The Supreme Court rules on force majeure and employment contract termination.

22 December 2008

Supreme Court ruling (Labour Court) dated July 8, 2008.

The Supreme Court focused its analysis on whether or not a dismissal that the employer attributed to the commercial lease’s end is to be considered an example of force majeure or as an objective dismissal. The results of this analysis have various consequences, both from the legal point of view as well as from the procedural point of view, since a dismissal must be preceded by an administrative procedure if it is to be based on the grounds of force majeure.

The High Court clarifies that force majeure, as such, does not in and of itself constitute grounds for termination of a contract, however it is an occurrence that may lead to this cause. For this, two specific circumstances must occur: that there is a proven “uncontrollable and unforeseeable force” and that it is likewise “outside of normal and reasonable provisions required by the circumstances of each specific case”. In this sense, the Court clarifies that the most important point is not that the cause was out of the employer’s control, but rather that it could not have been foreseen or avoided by the employer. And it is precisely based on this ratio decidendi that the Supreme Court quashed the appeal as they considered that the termination of the commercial lease was perfectly foreseeable by the lessor as they were subject to the term from the beginning and, therefore, did not allow the cause of force majeure. As a result, the Supreme Court confirms that this is a case of objective dismissal. And, further, the source of the objective dismissal was confirmed as the company had proven that there were significant difficulties (economic, commercial and manufacturing) in providing another ideal location in which to continue offering services.

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