May
2009
LABOUR LAW
1. European Works Council. Procedure in
Community-scale undertakings and Community-scale groups of undertakings
for the purposes of informing and consulting employees
Directive 2009/38/EC of the European Parliament
and of the Council of 6 May 2009 on the establishment of a European
Works Council or a procedure in Community-scale undertakings and
Community-scale groups of undertakings for the purposes of informing and
consulting employees, replaced Directive 94/45/EC of the Council of 22
September 1994. The Directive is designed to modernise Community
legislation on information and transnational consultation of the
employees of companies and corporate groups with a Community scope, to
promote labour dialogue and to resolve the legal uncertainly of the
prior regulation. (More information)
2. Occupational accident. Shelving of the
administrative sanctioning procedure. The injured employee lacks
standing in the contentious-administrative procedure challenging such
shelving
In its decision of 23 February 2009, the
Constitutional Court rejected the appeal for legal protection and held
that the shelving of an employee’s administrative sanctioning procedure
had no direct influence on the legitimate interests of the appellant
employee, who has sufficient standing to bring a claim in both civil and
labour courts. (More information)
3. Remunerated directors. Contributions to the
Social Security with retroactive effects
Law 50/1998 established that paid directors (who
do not control the company) fall under the retroactive framework of the
Social Security, and must contribute with retroactive effects as of 1
January 1998. In its decision of 20 April 2009, the Constitutional Court
stated that the amendment to the second paragraph of article 34 of Law
50/1998 dated 30 December on tax, administrative and labour measures is
neither predictable nor in the public interest. This amendment was
therefore considered contrary to article 9.3 of the Spanish Constitution.
(More information)
4. Disciplinary dismissal: scope of the
limitation period
In its decision of 9 February 2009 regarding the
limitation period for imposing a disciplinary dismissal, the Supreme
Court confirmed its doctrine of “full knowledge” after analysing the
dismissal of a bank’s branch manager prosecuted for embezzlement. The
Supreme Court stated that carrying out criminal actions to acquire full
knowledge of the facts interrupts the calculation of the “short
limitation period” of 60 days established in article 60.2 of the Statute
of Workers. (More information)
5. Unemployment. Employee shareholder and
managing director of an employee-owned company
In its decision of 17 February 2009, the Supreme
Court acknowledged the right to unemployment benefits of a worker of an
employee-owned company who also held the non-remunerated position of
managing director. The Supreme Court argued that the employment
relationship absorbed the commercial relationship in the matter at hand,
thereby satisfying the employment relationship requirements.
(More information)
6. Senior management contract. Nullity of a
clause establishing that compensation for dismissal is net of taxes
The Supreme Court’s decision of 24 February 2009
declared the nullity of a clause establishing a compensation net of
taxes in the event of the dismissal of a senior manager. According to
the Supreme Court, while the clause was consistent with labour
regulations for senior management giving primacy to the will of the
parties, the contractual provision was nevertheless contrary to tax
regulations, which cannot be amended by private contract.
(More information)
7. Notification of dismissal. The employee’s
violent reaction during the notification is likely to cause further
contractual breaches
In its decision of 27 February 2009, the Supreme
Court acknowledged the possibility of extending the original actions
underlying the disciplinary dismissal to others occurred at the time of
the delivery of the dismissal letter. The employee’s aggressive
behaviour upon receipt of the letter prevented the effective
transmission of the company’s will to extinguish the relationship,
enabling it to include the employee’s violent reaction in a second
letter. (More information)
8. Unemployment benefits. Chain of contracts.
The company is not liable for unemployment benefits
The Supreme Court’s decision dated 5 March 2009
overturned a judgment ordering the company to satisfy the unemployment
benefits to the Spanish Public Employment Service (Servicio
Público de Empleo Estatal) for an employee who was fraudulently
employed through temporary employment contracts for consecutive years.
The appropriate contract for the employee would have been a permanent
seasonal contract. The Supreme Court stated that, although the company
used an inappropriate type of contract, the unemployment benefits
created were the same as those that would have been created by the
appropriate permanent seasonal contract. (More information)
9. Industrial action. The limitation period for
individual actions concerning salary matters may not be suspended
The decision of the Supreme Court dated 16 March
2009 established that industrial actions will only suspend the
limitation period of an individual claim regarding the salary items
involved in the dispute, but not those that are not the object of the
industrial action. (More information)
10. Collective redundancies. Severance
compensation may be increased for employees that volunteer for the
measure
In its decision of 29 October 2008, the High
Court of Justice of Madrid stated that a 15% increase in severance
compensation only for employees who volunteer for the collective
redundancy does not give rise to unfairness. (More
information)
11. Nullity of a contractual clause forcing an
employee to accept a transfer
The decision of the High Court of Justice of
Catalonia dated 26 January 2009 stated that the location of the new work
centre to which the company intended to transfer the employee was 59 Km
farther away than the original work centre and, thus, was a relocation
that will imply the change of residence. Therefore, the employee was
entitled to terminate the employment contract and retain the right to
the mandatory severance. This was the case even if the employee had
contractually accepted the possibility of the company moving to another
city. (More information)
1. European
Works Council. Procedure in Community-scale undertakings and Community-scale
groups of undertakings for the purposes of informing and consulting
employees
Directive 2009/38/EC of the European
Parliament and Council dated 6 May 2009 on the establishment of a
European Works Council or a procedure in Community-scale undertakings
and Community-scale groups of undertakings for the purposes of informing
and consulting employees (Official Journal of the European Union dated
16 May 2009)
The Directive aims to modernise EU law on
transnational information and consultation of employees of companies and
groups of companies with Community scope as well as promote labour
dialogue and provide a solution to the legal uncertainty arising from
Directive 94/45/EC and its subsequent amendments -Directive 97/74/EC and
Directive 2006/109/EC.
The legislative endeavour of the European Union
regarding informing and consulting employees began and was developed
with the tripartite objective of ensuring effective transnational
communication, doing so at both a national and transnational level, and
providing the necessary legal certainty. In view of these aims, the
powers and scope of the European Works Council will be restricted by
those of national employee representation bodies and limited to
transnational issues including either (i) matters affecting the company
or the group of companies with Community scope, a company that employs
1,000 or more employees in the Member States and 150 employees or more
in at least two different Member States, or (ii) at least two companies
or establishments of the company or group located in two different
Member States.
The Directive states that the responsibility for
establishing the conditions and means necessary for the formation of the
European Works Council or the establishment of an information and
consultation procedure will lie with the central management of the
company with Community scope. Alternatively, in the case of a group of
companies with Community scope, this responsibility will lie with the
company that exercises control, i.e., that which can exercise a dominant
influence over another by reason of holding the majority of the share
capital, the majority of the votes or the power to appoint more than
half of the members of the board of directors.
As regards the European Works Council, the
central management will initiate negotiations at its own discretion or
upon the written request of at least 100 employees or their
representatives belonging to at least two companies located in at least
two Member States. With this aim, a special negotiating body (“Comisión
Negociadora”) will be created, which function will be to determine,
together with the central management and by virtue of a written
agreement, the scope of the functional responsibilities of the European
Works Council, its composition, the frequency of meetings, the financial
and material resources to be allocated and the duration of the mandate
of the European Works Council or the procedures for implementing a
procedure to inform and consult employees. The special negotiating body
may nevertheless decide not to open negotiations or to conclude the
negotiations in process by a majority of at least two thirds of the
votes.
Conversely, the central management and the
special negotiating body may decide in writing to establish one or more
information and consultation procedures instead of establishing a
European Works Council. In this regard, the Directive will not affect
the information and consultation procedures included in Directive
2002/14/EC or the specific procedures referred to in Article 2 of
Directive 98/59/EC and Article 7 of Directive 2001/23/EC.
Finally, the obligations arising from the
Directive will not apply to companies and groups of companies with
Community scope which:
(i) have entered into a bilateral agreement or
agreements with all of its employees that establish the transnational
information and consultation requirements of Article 14, paragraph 1 of
Directive 94/45/EC or Article 3, paragraph 1 of Directive 97/74/EC, or
these agreements have been revised due to changes in the structure of
the companies or the groups of companies, or
(ii) at least one agreement was entered into or
revised under Article 6 of Directive 94/45/EC between 5 June 2009 and 5
June 2011.
2.
Occupational accident. Shelving of the administrative sanctioning
procedure. The injured employee lacks standing in the contentious-administrative
procedure challenging such shelving
Judgment 48/2009 of the First Chamber of the
Constitutional Court dated 23 February
The appellant was involved in work accident
leading to a proposed sanction from the Work Inspectorate for failure to
observe labour health and safety regulations. An administrative
sanctioning procedure was initiated. The sanctioning procedure
ultimately determined that no infraction had taken place. The appellant
lodged a contentious-administrative claim requesting a judicial review
of the decision shelved and a sanction against the company. The claim
was rejected due to lack of standing. The appealed judgments established
that the potential claims for compensation and social security
surcharges that the appellant could bring against the company could not
give rise to the legitimate interest required, since the enforceability
of this interest was not in any way affected by the decision to shelve
the claim.
The Constitutional Court (“CC”) rejected the
appeal lodged by the employee on the basis that (i) the denial of his
legitimate interest in the administrative decision regarding the
shelving of the sanctioning procedure did not prevent the appellant from
seeking an indemnity for damages in the civil courts or from pursuing
the social security surcharge procedure established in article 123 of
the General Social Security Law in the labour courts and (ii) the
decision to shelve the sanctioning procedure had no detrimental
influence on the civil or labour courts, which must render decisions on
the basis of such actions.
3.
Remunerated directors. Contributions to the Social Security with
retroactive effects
Judgment 89/2009 of the First Chamber of the
Constitutional Court dated 20 April
In this decision regarding a claim based on
unconstitutionality, the CC stated that Law 50/1998 establishes a new
approach regarding the framework for remunerated directors in the event
that they perform management functions and do not exercise control over
the company. Such individuals will no longer fall under the scope of the
special framework for self-employed workers and will instead fall within
the general social security framework. The amendment will have
retroactive effects as of the entry into force of the previous Law
66/1997.
In this regard, the CC stated that there is no
prima facie constitutional prohibition of retroactive tax
legislation and that the prohibition in article 9.3 of the Spanish
Constitution is limited to sanctioning regulations which are
unfavourable to citizens and rules which restrict individual rights.
This notwithstanding, the CC further stated that the admissibility of
retroactive tax legislation is not absolute and that, in cases where it
is contrary to the constitutional principles of legal certainty or
interdiction of arbitrariness of public authorities, such retroactive
tax legislation may be considered unconstitutional.
In this case, the CC stated that the regulation
in question, by extending to situations produced prior to its entry into
force, fully amended a concept regulated just one year before. Moreover,
companies could hardly be expected to consider the modification as
provisional, when under the obligation to pay retroactive contributions
for their directors. The modification therefore violates the legal
principle of legal certainty and public confidence and the CC considered
that such drastic change could not be justified on the basis of general
interest. The CC ultimately held that the regulation could be described
as unpredictable and lacking sufficient justification and was therefore
unconstitutional, breaching the principle of certainty set out in
article 9.3 of the Spanish Constitution.
4.
Disciplinary dismissal: scope of the limitation period
Judgment of the Labour Chamber of the Supreme
Court dated 9 February 2009
The Supreme Court (“SC”) addressed an appeal
filed by a bank that, after receiving judicial verification of the
criminal offences with which one of its branch managers had been
prosecuted (embezzlement), dismissed him on disciplinary grounds. The
Labour Court declared the dismissal to be fair but the High Court of
Justice reversed the ruling on the basis that the limitation period to
impose the dismissal had expired since the breach of contract had
occurred time ago.
The SC therefore analysed the scope of the
limitation period established in article 60.2 of the Statute of Workers
(“SW”) to react against a breach of contract. In this case, a bank
initiated criminal proceedings against one of its branch managers in
order to find out the scope of certain acts carried out by him which
were otherwise difficult to uncover, and waited for the definitive
judicial decision before dismissing the manager on disciplinary grounds.
The SC held that the employee’s concealment of
facts and the abuse of the confidence placed on him as a branch bank
manager constituted a constant lack of loyalty that prevents, while it
lasts, the start of the short limitation period established in article
60.2 of the SW. Specifically, the SC established that the suspension of
the limitation period would last until the criminal court had issued a
final judgment.
5.
Unemployment. Employee, stakeholder and managing director of an employee-owned
company
Judgment of the Fourth Chamber of the Supreme
Court dated 17 February 2009
In this case, the SC addressed the issue of
whether or not the claimant, a remunerated employee of an employee-owned
company in which he held a 25% stake with his wife and was managing
director, is entitled to receive unemployment benefits.
The employee’s claims were rejected by the High
Court of Justice of Madrid which, after the appeal made by the Public
Employment Service against the judgment upholding the claimant’s right
to benefits, held that the employee was not entitled to the benefits on
the basis that the lack of remuneration for his duties as managing
director stemmed from his free choice in accordance with the company’s
articles of association.
However, the SC upheld the claimant's appeal and
confirmed the first instance judgment in recognising the worker’s right
to unemployment benefits. The SC stated that management functions were
insufficient to absorb the employee’s labour activity and, thus, could
not remove the employment relationship requirement in respect of the
company.
6. Senior
management contract. Nullity of a clause establishing that compensation
for dismissal is net of taxes
Judgment of the Labour Chamber of the Supreme
Court dated 24 February 2009
The judgment stated that a clause establishing a
net amount of compensation for the termination of a senior management
contract is consistent with article 26.4 of the SW and article 3.1 of
Royal Decree 1382/1985 on senior management.
The SC held that the clause was nevertheless
void on the basis that it was contrary to article 18 of the General Tax
Law (Ley General Tributaria) which specifically prohibits taxes
from being governed by private agreements. The SC therefore ordered the
senior manager to satisfy his tax obligations, thereby relieving the
company of the obligation.
7.
Notification of dismissal. The employee’s violent reaction during the
notification is likely to cause further contractual breaches
Judgment of the Labour Chamber of the Supreme
Court dated 27 February 2009
The SC declared the judgment of the Labour
Chamber of the High Court of Justice of Andalusia null, stating that a
letter of dismissal can include the events that took place at a previous
unsuccessful attempt to deliver a former letter of dismissal.
The matter involved a manager who was to be
presented with a letter of dismissal with effects as from that day with
four other persons present. The letter indicated that his work
performance was experiencing a voluntary and continuous decline. The
manager reacted violently and defiantly toward the company
representative and the letter could not be delivered. The company
delivered a new notice of dismissal the following day, which included
the previous grounds for dismissal as well as the violent reaction
during the first attempt to deliver the letter of dismissal.
In contrast with the decisions of the lower
courts in which the analysis of the dismissal was limited to the grounds
included in the first letter, the SC admitted the facts arising on the
date of the first notification and their inclusion in the second letter.
In doing so, the SC stated that the labour relationship between the two
parties was still in force on the basis that the extinctive will was not
transmitted to the employee due to his aggressive behaviour and,
accordingly, the conduct constituted a serious breach of contract.
8.
Unemployment benefit. Chain of contracts. The company is not liable for
unemployment benefits
Judgment of the Labour Chamber of the Supreme
Court dated 5 March 2009
The SC stated that, given the specific corporate
purpose of the company (citrus industry), the contract that should have
been entered into with the employee whose unemployment benefits were
being claimed by the authorities, was a permanent seasonal contract (“contrato
fijo-discontinuo”) rather than linking various temporary contracts.
This decision also confirmed the settled
doctrine of the SC of 26 December 2007, 14 January 2008 and 19 February
2008 in the sense that, although the company used an inappropriate type
of contract, no rights were created other than the unemployment benefits
that would have been created had the appropriate permanent seasonal
contract been entered into. The SC overturned the decision of the High
Court of Justice of Valencia and rejected the claims of the Spanish
Public Employment Service.
9. Industrial
action. The limitation period for individual actions concerning salary
matters may not be suspended
Judgment of the Labour Chamber of the Supreme
Court dated 16 March 2009
In this case, the expiry of the limitation
period for claiming salary items was analysed by the SC that ruled in
favour of the company: the limitation period to claim certain salary
items accrued before 1994 has expired.
Before filing the individual procedure to claim
certain salary items, two industrial actions were brought against the
company regarding the accrual of other salary items. In this regard, the
SC stated that the limitation period for individual actions related to
the industrial actions is suspended as from the filing of the former.
However, the SC concluded that, despite the fact
that industrial actions were brought against corporate measures
regarding certain salary items, particularly "seniority pay" and "discretionary
pay supplements", the scope of the action could have extended to
encompass other salary items, including those claimed in the employee’s
individual action.
As such, since the items claimed by the employee
differed from those object of the industrial actions, their limitation
periods were not subject to suspension as a result of the industrial
actions. The SC held that since the limitation periods were not
suspended, the possibility of claiming had expired.
10.
Collective redundancies. Severance compensation may be increased for
employees that volunteer for the measure
Judgment of the Labour Chamber of the High
Court of Justice of Madrid dated 29 October 2008
The judgment included a legal economic analysis
to resolve a matter in which a company encouraged employees to volunteer
for a collective dismissal by offering a 15% increase in severance
compensation. The company voluntarily assumed the risk of increased cost
in order to minimise the traumatic effect of the collective dismissal
for employees.
One employee who wished to keep his job decided
not to volunteer, but then subsequently sought the 15% increase. The
court stated that the employee must be consistent in his decision and
therefore if the employee was made redundant but did not volunteer for
the collective dismissal he could not subsequently claim the 15%
increase offered by the company.
Since other employees volunteered in exchange
for higher compensation, the court stated that paying the increased
compensation to someone who did not volunteer for the collective
redundancy would actually have been unfair.
However, the dissenting opinion stated that the
distress for the employee who was ultimately made redundant was greater
than that of those who volunteered for the redundancy and, thus, should
receive the increased compensation because, otherwise he would be
enduring a "twofold punishment."
11. Nullity
of a contractual clause forcing an employee to accept a transfer
Judgment of the Labour Chamber of the High
Court of Justice of Catalonia dated 26 January 2009
The claimant was an employee affected by the
relocation of his work centre to another town. The individual brought a
lawsuit to claim the compensation established in article 40 of the SW on
the basis that he wished to terminate his employment contract based on
such substantial change of his employment conditions. The judgment at
the first instance applied article 40 of the SW but rejected the request
because the individual had signed a clause in his employment contract by
virtue of which he expressly accepted to be transferred to another work
centre, even if it was in a different municipality.
On appeal, the High Court of Justice of
Catalonia (“HCJ”) overturned the judgment. The HCJ stated that the 118
Km round trip was so burdensome that it required a change of residence
by the employee and, therefore, it should be considered a relocation
rather than a mere transfer.
The HCJ also took a different approach regarding
the enforceability of the relevant clause. While the first instance
court held that the agreement sufficiently justified the absence of a
right to compensation for terminations involving geographical mobility,
the HCJ held that the generic nature of the clause did not deprive the
worker of the ability to benefit from the guarantees established in
article 40 of the SW. The reason for this was that the wording of the
clause ("the employee is hired on the basis that he agrees that if
the company moves its work centre to another municipality he would
accept such transfer") would enable the company to benefit from
situations regulated differently in the SW. Furthermore, the HCJ stated
that the clause was contrary to article 1,256 of the Spanish Civil Code
and, thus, its endorsement could imply an early waiver by the employee
of the guarantees provided by the SW.
