Argentina, Italy and Spain temporarily banned dismissals for economic reasons. Short time schemes or other incentives have to be adopted instead of lay off procedures, previously available for companies facing financial difficulties or willing to undertake a restructuring procedure.
In Argentina, the Decree (“Decreto de Necesidad y Urgencia” N. 329/2020, Articles 2 and 3) published on 31 March 2020 bans the dismissal and suspension of employees for lack or reduction of economic activity, or due to force majeure for a period of 60 days until the end of May. The only suspensions allowed are the ones agreed upon by employers and workers, and ratified by the labour authority.
In Italy, the Law Decree “Cura Italia” (D.L. n. 18/2020, Article 46) bans individual and collective dismissals for “objective just cause” until 18 May 2020. Also, the dismissal procedures started after 23 February 2020 are suspended.
The Spanish Royal Decree-Law N. 9/2020 entered into force on 28 March 2020, establishes in its Article 2 that force majeure and economic, technical, organisational and production-related reasons associated with Covid-19, will not be considered as valid "justified reasons" for the termination of employment. This measure has no expiry date, since it is supposed to last until the state of emergency is over.
The Covid-19 specific situation justifies unprecedented measures to mitigate the crisis and protect both workers and business in terms of health and safety, income relief and liquidity support. However, it is the view of IOE Secretary-General, Roberto Suárez, that these measures must be balanced and should take into account that, despite all the incentives made available by the government and banks, a company may not be able to maintain its level of employment prior to the crisis, especially for SMEs or companies already in financial difficulties.
The Union Industrial Argentina (UIA) Vice-President, Daniel Funes de Rioja, underlined the impossibility of maintaining the full salary during the temporary lockdown measures. The way forward is through dialogue and development of alternative solutions. As a result, the UIA recently signed a bipartite declaration with the national trade union confederation (Confederación General de Trabajadores – CGT), where the parties recommended the Ministry of Labour the conditions that must be met for suspension agreements.
Confindustria (Italy) considered the ban as “a very drastic measure, which considerably compresses the freedom of enterprise, and which can find some justification only in the ‘limited duration’ in time of this confinement. Any extension would no longer be justified, also in consideration of the fact that the various extraordinary interventions on income relief have an equally limited duration and limited funding”.
CEOE and CEPYME (Spanish Confederation for SMEs) disagreed with the new measures as they “will prevent laying the foundations for the necessary economic recovery in Spain and will ultimately lead to a higher level of unemployment”. They are “detrimental to the economic balance, the health of the public accounts, they are considerably increasing the deficit, and they will significantly reduce investors’ confidence, which are critical to the financial stability and economic recovery of this country”.