Freezing layoffs limits (in Spain) the freedom of enterprise

by Salvatore Trifirò

While a recent order of the Labour Court of Rome (February 26, 2021) extends the prohibition on dismissals for objective reasons as per Law 24 April 2020, n. 27, a recent sentence by the Spanish Labour Court of Barcelona states that dismissal for justified objective reason based on the economic losses suffered as a result of the pandemic is legitimate. It adds that the prohibition on dismissals established by Royal Decree – Law March 27, 2020 n. 9 similar in content to the law in force in Italy, violates the freedom of business economic initiative and is contrary to European legislation.

The justification of the sentence is interesting and topical because it poses questions as here in Italy we are discussing the extension of the ban. In fact, it is precisely the extension which has been blamed as the justification of the sentence: not the blocking of dismissals per se that is illegitimate, but the persistent recourse of the executive to the instrument of the extension. The Barcelona tribunal reasons that, although the freedom of economic initiative is not entirely free of constraints, similarly to what is provided for in article 41 of our Constitutional Charter, the limitations cannot be of a substantial or temporal nature such that freedom of enterprise is in fact emptied or even prevented. And this is what it had done, by continuing to extend the ban on dismissal for objective reasons for months and thus inhibiting the employer’s withdrawal which traditionally represents one of the reorganisation tools available to the entrepreneur. In this way – concludes the sentence – the prohibition is in contrast with the Spanish (article 38 of the Constitution) and European (article 16 of the Charter of Fundamental Rights of the European Union) protection of the freedom of enterprise. It includes not only the right to carry out a commercial activity but also the right to develop or reorganise, which is also provided for by article 41 of our Constitution.

The principles of law expressed by the Labour Court of Barcelona lend themselves to full application also in the Italian legal system. In fact, the Italian redundancy block is similar to the Spanish one. Both measures included an initial freeze on layoffs for economic reasons, limited to the early stages of the pandemic. Both regulations subsequently saw numerous confirmation and extension interventions. Furthermore, both legal systems are part of a completely overlapping constitutional and European regulatory context. Therefore, even in our municipalities, it is possible to raise an objection of unconstitutionality in order to achieve a similar non-application of the current block on dismissals, as contrary to the provisions of art. 41 of the Constitution & 16 CDFUE. On the other hand, maintaining the blockade with intrusive measures into the country’s freedom of economic initiative severely limits the prospects of redistribution of the workforce and consequent market repositioning of companies. While a freer market, even in times of crisis, can benefit both companies and workers because it has been made more reactive, flexible and competitive.

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