Puerto Rico Supreme Court Recently Revisited the Rules of Seniority in Reductions of Workforce
Article 3 of Puerto Rico’s Wrongful Discharge Act, Law No. 80 of May 30, 1976, as amended, 29 L.P.R.A. § 185c, requires employers follow seniority guidelines in reductions of workforce.
Recently, the Puerto Rico Supreme Court revisited these guidelines, and in Reyes Sánchez v. Eaton Electrical, 2013 TSPR 108, held that employers must retain employees based on company-wide seniority (years of service in all job classifications) rather than seniority within any particular job classification. This means that employees with more seniority in a job classification, but with less company-wide seniority than other employees in the same job classification, must be let go first.
The Court also concluded that, in cases in which companies have several offices, factories or branches, where the seniority of the employees is computed only among those employed in the establishment in which layoff will occur, the Company must establish that is not an usual and regular business practice to transfer employees from one establishment to another, and that it operates in a relatively independent manner with regards to personnel aspects, including the selection, retention, recruitment, and discharge of employees. If the Company fails to do so, layoff of employees must be based on company-wide seniority.
Finally, the Court held that such transfer only applies to establishments within the jurisdiction of Puerto Rico.