Case Study: Dismissal in the IT Sector Due to Elimination of the Job for a Real and Serious Cause — Rejection of the Challenge Against the Dismissal Decision under Article 65 of the Labor Code

Facts of the Case

The claimant had been employed by the defendant since 2018, under an open-ended individual labor contract, in the position of Analyst (according to the Occupational Classification).

By the dismissal decision, on May 30, 2020, the employer terminated the contract for reasons not related to the employee’s person, under Article 65(1) of the Labor Code.

Grounds for the Measure

The internal documents cited in the decision include:

• An economic-financial report showing declining revenues and limited ability to develop new revenue-generating projects;
• Sales forecasts for April–December 2020 versus the sales plan: fewer contracts than projected;
• The urgent need to reduce expenses to align with estimated income over the next 12 months, against a backdrop of financial blockage and difficulty obtaining credit;
• The necessity for an individual dismissal for reasons not related to the employee’s person, and the elimination of the Analyst position;
• The elimination of the job was executed effectively and had real and serious causes.

The contract terminated on June 30, 2020, due to this objective-based dismissal.

Claims and Defenses Raised

The claimant argued that the dismissal decision was illegal and unfounded, citing:

1. Notice period of less than 20 working days—incorrectly calculated;
2. Lack of motivation in the decision;
3. Unfounded claim—the job elimination was not effective, nor based on a real and serious cause;
4. Request for moral damages for non-material prejudice.

Court’s Findings — In Brief

• The notice period was correctly provided—20 working days, properly calculated. The Supreme Court holds that a dismissal is void only if no notice is given, not when the decision fails to explicitly state that notice was given.
• The dismissal decision was sufficiently motivated, pointing to the internal documents that supported the measure. The law does not impose excessive formality (no need to replicate detailed economic indicators verbatim in the decision).
• The elimination of the position was effective, for real and serious reasons—demonstrated via organizational charts, a certificate for emergency situations (≥30% revenue decline), and related measures (multiple contract terminations, technical unemployment, salary and hour reductions, hiring freeze).
• Moral damages were denied: no specific non-material prejudice was shown (based on Article 1357 of the Civil Code).

Verdict: The main claim was dismissed as unfounded.

Applicable Legal Provisions

Article 65, Labor Code — Dismissal for Reasons Not Related to the Employee’s Person

1. Such dismissal is the termination of an individual employment contract due to elimination of the job held by the employee, for reasons unrelated to the employee’s personal circumstances.
2. The job elimination must be effective and based on a real and serious cause.

Article 75, Labor Code — Right to Notice

1. Those dismissed under Articles 61(c) and (d), 65, or 66 are entitled to a notice period of at least 20 working days.
2. Exception: If dismissed under Article 61(d) during the probation period, this requirement does not apply.

Article 76, Labor Code — Content of the Dismissal Decision

The dismissal decision must be written and include:
a) Reasons for dismissal;
b) Length of notice;
c) In collective dismissals, prioritization criteria;
d) List of all vacant jobs in the unit and the deadline for employees to opt to fill them.

Article 78, Labor Code — Effects of Illegal Dismissal

Dismissal that fails to follow legal procedure is absolutely null and void.

Article 79, Labor Code — Justification in Litigation

During a labor dispute, the employer may not invoke facts or legal grounds other than those stated in the dismissal decision.

Article 1357, Civil Code — Liability Conditions

1. Anyone causing prejudice to another by an illicit act done with fault is obligated to repair it.
2. The author of the prejudice is liable even for the slightest fault.

Court’s Analysis

Motivation of the Decision — Sufficiency and Purpose

• Article 76 requires stating the reasons and fundamental documents but does not require exhaustive inclusion of every economic indicator. The employer referenced supporting documents (economic report, forecasts, justification note), providing clarity to both employee and court.
• Under Article 79, the employer cannot introduce new reasons during litigation; motivation must exist, and its depth depends on the legal purpose—ensuring the employee is properly informed and the case can be verified in court.

Special Section: Why the Court Found a Real and Legitimate Cause for Dismissal

Legal Test Under Article 65(2)

• Effectiveness: The job must genuinely disappear—absent from organizational charts/statements, without reintroduction under the same duties.
• Real cause: Objective, verifiable reasons—economic difficulties, technological changes, reorganization.
• Serious cause: Grave reasons tied to operational efficiency, not hiding ulterior motives.

Application to the Case

The court found all criteria met:

1. Effectiveness proven by organizational charts showing a decline in positions (e.g., from 56 to 52, then to 51; Analyst QA/Tester post suspended for parental leave). No evidence of position reinstatement.
2. Real cause: Significant revenue decline, negative forecasts, emergency certificate (≥25% reduction), financing issues, and systemic measures (mass terminations, technical unemployment, salary/time reductions, hiring freeze).
3. Serious cause: The gravity of the COVID-19 context mandated restructuring; the court does not judge managerial prudence but ensures legality.

Conclusion: The job elimination was necessary, proportionate, legitimate, and backed by a consistent set of documents and systemic measures, not isolated decision-making.

Moral Damages

No moral damages awarded—mere job loss discomfort does not amount to non-material prejudice (Article 1357 Civil Code).

Practical Relevance

The court dismissed the case: notice was properly given, the decision was sufficiently motivated, and job elimination was effective, real, and serious, justified by an objective economic context and systemic recovery actions. This reinforces best practices for dismissals not tied to an employee’s person—particularly amid economic crisis—and outlines the evidence standards employers must meet for a serious and legitimate cause.