Collective labour measures in bankruptcy proceedings
Although it is always advisable to adopt labour-related measures before the company has been forced to initiate a bankruptcy proceeding, as this could be avoided by adjusting certain aspects linked to the employment contracts of the people who form part of the workforce, the truth is that on certain occasions this is not possible.
However, the fact that insolvency proceedings have been initiated does not prevent an assessment of the advisability of adopting collective labour measures within the process, even if only to be able to overcome the insolvency situation in the best possible conditions.
That is why in this article we would like to explain what measures can be taken and what procedure should be followed.
Collective measures that can be taken within the bankruptcy proceeding
Even if the company has been declared bankrupt, a series of collective measures may be carried out that affect employment contracts and that are considered appropriate to adjust them to the company’s needs. These measures are:
- Substantial modification of working conditions, which are those affecting the working day, working hours and distribution of working time, shift work regime, system of remuneration and wage rates, system of work and performance or functions.
- Transfers
- Temporary Labour Force Adjustment Plans
- Reduction of working hours for economic, technical, organisational or production reasons.
- Labour Force Adjustment Plans
Procedure for the adoption of collective labour measures within the bankruptcy proceeding
Once the company has been declared bankrupt, any decision to adopt collective measures must be approved by the bankruptcy judge, following the procedure established by the bankruptcy law.
Legitimation:
This being the case, the first thing to determine is who is entitled to request them. Well, the answer to this first question is that the insolvent company, the insolvency administration or the legal representation of the company’s employees, if any, can request the adoption of these measures.
Deadline:
The second question to bear in mind is from what moment such a request can be submitted, and in this regard we should point out that the adoption of these measures can only be requested after the submission of the report by the insolvency administration.
However, there is an exception to this rule whereby it may be submitted in advance, where it is considered that delay in implementing the measures sought may seriously jeopardise the future viability of the undertaking and employment or cause serious harm to the workers.
Content:
The request must explain and justify the reasons why the adoption of the collective measures requested is considered appropriate, as well as the objectives to be achieved, attaching the documents that accredit this. The insolvency law does not specify what these documents should be, so it leaves the parties completely free to provide the documents they consider appropriate, although we always recommend providing the documents required by labour law for the adoption of the measure sought outside the insolvency proceedings.
If the bankrupt company has a workforce of more than fifty (50) employees, a plan must also be provided that considers the impact of the proposed labour measures on the future viability of the company and employment.
Procedures:
Once the request has been submitted, a consultation period begins, which may not last more than thirty (30) calendar days, or fifteen (15) in companies with a workforce of less than fifty (50) people. If the request is made by the insolvent party or the insolvency administration, the communication of the consultation period to the legal representatives of the employees must include a copy of the request to the insolvency judge and the documents attached to it.
The parties must negotiate in good faith in order to reach an agreement. It is important to bear in mind that, at the request of the insolvency administration or the legal representatives of the employees, the insolvency judge may request the participation in the consultation period of other persons who could form a business unit with the insolvent company.
This consultation period will not be necessary if a prior agreement is reached, signed by the insolvency administration and the legal representatives of the workers, which must be attached to the application, so we recommend contacting the company beforehand to assess this possible agreement, which reduces the deadlines for the application of the measure. Furthermore, it may be agreed at any time to replace the consultation period with the mediation or arbitration procedure.
Once an agreement has been reached or the maximum duration of the consultation period has ended, the judge in the insolvency proceedings must be notified of the outcome, who will request a report from the labour authority on the measures sought or the agreement reached, and will approve the agreement, unless he or she finds fraud, fraudulent intent, coercion or abuse of rights, or will rule on the appropriateness of the adoption of the measures requested in accordance with labour legislation, after hearing the parties, which may be by appearance in court or in the form of written allegations.
Finally, it is important to bear in mind that both during the insolvency proceedings and up to a maximum of twelve (12) months from the date of the judicial decision of the insolvency judge authorising the adoption of the requested measure, the right to termination of the contract with compensation of the employees affected by such measures is suspended.
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