Major Changes at Spanish Telco Telefonica: 12% Workforce Cut, 2,500 Jobs Affected

Telefónica plans to lay off around 2,500 employees in Spain through a collective dismissal, shifting from voluntary exit plans

telefonica layoffs
telefonica layoffs

Telefónica, the gian Spanish Telco, plans layoffs affecting 2,500 employees in its major subsidiaries in Spain.

The company communicated this decision to the major labor unions (UGT, CCOO, and Sumados-Fetico).

While the exact number was not specified in the recent meeting regarding the new collective agreement, union sources estimate the impact on approximately 2,500 employees out of the total 20,947 employed by Telefónica in Spain.

This accounts for roughly 12% of the workforce, considering that only 16,000 workers fall under the current agreement.

In a shift from their voluntary exit plan (internally known as PSI) since 2016, Telefónica is returning to layoffs, a method not employed since 2011 when they affected 6,830 employees until 2013.

This previous round of dismissals sparked controversy due to its potential cost to the state despite the company’s substantial profits. It led to a legal amendment, known as the Telefónica clause, obligating profitable companies with over 500 employees to cover unemployment benefits and social security contributions in case of collective dismissals. Telefónica adhered to this change, paying around 350 million euros to the state.

To avoid criticism, Telefónica shifted to voluntary exit plans in 2015, executing the departure of 11,300 employees through three voluntary plans under José María Álvarez Pallete’s presidency.

The company has not clarified the reasons behind reverting to collective dismissals or whether there will be a cost to the state. The negotiations for the new collective agreement (III Convenio de Empresas Vinculadas) include discussions on reducing working hours to 35 hours, implementing telecommuting, and ensuring a minimum duration of three years for the new agreement.

The specifics will be determined in subsequent meetings between the company and union representatives.

Telefónica plans to allocate over 1,000 million euros for severance, with an additional 200 million euros for a voluntary exit plan targeting approximately 300 corporate executives.

The change in approach may be influenced by the flexibility of collective dismissals compared to voluntary plans, which are more tied to the age distribution of the workforce than professional reasons.

This adjustment is linked to the complete outsourcing of customer service for residential subscribers and the closure of 100 buildings due to the replacement of copper networks with fiber optics.

There are notable differences between a collective dismissal (ERE) and a voluntary exit plan (PSI). The ERE requires a report from the Labor Inspection, evaluating if the collective dismissal aligns with the reasons stated by the company. In contrast, the PSI only necessitates agreement between the company and unions.

This change, introduced through a recent amendment, grants the Labor Inspection the authority to assess the justifications provided by the company for the collective dismissal. While administrative authorization is not required, a contrary report from the Inspection could make it easier for a court to annul the collective dismissal if challenged.

Additionally, the ERE allows Telefónica to impose forced layoffs if the desired number of exits is not achieved, unlike PSI where all departures are voluntary.

However, affected workers under ERE receive lump-sum payments for severance or have better guarantees for early retirements, as PSI payments are periodic due to temporary employment suspension.

This workforce adjustment aligns with uncertainties surrounding Telefónica’s ownership, triggered by Saudi Telecom Company’s unexpected acquisition of 4.9% of the shares.

The government is considering returning to Telefónica’s shareholder base through the Sociedad Estatal de Participaciones Industriales (SEPI), acquiring a 5% stake in response to this development.

Gerard Thompson
Gerard Thompson

Gerard Thompson, a seasoned tech industry worker understands the struggles of facing layoffs firsthand. Having navigated the uncertain and daunting world of job loss himself. Gerard is the founder of JustLayoffs.com

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