sufficient information for the employee to understand the facts supporting the decision and to defend themselves.
This does not mean that there is a general obligation to attach all annual accounts, tax returns or accounting documents to the letter. Whether the notice is sufficient depends on whether the key facts and data are properly explained.
Compensation of 20 days per year
Compensation for a lawful objective dismissal is 20 days' salary per year of service, calculated pro rata by month for periods of less than one year, up to a maximum of 12 months' salary.
This compensation is not split into 45 days for periods before 2012 and 20 days for subsequent periods. The 45/33 transitional rule applies to calculating unfair dismissal compensation for contracts entered into before 12 February 2012.
15 days' notice
A notice period of 15 days must be given between delivery of the notice and termination. During that period, the employee is entitled to six paid hours per week to look for work.
For dismissals under Article 52.c), a copy of the notice letter must be given to the employees' legal representatives for their information.
Exception to making compensation available
Where termination is based on economic grounds and the economic situation itself prevents compensation from being made available when the letter is delivered, the company may rely on the exception in Article 53.1.b), provided this is expressly stated in the notice.
It is not enough to make a generic claim of a lack of liquidity: if disputed, the company will have to prove the situation that prevented payment.
Individual or collective dismissal: when the procedure changes
Article 51 thresholds and staggered dismissals
| Company size | Threshold over 90 days |
|---|---|
| Fewer than 100 employees | 10 employees |
| Between 100 and 300 employees | 10% of the workforce |
| More than 300 employees | 30 employees |
Termination of the entire workforce is also considered a collective dismissal where it affects more than five employees and results from the total cessation of business activity on the legally established grounds.
The Statute also contains a specific rule to prevent successive terminations from being carried out with the aim of avoiding collective dismissal thresholds. Where the individual procedure is used fraudulently, the consequences may be particularly serious.
How the consultation period works
In a collective dismissal, the consultation period lasts no more than 15 calendar days in companies with fewer than 50 employees and no more than 30 calendar days in companies with 50 or more.
No prior administrative authorisation is required to carry out an ERE on economic grounds, but the consultation procedure, the regulatory documentation and notifications to the labour authority must be complied with.
An external outplacement plan is compulsory where the collective dismissal affects more than 50 employees, subject to the legal exceptions. It is not a compulsory document in every ERE.
Errors that can make a dismissal unfair or void
An overly generic letter
A letter that merely states that “sales have fallen” without explaining the data, periods or circumstances may prevent an adequate defence and compromise the formal validity of the dismissal.
A poorly prepared dismissal can cost your company far more than the compensation payment. Speak to our employment lawyers and develop a robust, documented and legally compliant contract termination strategy.
Confusing objective dismissal compensation with unfair dismissal compensation
In a lawful dismissal due to loss of turnover in Barcelona, compensation is 20 days per year of service, capped at 12 months' salary. If it is found to be unfair, the general benchmark becomes 33 days per year of service, capped at 24 months' salary, with the 45/33 transitional regime applying where appropriate.
Subsequent recruitment, unfairness and voidness
A subsequent hire does not automatically make the dismissal unfair. However, if the exact same role and duties are filled shortly afterwards, this may be relevant when assessing whether the reason and the claimed elimination of the role were consistent.
Furthermore, failure to comply with formal requirements will usually result in unfair dismissal where the law so provides. Voidness is reserved for cases such as discrimination, breach of fundamental rights, certain specially protected groups or fraudulent use of individual dismissal to avoid a collective dismissal.
What happens if the employee challenges the dismissal
20 working-day time limit
The employee has 20 working days from the date of dismissal to challenge it. In Catalonia, as a general rule, an administrative conciliation claim must first be filed.
Filing for conciliation suspends the limitation period; the time limit does not start again from zero.
What the company will need to prove
If the dismissal due to loss of turnover in Barcelona goes to court, the company must prove the reason claimed and that the procedure was followed correctly. This is why, at Barcelona Laboral, we insist on preparing the case before implementing the dismissal, rather than after receiving a claim.
Possible outcomes
The dismissal may be declared lawful, unfair or void. If it is lawful, the termination and objective dismissal compensation remain in place. If it is unfair, the rules on reinstatement or compensation apply. If it is void, the general consequence is mandatory reinstatement and payment of processing wages.
Barcelona Laboral: advice on economic dismissals in Barcelona
At Barcelona Laboral, we specialise exclusively in Employment Law. We advise companies that need to reorganise their workforce and employees who wish to review whether an economic reason has been properly evidenced.
For companies
We analyse the financial documentation, thresholds, collective agreement, role selection, compensation and letter before carrying out the dismissal due to loss of turnover in Barcelona.
For employees
We review the letter, the economic trends relied upon, compensation and the time limit for challenging the dismissal to assess whether there are substantive or procedural defects.
Frequently asked questions about dismissal due to loss of turnover in Barcelona
Does the company have to be making losses?
No. An economic reason may also exist where there is a persistent decrease in ordinary income or sales for three consecutive quarters compared with the same quarters of the previous year.
Has your company lost turnover and do you need to reorganise the workforce? We help you prepare all supporting documentation and manage the process with legal certainty from the outset.
What percentage fall in turnover does the law require?
There is no legally established minimum percentage. The economic situation provided for in the Statute and the reasonable connection between the measure and that situation must be evidenced.
What is the compensation for an objective dismissal on economic grounds?
It is 20 days' salary per year of service, calculated pro rata for periods of less than one year, up to a maximum of 12 months' salary.
Do contracts entered into before 2012 receive 45 days in an objective dismissal?
No. A lawful objective dismissal is compensated at 20 days per year of service. The 45/33 transitional rule applies to calculating unfair dismissal compensation for contracts entered into before 12 February 2012.
Does the company have to provide all its accounts with the letter?
There is no general obligation to attach all accounting documentation to the individual letter. However, it must state the reason sufficiently and the company must be able to prove it if the dismissal is challenged.
How long does the consultation period for an ERE last?
A maximum of 15 calendar days in companies with fewer than 50 employees and 30 calendar days in companies with 50 or more, unless the procedure ends earlier in the cases provided for by law.
How long does the employee have to challenge the dismissal?
The time limit is 20 working days from the dismissal. Prior administrative conciliation suspends the limitation period in accordance with employment procedural law.