January 2008
LABOUR LAW
1. Employee’s right to enjoy holidays survives while on sick
leave
The decision of the European Court of Justice dated 20 January 2009
establishes that an employee on sick leave who could not take his annual
paid holiday leave has the right to take such leave. The decision also
states that an employee on sick leave remains entitled to paid holidays
even when the calendar year for their enjoyment or the additional period
established in the laws of a Member State has elapsed. The Court based
its decision on the reasoning that sick leave is an involuntary
situation for employees. (More information)
2. Loss of business premises. Force majeure or objective cause
for termination of employment contracts?
In its ruling of 8 July 2008 the Supreme Court held that the loss of
a company’s premises can be an objective cause for terminating
employment contracts according to article 52 of the Statute of Workers
if certain requirements are met. (More information)
3. Losses of a company do not justify dismissals for economic
reasons
The decision of the Supreme Court dated 29 September 2008 establishes
that a company in a negative economic situation incurring losses cannot
justify dismissals based solely on economic reasons. There must also be
an excess in the company’s production capacity. (More
information)
4. Company liability for unfair dismissal by a temporary
employment agency
In its ruling of 3 November 2008 the Supreme Court held a company
jointly and severally liable and thus, just as the temporary employment
agency, under the obligation to reinstate the employee. The Supreme
Court held that the user company had breached the conditions of the
contract by assigning her different tasks to those agreed.
(More information)
5. Consequences of a collective dismissal authorisation
subsequently being declared void
The Supreme Court’s ruling of 4 November 2008 addresses the
consequences of an initially authorised collective dismissal
subsequently being declared void. The Supreme Court ordered the company
to the reinstate the employees until a new express resolution is issued
or until authorisation is inferred from the positive silence of the
relevant authorities. As the company failed to reinstate the employees,
the latter were held to be unfairly dismissed outside the collective
dismissal process on the basis that the subsequent authorisation does
not validate previous dismissals. (More information)
6. Taxation on severance payment for termination of employment
contracts. Collective bargaining agreement for voluntary redundancy
In its ruling of 2 July 2008, the Contentious-administrative Chamber
of the National Court held that severance payments negotiated by the
mediation, arbitration and conciliation services for an alleged
dismissal are not tax exempt, based on the fact that the terminations
were voluntarily accepted by the employees. (More
information)
7. Breastfeeding. Multiple births. Collective bargaining
agreement contrary to the Law on Equality
The National Court’s decision of 30 September 2008 establishes that
in the event of multiple births, leave for breastfeeding must increase
proportionally with each child regardless of what is established in the
applicable collective bargaining agreement. In the Court’s opinion the
provisions of the Law on Equality supersede those of the collective
bargaining agreement. (More information)
8. Employer’s monitoring of computer use. Void dismissal
Following recent Supreme Court doctrine, the High Court of Justice of
Cataluña’s decision of 3 June 2008 held that any monitoring system
employed by a company in controlling employees’ use of computers could
constitute a breach of the right to privacy if a clear set of rules was
not previously established and no warning was provided regarding the
existence of monitoring systems. (More information)
9. Personal data protection. Lawfulness of transferring TC2 forms
and other data of employees from a subcontractor company to the
principal company
The Spanish Data Protection Agency resolved this issue in its
communication of 18 August 2008 on the basis that TC2 forms and other
documents such as medical reports may contain information regarding the
health of employees and that this type of data requires special
protection. As such, the Spanish Data Protection Agency stated that the
transfer of such information by the subcontractor to the principal
company is unlawful. (More information)
1. Employee’s
right to enjoy holidays survives while on sick leave
Ruling of the Grand Chamber of the European Court
of Justice dated 20 January 2009
The Grand Chamber of the European Court of Justice (ECJ)
issued a judgment at the request of the United Kingdom and Germany
answering first ruling procedures regarding the interpretation of
Article 7 of Directive 2003/88 on an employee’s right to at least four
weeks of paid holiday per year.
The ECJ declared that Article 7 is not contrary to
national legislation that does not confer employees the right to enjoy
holidays while on sick leave. Nevertheless, the ECJ stated that if such
legislation does not allow employees to enjoy holidays once the sick
leave has ended, the Member State would be in violation of Article 7
even if the employee has been on sick leave for the whole calendar year
during which the holidays should have been enjoyed. The ECJ also stated
that an employee should be financially compensated if the employee on
sick leave is dismissed without enjoying his/her holidays.
The ECJ considered these situations separate, while
holidays are a right of the employee, sick leave is involuntary and
necessary to ensure the employee’s recovery and return to work.
2. Loss of
business premises. Force majeure or objective cause for termination of
employment contracts?
Decision of the Labour Chamber of the Supreme
Court dated 8 June 2008
The issue to be decided in this case was: “whether
a dismissal based on the termination of a lease agreement should be
considered a case of force majeure, in which case authorisation must be
sought following the administrative procedure set out in article 51 of
the Statute of Workers (SW), or a dismissal for objective reasons
governed by article 52 of the SW.”
The Supreme Court (SC) stated that the cause of force
majeure established in article 51 of the SW cannot be compared to the
economic, production and organisational reasons established in article
52 of SW to individually dismiss employees. The difference being that
force majeure must result in a definitive impossibility to work and be
caused by unforeseeable and unexpected circumstances for the employer.
The SC held that the fact that an event is
independent of the employer’s will does not in itself imply the
existence of force majeure. The key issue is not the wilfulness
associated with the underlying fact, but rather whether it was
foreseeable and avoidable. In this regard, the SC found that the
termination of a lease agreement was foreseeable for the employer and
that, therefore, the termination of an employment contract can only be a
valid cause when, as in the case in question, it is impossible or there
are substantial economic, commercial or production difficulties of
finding other suitable premises for the business. In view of this line
of reasoning, the SC stated that the dismissal should have been based on
article 52 of the SW and not, as was contended, on its article 51.
3. Losses of
a company do not justify dismissals for economic reasons
Decision of the Labour Chamber of the Supreme
Court dated 29 September 2008
The main issue in the dispute was whether a staff
reduction measure based on objective reasons was justified given the
company’s significantly negative financial situation and despite not
evidencing the effectiveness of the measure in overcoming the company’s
compromised financial state.
The SC stated that the analysis of objective
dismissals based on economic reasons must consider three issues: (i) the
negative situation of the company, that is, whether or not it incurs
sustained and significant losses, (ii) the purpose of the intended
termination, and (iii) the causal link between the measure and its
purpose. The SC held that the measure need not guarantee the company’s
effective recovery from its compromised situation, but rather that it
may contribute to its recovery, thus, that it involves measures that
correspond to the financial needs of the company.
While it could be inferred from previous rulings of
the SC that in situations of continuous and significant losses such as
that under dispute, the reduction of jobs was itself a measure that
contributed to overcoming the situation, the decision of 29 September
2008 clarified the SC’s position. The SC stated however that the link
between declining losses and the extinction of jobs cannot be
automatically assumed. But this does not mean that a company is expected
to prove a future event such as the effectiveness of the measure.
The SC stated that the analysis of whether or not the
required link exists in view of the facts of the case and evidence
provided corresponds to the trial judge. The SC also stated that it is
the company’s excess production capacity, and not only a general
reduction of costs which justifies whether or not the dismissals
contribute to overcoming a negative financial situation.
4. Company
liability for unfair dismissal by a temporary employment agency
Decision of the Labour Chamber of the Supreme
Court dated 3 November 2008
The SC ruled on the liability of a company for the
dismissal of an employee while on maternity leave who was employed
through a temporary employment agency (“TEA”) contract and who did not
ultimately carry out the tasks established in such contract.
The SC held that: (i) under Spanish law the
assignment of employees from a TEA to a company is an exception to the
illegality of transferring employees and as such should be interpreted
restrictively, (ii) the breach of obligations agreed with employees can
be caused by the company, the TEA or by both, and (iii) article 43.1 of
the SW states that both companies must observe the applicable
regulations.
On the basis that the company did not assign the
tasks stipulated in the TEA contract, the SC held that the assignment
was unlawful and that the company was therefore jointly and severally
rather than subsidiarily liable for the TEA’s acts which led to the
employee’s dismissal (due to her maternity) being declared void. The
court thus ordered her reinstatement to her job.
5.
Consequences of a collective dismissal authorisation subsequently being
declared void
Decision of the Labour Chamber of the Supreme
Court dated 4 November 2008
The SC established that when the labour authorities
initially approve a collective dismissal (CD) but subsequently overturn
it on appeal, all actions must be changed retroactively to return to the
original situation prior to the formal defect causing the nullity of the
first decision.
The SC stated that the retroactive annulment of all
actions implies that the initial CD was void and that the employees
should therefore be reinstated at least until a new administrative
decision was issued authorising the extinction of employment contracts
or until authorisation is inferred from the positive silence of the
authorities upon the lapsing of the stipulated period of time.
In the matter in question, an employee requested to
be reinstated following an administrative resolution voiding the
approval of the CD. The company rejected the employee’s request and the
employee brought suit before the labour courts for unfair dismissal. The
SC held that the failure to reinstate the employee constituted a
dismissal since the company should have reinstated her when the
authorisation was declared void and waited the 15-day term established
by law to consider the CD approved by positive silence.
The employee was therefore considered dismissed as
the company decided not to reinstate her despite an obligation to do so.
Furthermore, the implied approval after the 15-day term has no
retroactive effect and only authorises subsequent dismissals.
6. Taxation
on severance payment for termination of employment contracts. Collective
bargaining agreement for voluntary redundancy
Decision of the Contentious-administrative Chamber
of the National Court dated 2 July 2008
In its ruling of 2 July 2008, the National Court (NC)
confirmed previous decisions of the Tax Inspectorate and Tax Appeal
Board stating that, exceptionally, severance payments negotiated by the
mediation, arbitration and conciliation services are not tax exempt.
In the case at hand, the tax authorities and the NC
found that there had been no dismissals but rather that an employment
relationship had been terminated by the mutual agreement of a
significant group of employees and the employer. The NC declared that
the severance payment agreed by conciliation should not be tax exempt
according to article 7.c of the Personal Income Tax Law.
The NC highlighted two factors in determining that
there had been no dismissals but rather terminations by mutual consent
in the form of dismissals: (i) all the employees were above the age of
50 and (ii) the severance payments made were not in accordance with the
legally stipulated payment, but rather were calculated based on the
difference between the dismissal date and the date on which the employee
would have reached the legal age of retirement, and this expense was
budgeted under the item “early retirement.”
Consequently, the NC held that the severance payments
were subject to taxation.
7.
Breastfeeding. Multiple births. Collective bargaining agreement contrary
to the Law on Equality
Decision of the National Court dated 30 September
2008
This decision analysed the challenge by trade unions
of a collective bargaining agreement following the coming into force of
the Basic Law on Equality which amended article 37 of the SW on leave
for breastfeeding. The length of leave for breastfeeding in the
collective bargaining agreement which was being challenged was less than
that set out in the amended SW.
After addressing constitutional doctrine, the NC held
that, as a basic law, the Basic Law on Equality is mandatory law which
ranks above the collective bargaining agreement. Thus, the modified
stipulations on leave for breastfeeding supersede the provisions of the
collective bargaining agreement.
Furthermore, the NC interpreted the amended
regulations as establishing that, in cases of multiple births, leave for
breastfeeding must be proportionally increased regardless of the manner
in which the employee decides to enjoy it. In the matter in question, as
the collective bargaining agreement established accumulated leave of 14
days after maternity leave, the NC held that there was no possible
interpretation other than that each child increased the leave for
breastfeeding by 14 days.
8. Employer’s
monitoring of computer use. Void dismissal
Decision of the Labour Chamber of the High Court
of Justice of Cataluña dated 3 June 2008
This decision was relevant as it is the first time a
high court of justice applies the doctrine established by the SC in its
ruling dated 26 September 2007.
The High Court of Justice of Cataluña (HCJ) strictly
followed the arguments of the SC in stating that, when analysing the
monitoring of a production tool such as a computer, article 20.3 of the
SW must be applied and not article 18, which had previously provided
more liberty to employers in their monitoring actions.
The HCJ also stated that since it is standard
practice to tolerate a certain degree of private use of the computer by
an employee, a general expectation of confidentiality is created. In
this way, the constitutional right to personal privacy or even to the
secret of communications is violated if a company starts carrying out
different types of monitoring procedures without previously notifying
its employees or fails to establish a clear and express set of rules on
the use of the computer and the Internet.
The HCJ therefore upheld the void dismissal under
appeal, on the basis that the dismissal was caused by a breach of the
dismissed employee’s right to personal privacy.
9. Personal
data protection. Lawfulness of transferring TC2 forms and other data of
employees from a subcontractor company to the principal company
Communication of the Spanish Data Protection
Agency 0337/2008 dated 18 August 2008
It is standard practice for subcontracting companies
and principal companies to exchange certain information regarding
employees to ensure that salary and social security obligations have
been complied with. This is because the principal company is jointly and
severally liable according to article 42.1 of the SW if the
subcontracting company does not comply with such obligations.
In this regard, on the basis that documents such as
the TC2 forms, payslips and medical reports contain information
regarding employees’ health, the Spanish Data Protection Agency (SDPA)
stated that, according to the Basic Law on Data Protection, such
information may only be transferred with the previous and express
consent of the employee or for reasons of public interest.
The SDPA held that the subcontracting company should
not have provided the principal company with these documents, since a
negative excerpt issued by the Social Security could have been requested
to verify compliance with the obligations set out in article 42 of the
SW. The SDPA therefore considered the exchange of information unlawful
and disproportionate for the purpose of fulfilling such obligations.
