EU rules on collective redundancies still apply where a business is winding down as a result of the owner’s retirement, the Court of Justice of the European Union (CJEU) has ruled.
In Case C‑196/23 Plamaro, the court considered whether a Spanish law excluding “cases of the death, retirement or incapacity of the employer” from the requirement to consult with workers’ representatives was compatible with Directive 98/59 on collective redundancies.
The case concerned a businessperson whose retirement resulted in the termination of 54 employment contracts across eight of his business establishments.
Eight of the former employees subsequently brought a complaint of unlawful dismissal, which was dismissed. An appeal in the Spanish courts led to a referral to the CJEU.
In its judgment, the court recalled that the main objective of the directive is to make collective redundancies subject to prior consultation with the workers# representatives and the notification of the competent public authority.
It added that, according to its settled case law, there are collective redundancies, within the meaning of that directive, when there are terminations of employment contracts without the consent of the workers concerned.
The court found that the Spanish law is contrary to the directive, which applies in the event of the employer’s retirement as long as the threshold numbers of dismissals set out in the directive are met.
An employer’s retirement cannot be treated in the same way as an employer’s death, to which the directive does not apply, the court added. This is because an employer who retires is, in principle, capable of conducting consultations seeking, inter alia, to avoid the terminations or to reduce their number or, in any event, to mitigate the consequences.
