The Supreme Court endorses ERTE by Covid in companies that work with public administrations

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The Plenary of the Fourth Chamber of the Supreme Court has established that the collective suspension of contracts (FOR HIM) due to force majeure, derived from the state of Covid-19 health alarm, is compatible with the concessionaire’s right to request the economic restoration of the contract.

The judgment, a presentation by Judge Rosa MarÃa Virolà © s, responds to the appeal for cassation filed against the judgment of the National High Court that dismissed the claim for a collective dispute filed by the State Federation of Workers’ Commissions in contesting the collective suspension (ERTE ) of employment contracts in the company Ana Naya GarcÃa, owner of various early childhood education centers.

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On March 18, 2020, a temporary employment regulation procedure was initiated before the Ministry of Labor and Social Economy presented by the defendant company requesting authorization for the suspension of the labor relations of 187 workers, that is, on the entire workforce of the company belonging to the company’s work centers in the Autonomous Community of the Canary Islands, Castilla-La Mancha, Galicia, Murcia and the Valencian Community, during the period of declaration of the first state of alarm decreed by the pandemic due to force majeure .

On March 31, the company informed the workers that it was making the suspension effective since, having not received any communication from the labor authority, its existence should be understood to have been verified by administrative silence. Meanwhile, various city councils in which the work centers are located agreed to suspend the municipal nursery school service.

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Subsequently, by resolution of the General Directorate of Labor of the Ministry of Labor and Social Economy, issued in the ERTE due to force majeure Covid-19 no. 346/20, it was agreed to declare verified the existence of force majeure alleged by the company for loss of activity as a result of Covid-19 and justification for the suspension of labor relations of the workers, from the moment of validity of Royal Decree 463/2020, of March 14, of the state of alarm.

After these events, a collective dispute lawsuit was filed by the CCOO Teaching Federation requesting the declaration of nullity or, where appropriate, the lack of justification for the measure, which was rejected by the National High Court.

Against that judgment, he filed a cassation appeal before the Supreme Court. Now, the Social Chamber has dismissed the aforementioned appeal although it admits that the sentence under appeal did not give an answer, not even implicitly, to one of the main allegations of the lawsuit, consisting of the infringement of article 34 of Royal Decree Law 8/2020 of 17 March 2 on public procurement measures to alleviate the consequences of Covid-19. The Social Chamber considers that, due to procedural economy, it can respond when resolving the cassation appeal, as it does, without annulling the judgment of instance so that it can previously rule on the matter.

First of all, the Supreme Court considers that if the company presented the required documentation and the required budgets are recorded, nothing prevents the request from being deemed approved due to positive administrative silence, although an express resolution subsequently falls.

The plenary session explains that the company is in one of the cases of loss of activity that imply suspension or cancellation of activities and are considered force majeure for the suspension of the employment relationship. Nor can it be ignored that the municipalities where the affected centers are located suspended the municipal public school service and the corresponding management contracts due to the total impossibility of providing them. Regarding the possible fraudulent nature of the business measure, taking into account that the labor expenses resulting from the contractual suspension would be compensable, where appropriate, by the contracting administration and the alleged impossibility of applying the temporary suspension measure. in this case, because the company is a public services concessionaire, these allegations are rejected by the Chamber.

Ultimately, the Chamber establishes that the ERTE by force majeure is compatible with the right of the contractor or concessionaire of a public service to reestablish the economic balance of the contract

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