1. European companies. Employee involvement
Law 3/2009 of 3 April on corporate structure
changes (Official Spanish Gazette of 4 April 2009)
Law 3/2009 of 3 April on corporate structural
changes (“LSC”) unifies and widens the scope of the legal regulation of
structural modifications to companies; in other words, changes that go
beyond simple amendments to articles of association and that affect the
company’s structure, including its assets and legal status.
Transformations, mergers, split-offs and global transfers of assets and
liabilities are included in this definition.
The LSC covers three main areas of labour
regulations:
(i) The first additional provision refers to
employee information and consultation rights, within the context of
structural company changes, that are not regulated in the LSC. It
establishes a general reference to labour law regulations.
The provision also regulates situations in which
structural changes imply a change in ownership of the company, a
workplace or an autonomous production unit. In these circumstances,
article 44 of the Statute of Workers (“SW”) will apply.
(ii) Article 67 LSC regulates the involvement of
employees in a company in merger transactions. Employee involvement
means any mechanism, including information, consultation and
participation, through which employees’ representatives may exercise an
influence on decisions to be taken within the company.
When the company resulting from a merger has its
registered office in Spain, the employee involvement rights in the
company shall be defined in accordance with Spanish labour law. This
regulation also protects the information and consultation rights of
employees who work in a Spanish workplace of a company that is the
product of a merger, irrespective of where it has its registered office.
If at least one of the companies involved in the
merger applies employee participation rules and the company resulting
from the cross-border merger is governed by the same rules, the latter
must be a type of company that allows the employees to exercise their
participation rights.
(iii) Final provision three adds a new title to
Law 31/2006 of 18 October 2006 on the involvement of employees in
European companies and cooperatives (“Law 31/2006”), and is regarded as
the most important change introduced by the LSC.
This new title regulates the provisions
applicable to cross-border intra-Community mergers of limited liability
companies and differentiates between the provisions applicable to
companies resulting from cross-border intra-Community mergers that have
registered offices in Spain, and those applicable to the Spanish
workplaces of companies resulting from cross-border intra-Community
mergers.
In the case of companies resulting from
cross-border intra-Community mergers with registered offices in Spain,
article 39 of Law 31/2006 states that the LSC is applicable when any of
the following requirements is met: (a) during the first six months after
the publication of the draft merger plan, at least one of the companies
involved in the merger has, on average, more than 500 employees and is
managed according to employee participation rules; (b) if the employees
participate in the company resulting from the cross-border merger, the
level of participation is not (at least) the same as that in the
companies involved in the merger; or (c) the workers in the company
workplaces located in other Member States have fewer participation
rights than the workers employed in Spain.
Chapter I of Title I of Law 31/2006 is
applicable to the negotiation of employee participation rights, with the
following specialties:
- The competent bodies of the companies involved
in the merger can opt to apply article 20 of Law 31/2006 immediately, or
to only do so as from the registration date of the company resulting
from the merger.
- The negotiating body will not have the
functions granted in article 8(2) and (3) of Law 31/2006.
- Article 9(2) of Law 31/2006 will not apply.
Nonetheless, in the event that any of the companies involved in the
merger allows its employees to participate in its management bodies and
its employees represent at least 25% of the total number of employees
involved in the merger, if the result of the negotiations leads to a
reduction of participation rights in the companies, the majority
required to take such a decision shall be, as a general rule, two-thirds
of the members of the negotiating body.
- The subsidiary provisions set out in article
20 of Law 31/2006 in relation to employee participation apply to the
company resulting from the cross-border intra-Community merger, as from
the date of its creation, in the following cases: a) when the parties
decide so, b) when no agreement is reached within six months, or any
extension of that term, pursuant to the terms provided in article 10 of
Law 31/2006, provided that the three conditions of Law 31/2006 for such
events are met.
Chapter III of Title II of the LSC will also
apply to companies resulting from cross-border intra-Community mergers
with registered offices in Spain, except in relation to management
bodies and employee representatives who exercise their functions within
the framework of an information and consultation procedure.
In the event that a company resulting from a
cross-border intra-Community merger is managed with the participation of
employees, the company must ensure that the employees’ rights are
protected in the event of subsequent national mergers during the three
years after the cross-border intra-Community merger has taken effect.
Various titles of Law 31/2006 apply to
Spanish workplaces of companies resulting from cross-border intra-Community
mergers. Specifically: (a) Title II, except in relation to
representative bodies; (b) Title III provisions concerning judicial
proceedings; and (c) the new Title IV regulations, but only when there
must be employee participation in the company resulting from the merger.
The LSC will enter into force three months after
its publication in the Official Spanish Gazette, that is to say, on 4
July 2009, except for those provisions relating to cross-border intra-Community
mergers, which entered into force on 5 April 2009.
2. Economically dependent self-employed workers.
Contract registration process
Resolution of 18 March of the National
Employment Office, which establishes the procedure to register the
employment contracts of economically dependent self-employed workers (Official
Spanish Gazette of 4 April 2009)
The National Employment Office Resolution of 18
March 2009 (the “Resolution”), which entered into force on 5 April 2009,
establishes the procedure to register the employment contracts of
economically dependent self-employed workers (“EDSW”) in line with Royal
Decree 197/2009 of 23 February (“Royal Decree 197/2009”).
The Resolution states that EDSW or their client
must register their contracts, their amendments, and their terminations
with the National Employment Office (“NEO”). The following information
must be included in the registration: the identity of the parties to the
contract, its start and end date, statement to the effect that the self-employed
worker is economically dependent on the client; purpose of the contract,
distribution of working hours, weekly rest days and annual rest period;
the professional interest agreement, if one exists; professional
activity; the type of services rendered by the EDSW and the
consideration paid by the client.
The EDSW, their clients or their representatives
can carry out the registration process in person at the NEO or by
internet.
The Resolution repeals the previous one dated 21
February 2008. EDSW or their clients must therefore adapt the contracts
that were registered pursuant to the previous resolution and were still
in force on 5 March 2009, to the new Resolution. Such amendments must be
made within 3 months following 5 March 2009.
3. Extra payment for working unsociable hours
during paid days off. Non-accruable
Decision of the Labour Chamber of the Supreme
Court dated 18 March 2009
The Supreme Court (“SC”) upheld a National Court
(“NC”) decision on whether or not an extra payment for working
unsociable hours should be paid for two paid days off. The SC compared
paid days off to other similar situations such as rest days, bank
holidays and time off.
The SC held the extra payment for working
unsociable hours to be a supplement payable depending on the position
carried by the employee. Doctrine states that the extra payment for
working unsociable hours does not accrue during rest days, bank holidays,
time off or paid leave. Nevertheless, the SC pointed out that during
holiday periods, “the average value of the extra payments for working
unsociable hours must be paid”, by virtue of convention 132 of the
International Labour Organization (“ILO”).
Neither the SW nor the applicable collective
bargaining agreement allow for paid days off to be added to holiday
periods, and as such the ILO’s convention 132 does not apply to them.
As a consequence, days off cannot accrue extra
payments for working unsociable hours.
4. Consecutive temporary employment contracts.
Need to prove the “essential employment link”
Decision of the Labour Chamber of the Supreme
Court dated 18 February 2009
In this decision the SC upheld its own doctrine
on the need to prove an “essential employment link”, and determines
whether an interruption of more than twenty working days between two
different employment contracts breaks the initial contractual link and
means that a new length of service period starts for severance payment
purposes or, alternatively, that such interruption is irrelevant when
the essential employment link is not broken.
In the case at hand, the parties entered into
several temporary employment contracts, and left thirty days between the
penultimate and ultimate contract signed when the legal limit for a
contract not to be fraudulent is twenty working days (term within which
an action against the termination decision must be brought).
The SC looked at all the contracts as a whole
without taking into consideration the duration of the breaks between
them. As a result, it held that the length of service dated from the
beginning of the first contract, and that the severance payment should
be increased accordingly.
5. Work experience contract. Duties different
from those agreed
Decision of the Labour Chamber of the Supreme
Court dated 16 February 2009
In this decision the SC overruled the decision
of the High Court of Justice of the Basque Country by holding that a
work experience contract under which the worker performed functions
according to his academic training for the majority, but not all, of the
contract period could not be deemed fraudulent.
The case involved a person on work experience
who undertook duties for which he was trained for a twenty-two month
period. However, during the last two months, the employee carried out
duties that did not relate to the purpose of his contract.
The SC held that an extremely formalistic
interpretation of the main elements of the contract could be contrary to
employees’ interests. According to the SC, “(...) the employee’s
theoretical training was complemented during the majority of the
contract, therefore a slight deviation in his duties is insufficient to
deem the contract fraudulent”.
The SC therefore held that the termination of
the contract by the employer was valid under Spanish law.
6. Dismissal. Severance payment calculation:
periods of less than one year must be calculated on a monthly basis as
opposed to a daily basis
Decision of the Labour Chamber of the Supreme
Court dated 11 February 2009
In this decision the SC deliberated on the
interpretation of article 56.1 of the SW. It upheld the First Chamber of
the SC’s approach (decisions dated 23 May 2006 and 13 July 2006), which
gives priority to the literal interpretation.
The SC held that “article 56.1 applies
to services rendered for less than one year, however these periods must
be pro-rated by months [as opposed to days]”. Moreover, the SC
stipulated that this pro-rata division must be carried out “as if the
employee had worked the complete month”.
7. Post-contractual non-compete agreement
applicable even if contract has been terminated during trial period
Decision of the Labour Chamber of the Supreme
Court dated 6 February 2009
The SC rejected an appeal by holding that a
post-contractual non-compete agreement remains in force even if the
employee has been dismissed during his trial period.
The SC held that, even though the employer
showed no interest in enforcing the post-contractual non-compete
agreement due to the fact that the employee had been at the company for
only a short period of time, as post-contractual non-compete agreements
are bilateral contracts, they entail rights and obligations for the
parties who have agreed them. Furthermore, the SC upheld its decisions
of 24 September 1990 and 5 April 2004 to the effect that there are two
interests at stake: the employer does not want the employee to use his
acquired knowledge in competing companies, whilst the employee is
guaranteed financial stability for a period of time.
As a consequence, the termination of the
employment contract due to the employer because the employee did not
pass the trial period does not affect agreements which enter in force
once the contract is terminated, such as the post-contractual
non-compete agreement.
8. Trial period established in a subsequent
contract
Decision of the Labour Chamber of the Supreme
Court dated 23 October 2008
In this decision the SC held that the employer
had the right to establish a trial period in a second contract with the
same employee if the first employment contract was terminated during the
trial period by the employee. The SC deemed that, in these cases, facts
such as the type of contract signed or the proportion of the trial
period worked are irrelevant.
The SC examined the purpose of the trial period,
i.e., a period of time that allows the employer to confirm that the
employee is capable of undertaking the assigned duties. In the case at
hand, the employee terminated the previous employment contract during
his trial period. As such, the SC held that upon entering into another
employment contract, the employer would be entitled to set a new trial
period to determine the employee’s aptitude, which the employer was
unable to determine during the first contract.
9. Working time: bringing forward the start and
end of the daily working time by thirty minutes does not imply a
substantial modification of working conditions.
Decision of the Labour Chamber of the Supreme
Court dated 6 October 2008
This decision draws up the boundaries of working
time. In this case the employees rejected a measure proposed by the
employer during the consultation period, which consisted of bringing
forward both the start and end of the working day by thirty minutes.
They brought an action against the employer claiming the infringement of
articles 34 and 41 of the SW. The employees claimed that the employer’s
measure amounted to a substantial modification of their working
conditions, and that changing their daily working time prevented them
from working on a series of “scheduled projects”, and therefore,
resulted in a decrease in their remuneration.
The employees’ post involved collecting a
company vehicle from the workplace, visiting clients, and returning the
vehicle to the workplace at the end of the working day. The new company
measure meant that the employer assigned a vehicle to each employee, so
that it would no longer be necessary for each employee to collect their
vehicle from the workplace at the start of each day. This would mean
that at the end of the working day, the employees would be able to
return straight to their homes after completing their last client visit.
The SC based its decision on the definition of
working time as set out in Directive 93/104/EC of 23 November: “any
period during which the worker is working, at the employer’s disposal
and carrying out his activities and duties”. The SC held that the
decrease in travel and unproductive activities was an alternative
distribution of working time but not a substantial modification of
working conditions.
As regards the salary decrease due to the new
working timetable, the SC stated that the “scheduled projects” were
carried out by the employees outside their working time, and therefore
should be considered overtime. According to the SC, the performance of
overtime is not an acquired right, as it depends on supply and demand.
10. Contract can be terminated during trial
period even if employee is on temporary sick leave
Decision of the Labour Chamber of the Supreme
Court dated 3 October 2008
This case relates to whether an employer’s
decision to terminate an employment contract, which included a 15-day
trial period, was valid given the fact that the employee suffered a
retina detachment and consequently went on sick leave only two hours
after being hired.
In the case at hand, the employment contract
resembled a clause which established a 15-day trial period, which would
not be interrupted due to sick leave. The SC therefore held that “denying
the employer the possibility of terminating the employment contract
(...) during the trial period, whilst the employee is on temporary sick
leave, would give rise to the contract becoming permanent, as the
employer would not be able to exercise its right to terminate the
contract outside of the trial period, which is in breach of the law”.
Thus, the SC upheld the first instance decision,
and declared the termination of the contract by the employer to be valid.
11. Right to use the employer’s premises for
union purposes. Employer not obliged to equip premises with IT systems
Decision of the Labour Chamber of the
National Court dated 25 March 2009
In this decision, the NC held that workplaces
that have more than 250 employees must provide workers’ committees with
premises to hold meetings. However, the NC held that there is no legal
obligation for employers to facilitate the transfer of union information
through IT systems (e.g. e-mail).
In 2002, the workers’ committee and the employer
entered into an agreement by means of which the employer would provide
the workers’ committee with premises, furniture and basic tools so that
the latter could carry out its activities. Pursuant to this agreement,
one of the representative trade unions brought an action against the
employer claiming they were entitled to be provided with a computer and
internet access. Their main argument was that circumstances had changed
significantly since the agreement was signed (2002) and that internet is
now a basic working tool.
The NC examined the legal doctrine on “rebus
sic stantibus”, which allows the conditions of a contract to be
modified in the event that the circumstances under which it was drafted
have fundamentally changed. However, in labour matters, the NC considers
that this doctrine is “only applicable - relatively - when dealing
with obligations arising from employment contracts, but not those
arising from collective bargaining agreements, since they are considered
to be legislation and the doctrine does not apply to legislation”.
The NC therefore held that the employer was not
obliged to provide the claimant with the requested computers for the
following reasons: (i) circumstances have not changed sufficiently since
the company agreement was drafted in 2002; and (ii) terms of contracts
must be literally interpreted pursuant to article 1283 of the Civil Code.
