In recent days, the Supreme Court of Puerto Rico issued a decision in which, among other matters, reaffirmed the discretion that employers have to manage their businesses in the way that best suits their operations, either by reorganizing them or adapting to a new technology, or to changes in the nature of the product, or in the services offered to the public. If, as a consequence of these bona fide reorganizational processes, employee dismissals are warranted, the Supreme Court reaffirmed that the employer has the authority to make such determination in accordance with Act 80 of Unjustified Dismissal, which establishes in subsection (e) of its article 2 as a justified cause for the dismissal of employees: technological changes or reorganization, as well as those of style, design or nature of the product that is produced or handled by the establishment, and changes in the services rendered to the public. It is important to highlight that the Supreme Court clarified through this recent decision that if the employer justifies the workforce reduction under this subsection, it is not necessary to prove the existence of a restructuring plan in a specific way, but it is enough to prove the dismissal responded to a valid managerial decision. This clarification was crucial for the legal community because lower courts sometimes require this type of evidence to justify the dismissal of employees under subsection (e).

Act 80 also establishes in subsection (f) of its article 2 that workforce reductions necessary due to a reduction in the volume of production, sales or profits -anticipated or that prevail at the time of dismissal- or with the purpose of increasing the competitiveness or productivity of the establishment, also constitute justified cause for the dismissal of employees. The Supreme Court also clarified and strongly criticized the decision of the Court of Appeals by confusing the cause included in subsection (e), with the one included in subsection (f), as if the former was dependent on the latter. In other words, a business reorganization (subsection (e)) is not necessarily the result of financial struggles (subsection (f)) and both causes are legitimate and independent from one another. Consequently, the Supreme Court clarified that a business reorganization can occur even if the employer is not experiencing financial difficulties, and that will be sufficient cause for the dismissal of employees according to Act 80, as long as the reorganization is legitimate, and that it responds to reasons related to the normal course of business operations. Therefore, the Supreme Court has been consistent in recent years in clarifying that it is the employer, and not the Court, who best knows the affairs of its company and must be granted deference and independence to manage it, provided that it does not incur in discriminatory or arbitrary acts, which are indeed prohibited and punished by our legal system.

Segarra Rivera v. International Shipping Agency, Inc., et al, 208 DPR ____, 2022 TSPR 31.

2022tspr31.pdf (

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