The information contained in this Newsletter is of a general nature and does not constitute legal advice


June 2009

LABOUR LAW

 

1. Non-EU workers. Procedure for admission to and residence in the European Union of highly qualified workers

Directive 2009/50/EC sets out the conditions of entry and residence in the EU (for more than three months) of third-country nationals and their families for the purposes of highly qualified employment. (More information)

2. Illegal immigration in the European Union. Sanctions and measures against employers of illegally staying third-country nationals

Directive 2009/52/EC introduces minimum standards and sanctions against offending employers to fight against illegal immigration. (More information)

3. Collection of social security contributions. Modifications to the collection procedure

The collection procedure of social security contributions has been modified by Royal Decree 897/2009 of 22 May. (More information)

4. Road transport and working time

The Land Transport Directorate’s resolution of 5 June 2009 transposed Directives 2009/4/EC and 2009/5/EC of the European Commission of 23 and 30 January 2008, and modified the Road Transport Directorate’s resolution of 19 April 2007. Measures to prevent and detect the manipulation of tachograph records have been introduced. Conversely, a new classification of infringements has been established to evaluate the risks taken by road transport companies that do not comply with maximum continuous driving times. (More information)

5. Harassment and violence in the workplace. Infringements of legislation on occupational hazards. New criteria of the Labour and Social Security Inspectorate

The Technical Criterion 69/2009 of 19 February 2009 of the Labour and Social Security Inspectorate establishes that harassment and violence at work is not only punishable as an infringement of employment legislation, but may also imply a breach of the occupational hazards legislation and, as a consequence, the amount of the sanctions can increase significantly. (More information)

6. Transfer of undertakings. Applicability of Directive 2001/23/EC even if the transferred activity does not retain its organizational autonomy in the transferee company

In its judgment of 12 February 2009, the Court of Justice of the European Communities responded to a reference for a preliminary ruling and held that a transfer of undertaking also takes place when the transferred activity does not retain its organizational autonomy in the transferee company, provided that the functional link between the various production elements that are transferred is preserved, and that the link enables the transferee to use those elements to pursue an identical or analogous economic activity. (More information)

7. Pregnant employee. Void dismissal regardless of whether employer knows about pregnancy

In a judgment dated 18 May 2009, the Second Chamber of the Constitutional Court confirmed the reasoning provided in its previous judgment no. 92/2008 of 21 July. The Constitutional Court declared that the termination of a pregnant employee’s contract is automatically void, provided that it is not declared fair and regardless the knowledge of the pregnancy situation by the employer. (More information)

8. Post-contractual non-compete agreements. Validity of penalty clauses

The Supreme Court judgment of 9 February 2009 declared that a penalty clause included in a post-contractual non-compete agreement was valid. The analysed clause established that in the event of a breach of the non-compete obligation the employee would be obliged to pay the employer twice the amount of the non-compete compensation received. (More information)

9. Collective labour disputes. Different salary on the basis of start date in the company

The judgment of 10 March 2009 of the Labour Chamber of the Supreme Court considered there to be no salary discrimination when employees were paid different amounts on the basis of their start date in the company. In this case, the difference in salary derived from a non-statutory collective agreement and a board of directors resolution. (More information)

10. Difference between a collective dismissal and a redundancy dismissal based on economic reasons. The calculation of the number of terminations must be carried out taking into account the company as a whole, and not the work centre

In its judgment of 18 March 2009, the Spanish Supreme Court unifies doctrine and clarifies that, for determining if individual dismissals based on redundancy causes must be considered as a collective dismissal, the number of terminations must be counted taking into account the number of the employees of the whole company and not the number of employees of the work centre affected by the restructuring. (More information)

11. Individual dismissals that exceed the limits established in article 51 of the SW (which regulates collective dismissals) are not null, but unfair

In its judgment of 19 February 2009, the Labour Chamber of the High Court of Justice of Catalonia held, in a very specific case, that a number of individual dismissals that exceeded the limits established in article 51 of the SW (which regulates collective dismissals) were not null, but unfair. The dismissals were not based on objective grounds, but had in fact been agreed with the employees and the works council as disciplinary dismissals that were subsequently acknowledged to be unfair. (More information)

12. Discrimination based on gender. Large scale and disproportionate dismissal of female employees

There is deemed to be indirect discrimination when a large number of female employees is dismissed. In the case at hand, the company was staffed mostly by male personnel, including the staff of a division of a company that had disappeared. The Labour Chamber of the High Court of Justice of Cantabria declared the dismissals void, because the company had not provided a reasonable explanation as to why the dismissals mainly affected women. (More information)

13. Changes to collective bargaining agreements. The procedure on the substantial modification of working conditions should be followed

The National Court judgment of 28 May 2009, held that the company’s decision to apply a different collective bargaining agreement breached the law because: (i) one of the requirements to apply the new collective bargaining agreement had not be complied with; and (ii) the procedure for implementing substantial modification of working conditions had not taken place. (More information)

 


 

1. Non-EU workers. Procedure for admission to and residence in the European Union of highly qualified workers

Directive 2009/50/EC of the Council of 25 May 2009 on the conditions of entry and residence of third-country nationals for the purposes of highly qualified employment (Official Journal of the European Union of 18 June 2009)

Directive 2009/50/EC establishes the requirements to be met by highly qualified non-EU nationals and their families to enter and reside in the European Union (“EU”) for periods of over three months.

Highly qualified employment (“Highly Qualified Employment”) is that performed by a person who has the required adequate and specific competence, as proven by higher professional qualifications (“Highly Qualified Worker”). According to Directive 2009/50/EC, a higher professional qualification is (i) a post-secondary higher education qualification for which at least three years of study are required; or (ii) exceptionally, if the national law allows, when five years of professional experience have been acquired in the profession or sector in which the job offer exists.

In general terms, the procedure to be followed to enter and reside as a Highly Qualified Worker is: (i) to apply for the corresponding permit (the “EU Blue Card”) and; (ii) to meet several admission conditions [i.e. to have an employment contract or job offer to perform Highly Qualified Employment for one year, the required professional qualification, to meet the mandatory conditions to practice the corresponding profession, to have health insurance and to receive a gross annual salary of, at least, 1.5 times the average gross annual salary in the corresponding EU Member State (“EU Member State”)]. EU Member States will determine if the application should be submitted directly by the employee or by the employer.

The EU Member States will set a standard validity period for EU Blue Cards of between one and four years. EU Blue Cards allow the Highly Qualified Workers to do paid work for two years, provided that admission conditions are being met at all times. After the two-year period, EU Member States can award the Highly Qualified Workers the same status as national employees with regard to Highly Qualified Employment.

Directive 2009/50/EC also provides for family reunification and the transfer of the Highly Qualified Worker and his family to other Member States for Highly Qualified Employment purposes when they have resided in the first Member State for, at least, 18 months.

Directive 2009/50/EC must be implemented by the Member States before 19 June 2011.

2. Illegal immigration in the European Union. Sanctions and measures against employers of illegally staying third-country nationals

Directive 2009/52/EC of the European Parliament and of the Council of 18 June 2009 providing for minimum standards on sanctions and measures against employers of illegally staying third-country nationals (Official Journal of the European Union of 30 June 2009)

The purpose of Directive 2009/52/EC is to fight against illegal immigration and introduce minimum standards on sanctions against offending employers (“Offending Employers”).

The Directive 2009/52/EC clearly defines the following obligations for employers: (i) to require that a third-country national, before taking up the employment holds and presents to the employer a valid residence permit or other authorisation for his or her stay; (ii) to keep, for at least the duration of the employment relationship, a copy of such documents; (iii) to notify the competent authorities of the start of employment of third country nationals.

The sanctions include fines and payment of the costs of returning illegally staying third-country nationals, although Member States can include these costs in the fines.

In addition to the sanctions, the Directive 2009/52/EC establishes supplementary measures such as: (i) exclusion from entitlement to benefits and subsidies, including EU funding, for up to five years; (ii) exclusion from public tenders during a maximum period of five years; (iii) recovery of some or all benefits and public subsidies granted to the employer for up to 12 months preceding the detection of illegal employment; (iv) temporary or permanent closure of the establishments of the Offending Employers that have been used to commit the infringement, or temporary or permanent withdrawal of a licence to conduct the business activity in question.

Finally, a contractor who subcontracts with Offending Employers may in addition to or in place of the Offending Employer be liable to pay any financial sanction. Liability may extend to intermediate subcontractors, where they knew that the employing subcontractor employed illegally staying third-country nationals.

Member States must implement the Directive before 20 July 2011.

3. Collection of social security contributions. Modifications to the collection procedure

Royal Decree 897/2009 of 22 May, on the modification of the General Regulation on the Collection of Social Security Contributions, approved by Royal Decree 1415/2004 of 11 June (Official Spanish Gazette of 15 June 2009)

Several rules of the General Regulation on the Collection of Social Security Contributions (“Collection Regulation”) have been modified in order to improve the collection procedure.

The most relevant modification relates to joint and several debt claims. In these types of claims, a 15-day period is granted to the claimant from the notification of the start of the proceedings in order to submit the pleadings and the corresponding documents. Furthermore, a maximum term of 6 months is set to notify the joint and several debt as from the day following the agreement to start the debt proceedings.

As regards the seizure of the current accounts, the seized amounts will be transferred to the Social Security General Treasury (“SSGT”) within ten days from the date of seizure (until now this term was 20 days).

The rules on the competence of regional bodies to agree on the transfer of seized property have been also modified. Therefore, the General Director of the SSGT can decide which regional body is most competent depending on where the goods are located or deposited. Finally, the concept of bad debts has been extended to cases in which, from the goods and rights of the debtor which are known to exist, there is insufficient additional income to satisfy the debt.

4. Road transport and working time

Land Transport Directorate’s resolution of 5 June 2009 on the modification of the 19 April 2007 resolution on the setting up of minimum controls on the working time of transport drivers (Official Spanish Gazette of 25 June 2009)

The Land Transport Directorate’s resolution of 4 June 2009 (the “Resolution”), transposed Directives 2009/4/EC and 2009/5/EC of the European Commission and modified the Road Transport Directorate’s resolution of 19 April 2007 .

The regulation establishes measures to prevent and detect the manipulation of the vehicle’s tachograph records, in order to avoid non-compliance with maximum continuous driving times. Furthermore, a new more comprehensive list of infringements has been created, which takes seriousness into account when considering the risks taken by the breaching companies. This classification, however, will have no bearing on the classification of the actual infringement for sanctioning purposes.

5. Harassment and violence in the workplace. Infringements of legislation on occupational hazards. New criteria of the Labour and Social Security Inspectorate

Technical Criterion 69/2009 of 19 February 2009 on Labour and Social Security Inspectorate actions concerning harassment and violence in the workplace

Technical Criterion 69/2009 (“TC”) of the Labour and Social Security Inspectorate (“LSSI”) establishes that violence and harassment in the workplace (“Psychosocial Risks”) may also constitute an infringement of legislation on occupational hazards.

According to the TC, the failure to respond to the detection of Psychosocial Risks (i.e., acts of employers giving rise to the risks or the failure of an employer to act in the presence of such risks) could imply a breach of legislation on occupational hazards. Depending on the risk, this situation could be considered a minor breach (punishable with a fine of between €40 to €2,045), a serious breach (punishable with a fine of between €2,046 and €40,985), or a very serious breach (punishable with a fine of between €40,986 and €819,780).

The LSSI’s new criterion is particularly important given the impact on the amounts of the fines that could be imposed. [Of relevance is the fact that, until now, the LSSI has considered harassment cases as very serious infringements of labour legislation (punishable with a fine of between €6,251 and €187,515)].

Finally, the TC specifically states that the failure to carry out the precautions regarding Psychosocial Risks (e.g., absence of evaluation, identification, or review, not implementing the measures established in the risk evaluation or the plan for the monitoring of health, lack of information and training) could constitute a serious infringement of legislation on occupational hazards (punishable with a fine of between €2,046 to €40,985).

6. Transfer of undertakings. Applicability of Directive 2001/23/EC even if the transferred activity does not retain its organizational autonomy in the transferee company

Judgment of the Court of Justice of the European Communities of 12 February 2009 (Case C-466/2007)

This judgment responds to a reference for a preliminary ruling that the Landesarbeitsgericht of Düsseldorf (the “German Court”) sought from the Court of Justice of the European Communities (“ECJ”) on whether there is a transfer of undertaking (for the purposes of Directive 2001/23/EC) when the part of the undertaking or business transferred does not continue to be part of an autonomous undertaking or business in the transferee company.

The German Court raised this point in relation to an asset and business sale agreement (the “Agreement”) between two companies. Under the Agreement, the transferee company acquired all rights to software, patents, patent applications and inventions, as well as the rights over product names and technical know-how, the development hardware and manufacturing materials. A list of suppliers and customers was also transferred, as well as a number of employees, who were integrated into the organizational structure of the transferee company and started to perform tasks linked to products other than those transferred.

Although the transferred elements did not retain their organizational autonomy or identity in the transferee company, the ECJ held that a transfer of undertaking may also occur in these circumstances, provided that the functional link between the various elements of production transferred is preserved, and that that link enables the transferee to use those elements to pursue an identical or analogous economic activity; which it is for the national court to determine.

7. Pregnant employee. Void dismissal regardless of whether employer knows about pregnancy

Judgment of the Second Chamber of the Constitutional Court of 18 May 2009

The Constitutional Court (“CC”), confirmed its previous decision of 21 July, stating that “(…) article 55.5.b) of the Statute of Workers does not provide that termination of employment contracts of pregnant employees are to be considered void if employees provide evidence that the employer was aware of that situation, and that the employee notified that circumstance to the employer (…)”.

Therefore, the CC confirmed that the dismissal of pregnant employees is automatically void, provided that the pregnancy is evidenced and that no reasons for fair termination concur. The CC stated that the law protects pregnant employees by exonerating them from providing evidence that can be very difficult to collect sometimes, and therefore it could imply a limitation of the fundamental right of pregnant employees. Thus, pregnant employees are exempt from providing evidence justifying that a third person (the employer) knew something about the employee’s personal life.

However, there was a dissenting opinion according to which, the criterion established in judgment no. 92/2008 (and now confirmed), should be decided by the plenary meeting of the CC, in accordance with article 13 of the Basic Law of the Constitutional Court.

The dissenting opinion also stated that there was no breach of constitutional rights - articles 24 and 14.1 of the Spanish Constitution (“CE”)- in this case, and therefore the interpretation involved ordinary law as opposed to constitutional law. The Supreme Court (“SC”) is the body with authority to interpret article 55.5 b) of the Statute of Workers (“SW”), and not the CC.

Finally, in his opinion, there cannot be a discrimination if the employer is unaware of the employee’s pregnancy, because “(…) the concept of discrimination logically requires that the discrimination be known, therefore the reason for the dismissal cannot be the pregnancy if it is not known.”

8. Post-contractual non-compete agreements. Validity of penalty clauses

Judgment of the Labour  Chamber of the Supreme Court of 9 February 2009

The SC held a penalty clause in a post-contractual non-compete agreement to be valid. The clause provided that if the employee breached the post-contractual non-compete agreement, he would be bound to pay the employer twice the amount of the non-compete compensation he had received.

The SC rejected the appeal lodged by the employee whereby he claimed a breach of article 3.5 SW. The SC declared that the approval of these type of clauses did not imply an early waiver of reserved rights, as only rights established by law, as well as reserved rights established by a collective bargaining agreement cannot be waived.

Nevertheless, the SC held that in certain cases the proportionality of the compensation for the penalty clause can be questionable (i.e. if it is abusive or against the principle of good faith provided in article 7.2 of the Spanish Civil Code).

9. Collective labour disputes. Different salary on the basis of start date in the company

Judgment of the Labour Chamber of the Supreme Court dated 10 March 2009

The SC heard the appeal against a National Court (“NC”) decision which rejected a labour dispute claim.

The claim was brought by a trade union in representation of 70 employees hired by the company since June 2004. The employees demanded same salary conditions than employees hired prior to June 2004 arguing that a salary discrimination was taking place.

The improved salary conditions were granted to the employees hired before June 2004 within the scope of a merger, and were implemented by means of a non-statutory collective agreement of the year 2002 published in the Official Spanish Gazette and of a board of directors resolution in 2004.

The SC rejected the appeal on the following grounds:

(i) The absence of discrimination in consideration of the doctrine which establishes that article 14 of the CE does not imply a general obligation of equal treatment in all cases. Undoubtedly, the free will of parties can lead to differences in salary, provided that the minimum salaries established by law and the relevant collective bargaining agreements are complied with.

(ii) The board of directors resolution has no legal status and private agreements cannot be considered in breach of the principle equality, except when the difference is based on the discrimination grounds established in the CE or in the SW.

(iii) The non-statutory collective agreement of 2002 cannot be considered a collective bargaining agreement and thus is a private agreement, which cannot be in breach of the principle equality as the difference in salary is not based on the discrimination grounds established in CE or in the SW.

10. Difference between a collective dismissal and a redundancy dismissal based on economic reasons. The calculation of the number of terminations must be carried out taking into account the company as a whole, and not the work centre

Judgment of the Labour Chamber of the Supreme Court dated 18 March 2009

The Labour Chamber of the SC heard an appeal regarding the framework for determining if redundancy dismissals must be considered as a collective or individual dismissals. Specifically, the matter involved the question of whether the number of terminations must be calculated taking into account the number of the affected employees in the entire company or of the work centre affected by the restructuring.

The SC held that the number of terminations to be taken into account corresponds to the number of affected employees companywide, and not the number of affected employees at the work centre. In this regard, the SC stated that article 51 SW not only refers to the company, but also establishes a procedure with more guaranties than that established in Directive 98/59/EC on collective dismissals (and which established that the framework should be the work centre). Spanish law offers more protection not only by establishing the company as the basis for calculating terminations, but also in requiring the justification of the reasons on which terminations are based and by introducing a procedure requiring a previous administrative authorization to carry out the employment terminations.

The SC based the judgment on previous decisions of the ECJ, which declared (judgement dated 18 January 2007 case C-385/2005) that: “(…) Directive 98/59 (…) establishes a minimum protection concerning the information and consultation to the employees in case of termination, but Member States may adopt more protective measures.” In its judgment of 15 February 2007 (case C-270/2005), the ECJ clarified that the aim of Directive 98/59/EC is “(…) to give additional protection to employees in the case of collective dismissals, taking into account the need for economically and socially balanced development in the EU.”

11. Individual dismissals that exceed the limits established in article 51 of the SW (which regulates collective dismissals) are not null, but unfair

Judgment of the Labour Chamber of the High Court of Justice of Catalonia, dated 19 February 2009

In this case, the company wanted to reduce its workforce and agreed with the employees and the works council to terminate several employment contracts. The company subsequently acknowledged that the terminations were unfair and paid the employees the maximum statutory severance payment.

The Labour Chamber of the High Court of Justice of Catalonia held that the dismissal of the claimant employee could not be considered null, as the maximum limits established in article 51.1 SW had been not breached. The judgment is based on the following reasoning:

(i) the dismissals carried out during the last 90 days prior to the termination of the claimant’s employment contract should not be taken into account, as they were not dismissals based on objective grounds;

(ii) the company did not commit a fraud of law under article 6.4 of the Civil Code, as the dismissals carried out previously were in fact agreed with the employees before the authorities;

(iii) disciplinary dismissals that lack justification or that are carried out in fraud of law are unfair dismissals, not null;

(iv) since the dismissals prior to the claimant’s were not based on objective grounds, but were rather agreed (and carried out as unfair dismissals), the doctrine set out in the SC’s judgment of 22 January 2008 is applicable. In that judgment, the SC held that there is only a collective dismissal if the number of dismissals exceeds the limits established in article 51.1 SW, and at the same time, the dismissals are based on economic, technical, organizational or production grounds.

12. Discrimination based on gender. Large scale and disproportionate dismissal of female employees

Judgment of the Labour Chamber of the High Court of Justice of Cantabria of 25 February 2009

In its judgment of 25 February of 2009, the Labour Chamber of the High Court of Justice of Cantabria decided on a dismissal procedure started by a woman working in a company with a high percentage of male employees. Eight of the nine redundancies implemented affected women.

The collective redundancy was based on organizational reasons due to the closing of a production line which was staffed by seven men and two women. Although the company carried out nine dismissals based on apparently objective criteria (length of services), the dismissals were considered to affect a minority group (i.e., most employees were male, in the company in general and in the production line closed).

The ruling held that since there is an indirect discrimination, the company was responsible for evidencing that the disproportionate dismissal of women is based on an objective criteria, unrelated to gender. As the company did not evidence the existence of reasonable causes for the terminations, the High Court declared the dismissals void.

13. Changes to collective bargaining agreements. The procedure on the substantial modification of working conditions should be followed

Judgment of the Labour Chamber of the National Court of 28 May 2009

The NC heard trade dispute proceedings initiated by several trade unions against a company decision to stop applying the collective bargaining agreement, as it understood that the company’s activity applied to a different collective bargaining agreement.

The NC upheld the claim and declared that the company’s decision to apply a different collective bargaining agreement breached the law, based on the following reasons:

(i) the legal procedure for implementing a substantial modification of working conditions had not taken place; and

(ii) the requirements to apply the new collective bargaining agreement were not fulfilled; amongst others, that the company has not applied a different collective bargaining agreement in the past.

The information contained in this Newsletter is of a general nature and does not constitute legal advice