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Is a redundancy plan (ERE) replacing employees with AI lawful? A Madrid High Court ruling says it depends

Original title, in Spanish: “Si la pregunta es si es legal un ERE que sustituya a trabajadores por IA, una sentencia del TSJ de Madrid la responde: depende”

Publication
Xataka (Spain)
Author
Rubén Andrés
Published on
29 October 2026 · read in the page structured data

Summary

A decision of the Madrid High Court of Justice (TSJM), handed down on 8 October 2026, examines whether the adoption of AI can justify collective dismissals. The case concerns a Spanish video game development studio which, faced with heavy losses (moving from a profit of €646,297 in 2023 to a loss of €3.5 million in 2024, and a fall in revenue from €7.99 million to €4.60 million), dismissed 13 of its 83 employees through an ERE (collective redundancy procedure). The court finds that AI, in itself, does not justify a dismissal: in this case, the use of AI was merely a consequence of a change in production model imposed by the economic situation and by clients, and not the direct cause. The article also recalls a decision of the Bilbao court that found unfair a dismissal based solely on the direct replacement of an employee by AI, with no other economic or organisational grounds.

Summary based on the full text of the article.

Read the article on Xataka →

Figures cited

  • 646,297 EUR

    Company net income in 2023 (profit)

    Video game development studio, Spain, financial year 2023

    « pasó de ganar 646.297 euros en 2023 a perder 3.546.027 euros en 2024 »

    Source: Sentencia 864/2026 du TSJ de Madrid

  • -3,546,027 EUR

    Company net income in 2024 (loss)

    Video game development studio, Spain, financial year 2024

    « pasó de ganar 646.297 euros en 2023 a perder 3.546.027 euros en 2024 »

    Source: Sentencia 864/2026 du TSJ de Madrid

  • 7.99 EUR million

    Company revenue in 2023

    Video game development studio, Spain, financial year 2023

    « Su cifra de negocio cayó de 7,99 a 4,60 millones »

    Source: Sentencia 864/2026 du TSJ de Madrid

  • 4.6 EUR million

    Company revenue in 2024

    Video game development studio, Spain, financial year 2024

    « Su cifra de negocio cayó de 7,99 a 4,60 millones »

    Source: Sentencia 864/2026 du TSJ de Madrid

  • 13 employees

    Number of employees affected by the redundancy plan (ERE)

    Video game development studio, Spain, out of a total workforce of 83 employees

    « presentó un ERE que afectó a 13 de sus 83 trabajadores »

    Source: Sentencia 864/2026 du TSJ de Madrid

  • 83 employees

    Company total workforce

    Video game development studio, Spain

    « presentó un ERE que afectó a 13 de sus 83 trabajadores »

    Source: Sentencia 864/2026 du TSJ de Madrid

Classification

Country
Spain
Company size
SMEs
Industries
Software vendors, IT services companies, telecoms
Keywords
dismissal, ERE, case law, video games, employment, economic grounds

Entry written by Marsanne Studio from the cited article, with the help of an AI model (claude-sonnet-5). The rights to the article and its illustrations belong to Xataka and its author. Entry translated from French by Claude Sonnet 5.5.