What new developments regarding dismissal should be applied in family businesses?

The obligations imposed by new regulations on dismissal are accumulating in all human resources departments, including family businesses. However, the personal relationships that accompany working relationships in this type of company make it particularly complex to apply them. 

Despite this complexity, family businesses are not exempt from complying with these labor obligations if one of the employees of the family business engages in any of the conduct established for disciplinary dismissal, despite the special relationship of trust that may exist between the parties to the conflict. 

We remind you that disciplinary dismissal is the termination of the employment contract that occurs when the company decides to end the employment relationship with an employee for having committed a serious and culpable breach of those set out in Article 54 of the Workers' Statute and/or those extended in the applicable Collective Agreement.

Furthermore, for the dismissal to be considered justified, the employer must comply with the rigorous formalities established in Article 55 of the Workers' Statute.

What new case law developments can be applied to family businesses?

Disciplinary dismissal has been one of the most controversial issues in the workplace in 2024, with the High Courts questioning whether the dismissal system provides sufficient guarantees for workers. It is also the area with the most new regulations to be applied in companies. In this context, the requirement to hold a hearing prior to disciplinary dismissal, as well as the possibility of granting additional compensation to the legal amount, and the new developments introduced in the dismissal of a worker who is temporarily incapacitated, open up a very different scenario from the one we have been used to until now. 

It is therefore essential to be aware of the latest labor developments in the area of dismissal recently implemented in our country, which all companies, including family businesses, must comply with:

1. The new formal requirement of a preliminary hearing

The Supreme Court requires that, as a prerequisite for delivering the disciplinary dismissal letter, the worker be given a hearing, which is sufficient to allow the worker to defend himself against the charges of misconduct. 

However, it is important to note that the Supreme Court has not established any specific form for conducting such a hearing, provided that the employee is given the opportunity to respond before the employer makes a final decision on the disciplinary dismissal.

Based on this ruling, failure by any employer to comply with this requirement in the case of a disciplinary dismissal would carry a high risk of the dismissal being classified as unfair.

2. Additional compensation

There were various rulings by the High Courts of Justice which held that in some cases the statutory compensation of 33 days per year of service applicable in cases of unfair dismissal might be insufficient to compensate the worker for the damage suffered. 

Finally, the Supreme Court expressly ruled on this issue, establishing that it is impossible to agree on compensation other than that legally assessed for dismissals classified as unfair, considering that Spanish legislation already establishes sufficiently adequate compensation.

3. In terms of disability

The government is eliminating automatic termination of employment contracts in cases where workers become permanently and totally disabled, or what was previously known as severely disabled. This provides more effective protection for the employment of people with disabilities, offering them more job opportunities and prioritizing options such as workplace adaptation or transfer to other duties. Consequently, companies, including family businesses, are now required to make reasonable adjustments to enable people with disabilities to exercise their right to work, even if they become disabled after starting their professional activity.

4. Extension of the right to indemnity

The Supreme Court has also had the opportunity to rule on the extension of the right to indemnity to all types of claims, including those brought by relatives of the same company. It establishes that any action taken by an employee against the company to claim their labor rights is covered by the guarantee of indemnity, protecting workers from possible reprisals by the company for having exercised or claimed their labor rights, and extending this “protective effect” to the employee's family circle.

Therefore, family businesses must bear in mind that one of their obligations is to comply with all the formalities inherent in dismissal, taking into account regulatory and jurisprudential updates, and it is therefore recommended that family businesses keep themselves constantly up to date in this area.

At Ceca Magán, we are experts in advising family groups and companies on dismissals, as well as in preparing disciplinary dismissal letters or initiating the process of filing allegations. You can contact our lawyers here.

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Rocío Guerrero y Helga Rodríguez – Family Business Group

Manager and lawyer in the field of labor law