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The information contained in this Newsletter is of a general nature and does not constitute legal advice |
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Social Security. New regulation on temporary and permanent disability, retirement, and death and survival issues
Law 40/2007 of 4 December concerning Social Security measures, enacted in the framework of the undertakings given in the Agreement on Social Security Measures of 13 July 2006, introduces modifications to several articles of the General Social Security Law concerning temporary and permanent disability, retirement, and death and survival issues. (More information)
Pension plans and funds. Reform
Royal Decree 1684/2007 of 14 February amends articles of the Regulation on Pension Plans and Funds approved by Royal Decree 304/2004 of 20 February and of the Regulation on the Implementation of Pension Commitments between companies, employees and beneficiaries approved by Royal Decree 1588/1999 of 15 October. (More information)
Collective bargaining. Extension to 2008 of the 2007 National Multi-industry Agreement
The 2007 National Multi-industry Agreement on Collective Bargaining has been extended to 2008, with amendments to chapters III, VI, VII and the adoption by the signatory organisations of the European Framework Agreement on violence in the workplace of 26 April 2007. (More information)
National minimum wage for 2008
Royal Decree 1763/2007 of 28 December establishes the new national minimum wage that will apply from 1 January 2008 and that will affect fixed, temporary and home-based employees. (More information)
Social Security. Pensions. Adjustments for 2008
Royal Decree 1764/2007 of 28 December increases the Social Security pensions and other Social Security benefits for 2008. (More information)
Collective disputes. Freedom to provide services in the European Union
The European Court of Justice issued two rulings on 11 December 2007 and 18 December 2007 analysing the limits on collective actions that (i) prevent a company from moving to another Member State, and (ii) compel a Company established in one Member State to participate in wage negotiations in another. (More information)
Gender discrimination. Leave of absence for child care. Return to different post. Not discrimination
The judgment of the Constitutional Court of 5 November 2007 states that returning to a post that has been modified, or to a different post, after a leave of absence of less than a year for child care does not necessarily imply gender-based discrimination, which requires a threat to employment conditions or a limitation or violation of the employee’s economic or professional rights or expectations. (More information)
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Social Security. New regulation on temporary and permanent disability, retirement, death and survival issues
Law 40/2007 of 4 December on Social Security measures. Spanish Official Gazette of 5 December 2007
On 1 January 2008, the above law entered into force, modifying several articles of the General Law on Social Security.
As regards temporary disabilities (“TDs”), persons who have been declared fit to return to work by public mutual insurance entities will now be entitled to challenge the medical checks carried out by such entities before the public health service within a term of 4 days following the declaration.
In the case of permanent disabilities (“PDs”), the method of calculating the benefits that a person is entitled to receive when suffering a common illness has been amended to bring it into line with the method established for retirement pensions. Moreover, a new provision (temporary provision no. 16) has been introduced concerning the contribution base for benefits paid for PD resulting from a TD.
As far as retirement is concerned, paragraphs 2 and 3 of article 161 have been removed and a new article introduced, namely article 161 bis, on early retirement. In addition, pension benefits will now be reduced by 7.5% when early retirement is taken and the worker has made social security contributions for a minimum of thirty years. Regarding partial retirement, as a general rule, the applicant must be at least 61 years of age, have six years of seniority at the company and 30 years of contributions to the Social Security .
Finally, surviving partners of unmarried couples will be entitled to receive a widow’s pension if it can be proven that the couple had lived together for at least five years and that the surviving partner was financially dependent on the deceased partner.
Pension plans and funds. Reform
Royal Decree 1684/2007 of 14 February has modified the Regulation on Pension Plans and Funds and the Regulation on the Implementation of Pension Commitments between companies and employees and beneficiaries. Spanish Official Gazette of 15 December 2007
Royal Decree 1684/2007 amends the regulation of company pension plans and employee benefits.
The amendments confirm the requirement that companies must appoint an independent actuary, and bring up to date the activities and audits that these actuaries must carry out in relation to company pension schemes. Moreover, the financial reserves needed to create a company pension plan have been reduced.
Basic Law 3/2007 on equality between men and women has also modified some aspects of pension plans, such that a person’s gender can no longer be taken into consideration when calculating the contributions to be made or the benefits to be received.
The list of goods and rights that it is considered are suitable for pension plans to invest in has been updated to allow for credit derivatives, non-financial derivatives, and non-harmonised collective investment entities among others.
Additional rules on administrative control as well as obligations regarding the accounting, advertisement, separation of managers from depository entities, informing of beneficiaries, and the internal control of pension plans and their registration (first introduced by Law 11/2006), have been included in this regulation.
Changes are also made to the rules on employee benefits, which are focused on two main aspects: the mobilisation between social prevision plans with a similar tax system, and avoiding the coexistence in a company of two employee benefits plans that create two difference systems.
Finally, changes are made to the rules on the pension-related information that must be provided to employees and their representatives.
Collective bargaining. Extension to 2008 of the 2007 National Multi-industry Agreement
Extension Accord for 2008 of the 2007 National Multi-industry Agreement on Collective Bargaining
Save for some amendments and new inclusions, the 2007 National Multi-industry Agreement on Collective Bargaining (“ACB 2007”) will remain in force in 2008, with the possibility of being extended to 2009.
Chapter III of the ACB 2007, entitled “Considerations on competition and employment”, has been substituted in the Extension Accord for 2008 of the 2007 National Multi-industry Agreement on Collective Bargaining (“Accord”) with text attached as Annex I concerning the change in cycle that the Spanish economy will face in 2007 and 2008.
Chapter VI on “Equality of treatment and opportunities” has also been modified to make provision for Law 3/2007 of 22 May on equality between women and men , and in particular its implications within the context of collective bargaining.
As regards Chapter VII, entitled “Health and safety at work”, the agreements relating to Objective 3 of the Spanish Strategy for Health and Safety at Work (paragraph 3.3), agreed by the signatories of the Accord, have been added as Annex III.
Finally, the European Framework Agreement on violence in the workplace of 26 April 2007, to which the signatory organisations are party, is attached as Annex IV to the Accord.
National minimum wage for 2008
Royal Decree 1763/2007 of 28 December establishing the national minimum wage for 2008. Spanish Official Gazette of 29 December 2007
Royal Decree 1763/2007, which entered into force on 1 January 2008, increases the national minimum wage established for 2007 by 5.15%. For 2008, the national minimum wage for all activities in the agriculture, industry and service sectors has been fixed at €20 per day or €600 per month; no distinction can be made on the basis of employees’ gender or age.
The revision of the national minimum wage will not affect the salary of employees who are already receiving more than the annual minimum. The annual minimum wage that will be used for comparison purposes will be the sum of the national minimum wage for 2008 plus salary supplements, and in any case cannot be less than €8,400.
Casual and seasonal workers who do not work for the same company for more than 120 days will receive, together with the minimum wage, a proportional part of payments for Sundays, holidays and the two annual extraordinary payments. Under no circumstances can their daily wages be less than €28.42. The minimum wage of employees working from home has been set at €4.70 per hour.
Finally, in the case of collective bargaining agreements in force on 1 July 2004 that will remain in force during 2008, the minimum wage used to calculate the basic salary and supplements will be the minimum wage for 2007 plus 2%.
Social Security. Pensions. Adjustments for 2008
Royal Decree 1764/2007 of 28 December on the revaluation of Social Security pensions and other Social Security benefits for 2008. Spanish Official Gazette of 29 December 2007
Royal Decree 1764/2007 introduces a general 2% increase in Social Security benefits, including the applicable upper limits. However, this increase includes the increase in the consumer price index between November 2006 and November 2007.
Furthermore, in accordance with the 14th Additional Provision of the National Budget for 2008 (Law 51/2007 of 26 December), pensioners will be granted a one-off payment before April 2008 of an amount equivalent to the difference between the pension they actually received in 2007, and that which they would have received had it been increased by 4.1%.
Other increases are provided for in the General Social Security Law which, in the case of contributory benefits, vary between 5% and 6.5%, depending on the benefit. For non-contributory benefits, increases range up to 3%.
Special attention is paid to the recipients of widowhood pensions with family responsibilities, who will now receive an amount equivalent to the retirement pension paid to individuals under the age of 65 who provide for a spouse. The Royal Decree also updates the income that an individual is entitled to earn in addition to receiving benefits for caring for children or minors, or disabled children aged 18 or over.
Collective disputes. Freedom to provide services in the European Union
Judgments of the European Court of Justice, 11 December 2007 (C‑438/05) and 18 December 2007 (C‑341/05)
In its judgment of 11 December 2007, the European Court of Justice concluded that Article 43 of the EC Treaty could be applied to a collective dispute action taken by a trade union against a private undertaking (a Finnish company). In this case, the trade union sought to execute a new collective agreement that would deter the Finnish company from registering its vessels under the flag of another Member State (Estonia), which would allow it to pay its employees a lower salary.
According to the Court, Article 43 of the EC may grant rights to a private undertaking that can be directly relied upon against a trade union. If not, the freedom to provide services would be compromised by the ability to neutralise the abolition of state barriers by means of obstacles resulting from the exercise, by associations or organisations not governed by public law, of their legal autonomy.
The Court affirmed that the rights guaranteed by Articles 43 to 48 of the EC Treaty would be rendered meaningless if the Member State of origin (in this case Finland) could prohibit undertakings from leaving in order to establish themselves in other Member States (here, Estonia). In this case, collective action such as that envisaged by the Finnish trade union had the effect of lessening the attractiveness, or even rendering futile, the exercise by the Finnish private undertaking of its right to freedom of establishment.
In conclusion, the Court held that Article 43 of the EC Treaty is to be interpreted to the effect that collective dispute actions, such as that at in issue in the main proceedings, which seek to induce an undertaking with its registered address in a Member State to enter into a collective bargaining agreement with a trade union established in that State, and to apply the terms set out in that agreement to the employees of a subsidiary of that undertaking established in another Member State, constitutes a restriction falling within the meaning of that Article. The restriction may, in principle, be justified by an overriding reason of public interest, such as the protection of workers, provided that it is established that the restriction is suitable for ensuring the attainment of the legitimate objective and does not go beyond what is necessary to achieve that objective.
In its judgment of 18 December 2007, the Court concluded that a Member State (in this case, Sweden) in which the minimum wage rates are not determined according to Articles 3.1 and 3.8 of Directive 96/71, is not entitled to require undertakings established in other Member States that render services on a transnational basis to enter into negotiations, on a case-by-case basis, to determine the wages that must be paid to their workers posted abroad (here, workers from a Latvian company were relocated to Sweden to build a school).
Furthermore, pursuant to the case law of the Court, since the freedom to provide services is one of the fundamental principles of the European Union, its restriction is only warranted if the restriction pursues a legitimate objective that is compatible with the Treaty and is justified by overriding reasons of public interest. If this is the case, the restriction must be suitable to attain the objective pursued and not go beyond what is necessary to do so.
Moreover, the Court considered that collective action, such as that at issue in the main proceedings (the Swedish trade union wanted the Latvian company to guarantee that it would pay its relocated workers a specific hourly salary), could not be justified for public interest reasons when the imposed wage negotiations were the result of a lack of sufficiently precise and accessible provisions in Sweden that allowed the Latvian undertaking to determine the minimum wage obligations with which it was required to comply without excessive difficulty.
Gender discrimination. Leave of absence for child care. Return to different post. Not discrimination
Judgment 233/2007 of the Constitutional Court of 5 November
In this case, a company hired a man to cover for a woman who was on leave of absence for less than a year to take care of a child. When the plaintiff returned to work, she did not have the same job, and was instead ordered to work exclusively in one of the two departments where she worked prior to childbirth, while the man hired as her substitute continued to work in the other department. The woman claimed that the changes were a consequence of her maternity and her subsequent leave of absence for child care. The Constitutional Court did not agree and found there was no discrimination in the reasons for the changes.
The Court reached this conclusion because, from its point of view, none of the three requirements for sex discrimination to exist were met, namely: (i) the denial of a female employee’s enjoyment of a right as a result of her maternity (e.g. the negative consequences arising from exercising the right of leave of absence for child care), (ii) other business practices restricting rights that, whether connected with the right exercised relating to maternity or not, cause real and clear damage consisting of a threat to employment conditions or a restriction of an employee’s rights or legitimate economic or professional prospects (e.g. refusal to reserve a post), and (iii) such infringement is due to discriminatory reasons (e.g. the restriction of the rights of a female employee represents a reaction to or reprisal for the previous enjoyment of a right connected to her maternity).
With reference to requirements (ii) and (iii) above, the Constitutional Court concluded that no real damage had been caused to the employee as she continued to perform the same functions, which were not inappropriate for her professional standing. Moreover, no discriminatory reasons were found to underpin the company’s decision, because it was proved that the hired male substitute continued working after the plaintiff’s return due to increasing work demands.
Finally, the Court warned that a right linked to maternity can be violated without there being discrimination or damage caused and, therefore, without the conduct in question implying an infringement of the prohibition against gender discrimination.
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The information contained in this Newsletter is of a general nature and does not constitute legal advice