January 2010
LABOUR LAW
1. Social Security. Payment rules for 2010
Order TIN/25/2010 of 12 January establishes the
2010 contribution bases and rates for social security payments,
unemployment benefits, the Salary Guarantee Fund and professional
training. (More information)
2. Collusive agreement. Sanction
In its resolution dated 24 September 2009, the
National Competition Commission declared the existence of collusive
conduct between the National Association of Stevedoring Companies and
Ship Consignees and various trade unions. The collusive conduct involved
an agreement that included provisions regulating labour relationships in
the sector that extended its scope of application to third-party
companies, thereby excluding or frustrating the entry of those companies
to the complementary dock services market. (More
information)
3. Back-pay and severance payment for
unemployment. Incompatibility
On 20 October 2009, the Supreme Court held that
when a severance payment for unfair dismissal has been deemed to have
been correctly calculated initially but subsequently rejected on appeal,
the accrual of back-pay is limited to the period from the date of the
dismissal until the date on which the company chooses to pay the
severance payment. (More information)
4. Dismissal withdrawal. Ineffective if
prior to the settlement package
On 7 October 2009, the Supreme Court held that
the withdrawal of a dismissal with a readmission offer was not effective
given that the unilateral decision of the employer could not restore the
contractual link between the parties. It also held that the employee’s
refusal to accept the reincorporation offer could not be considered a
resignation. (More information)
5. Working time. Paid leave
In its decision of 22 September 2009, the
Supreme Court held that a company cannot request proof of absence for
medical reasons if the required proof exceeds that established in the
applicable collective bargaining agreement. (More
information)
6. Rejection of voluntary additional
compensation for an employee’s decease
In its decision of 21 September 2009, the
Supreme Court rejected the right of a worker’s daughter to receive the
additional compensation provided in the applicable collective bargaining
agreement as a result of an employee’s decease from her mother’s former
employer. The employee left the company and later passed away due to a
long illness, of which the company was aware while she was an employee.
(More information)
7. Temporary disability and part-time work.
Bonuses and variable remuneration
In its judgment of 10 November 2009, the
National Court held that part-time workers and employees on temporary
disability leave have the right to receive the full bonus paid for the
achievement of joint targets. (More information)
8. Income tax. Compensation for arranged
dismissal
In its judgment dated 30 September 2009, the
National Court held that the income tax exemption for severance payments
is not applicable if the dismissal is arranged and the payment is made
to encourage the employee to voluntarily leave his/her post.
(More information)
9. Fair dismissal based on presumptions
In its judgment dated 16 September 2009, the
High Court of Justice of Castilla y León (Valladolid) confirmed that a
company can justify a disciplinary dismissal based on presumptions and
circumstantial evidence as opposed to direct evidence.
(More information)
10. Void dismissal for lack of justification
In its judgment dated 10 July 2009, the High
Court of Justice of Aragón upheld the decision of the lower court which
declared a dismissal void because the company had not justified the
dismissal sufficiently. (More information)
1. Social
Security. Payment rules for 2010
Order TIN/25/2010 of 12 January 2009 develops
the regulations on social security payments, unemployment benefits, the
Salary Guarantee Fund and professional training established in Law
26/2009 of 23 December on the National Budget for 2010
Order TIN/25/2010 establishes that the maximum
contribution base to the General Social Security Regime will be EUR
3,198.00 per month as of 1 January 2010. The minimum contribution base
for industrial accidents and professional diseases will be EUR 738.90
per month.
The payment rates will remain the same as those
applied in 2009.
The maximum contribution base for self-employed
workers will be EUR 3,198 per month and the minimum will be EUR 841.80
per month. The contribution base for those age 50 or over as of 1
January 2010 will range between EUR 907.50 and EUR 1,665.90 per month.
Nevertheless, the contribution base will range between EUR 841.80 and
EUR 1,665.90 per month if the self-employed worker is age 45 or older
and was obligated to register with the regime as a result of taking over
the business of his/her deceased spouse.
2. Collusive
agreement. Sanction
Decision of the National Competition
Commission dated 24 September 2010
The National Competition Commission (“NCC”)
declared that the Agreement IV executed between the National Association
of Stevedoring Companies and Ship Consignees (“ANESCO”) and
various trade syndicates violated article 1 of the Competition Law and
Article 81 of the Treaty Establishing the European Union.
Agreement IV extends the scope of the provisions
established in Agreement III under which stevedoring companies undertook
to only carry out complementary dock services with longshoremen.
Nevertheless, the performance of such services was not regulated by
Agreement III, but rather by the rules established the collective
bargaining agreements that regulated the labour conditions of such
employees, which afforded universal competition in the sector.
The execution of Agreement IV affected non-stevedoring
companies which principal activity was rendering complementary dock
services. Under the Agreement IV, ANESCO reserved all complementary dock
services for stevedoring companies, thereby extending their area of
activity and ensuring their protection from competition or new entries
to the market. As a result, non-stevedoring companies were subject to
their conditions, including the hiring of staff without any involvement
in the negotiations.
Similarly, the NCC stated that Agreement IV
could be protected under the scope of the Competition Law given that it
directly affected third parties. It also could not be protected by the
collective bargaining agreement given that it had not been published or
recognised by the labour authorities.
The NCC declared the agreement to be collusive,
qualified the conduct as a serious infraction and imposed a EUR
901,518.16 sanction on ANESCO and sanctions ranging between EUR 3,000 to
EUR 168,000 (depending on their contribution) on the trade unions.
3. Back-pay
and severance payment for unemployment. Incompatibility
Judgment of the Labour Chamber of the Supreme
Court dated 20 October 2009
In this case, an employee was dismissed by the
company for disciplinary reasons. The company acknowledged the
unfairness of the dismissal and offered the corresponding severance
payment.
The first instance court upheld the unfair
dismissal and declared the corresponding severance payment to be correct.
The employee appealed the decision to the High Court of Justice of the
Canary Islands (“HCJ”), which held the severance payment to be
incorrect. The HCJ ordered the company to pay the back-pay from the date
of the dismissal until the date of the notification of the judgment in
the appeal.
The main issue on appeal was whether the back-pay
must be paid until the date of the notification of the first instance
judgment or until the date of the notification of the judgment in the
appeal even though the severance payment was approved initially and
subsequently overturned by a higher court.
The Supreme Court (“SC”) stated that the
intention of the law to exclude the accrual of back-pay during appellate
proceedings if the employer paid the severance payment is clear given
that article 111 of the Labour Procedure Law characterises such
individuals as “unemployed” during appellate proceedings.
Therefore, the SC partially upheld the company’s
appeal and limited the severance amount to that stated in the judgment
of the HCJ along with the back-pay accrued from the date of the
dismissal to the date on which the employer chose to pay the severance
payment. The SC also held that the employee had the right to be declared
unemployed from the moment she began the appeal proceedings.
4. Dismissal
withdrawal. Ineffective if prior to the settlement package
Judgment of the Labour Chamber of the Supreme
Court dated 7 October 2010
In this case, the employee had been dismissed
due to multiple unjustified absences. The company withdrew its decision
a few days later but before offering her the settlement package. The
company notified the employee that the dismissal would no longer be
valid given that she had justified her absences by informing the company
that she had been temporarily incapacitated. The company indicated that
if the employee reassumed her post immediately she would only receive a
disciplinary sanction for not having made her temporary absence known on
time and by the correct means.
Following its own case law, the Supreme Court (“SC”)
held that the offer made to the employee to reassume her post did not
imply the restoration of the broken relationship and that the employee’s
refusal to reassume her post could not be considered a resignation
regardless of whether or not the offer had been made during or after the
pre-judicial settlement proceedings or even after the filing of the
claim. The SC reasoned that a decision to the contrary would distort the
dismissal process and compromise the right to effective judicial
protection.
5. Working
time. Paid leave
Judgment of the Labour Chamber of the Supreme
Court dated 22 September 2009
The Supreme Court (“SC”) rejected the
appeal against the decision of the Labour Chamber of the National Court
that established the employees’ right to enjoy the leave established in
the National Telemarketing Collective Bargaining Agreement by only
satisfying the requirements it contained.
In exercising one of the faculties afforded to
it under article 20 of the Statute of Workers, the company demanded that
its employees exhaustively prove their leave on the basis of an abusive
application of the rule established in the collective bargaining
agreement. The SC rejected the appeal and held that the requirement to
prove leave established in the collective bargaining agreement must be
interpreted in view of the circumstances of the specific case and that a
company cannot demand exhaustive proof as this restricts the employees’
right to attend medical appointments.
6. Rejection
of voluntary additional compensation for an employee’s decease
Judgment of the Labour Chamber of the Supreme
Court dated 21 September 2009
In this case, a worker’s daughter claimed her
right to receive compensation deriving from the life insurance taken out
by the company covering its employees’ decease as a consequence of
ordinary illness. She argued that although her mother no longer worked
for the company at the time of her passing, her death was the result of
complications from the ordinary illness from which she suffered while
working in the company, an illness of which the company was aware.
The Supreme Court (“SC”) stated that the
matter involved a general situation in which voluntary compensation that
is more favourable than that granted by the Social Security is
established in the applicable collective bargaining agreement by
obligating companies to take out a life insurance policy covering the
decease of their current employees.
The SC emphasised the difference between
additional compensation for death and for permanent disability, both as
a result of an ordinary illness. As regards the latter, the insured
event is the moment the injury renders the employee unfit for work and
it is therefore from this moment that compensation is due. However, if
the insured event is the decease of an employee, the event cannot be
anticipated or separated from the act itself, regardless of whether or
not the decease is caused by an illness that was known previously.
7.
Temporary disability and part-time work. Bonuses and variable
remuneration
Judgments of the Labour Chamber of the
National Court dated 6 and 10 November 2009
In its judgment of 10 November 2009, the
National Court (“NC”) held that part-time workers and those who
were on temporary disability leave had the right to receive exactly the
same bonuses as full-time workers for meeting joint targets, and that no
distinction may be made on the basis of the actual length of time worked
by each employee.
In this case, the NC found that a bonus was paid
on the basis of the results obtained by all the staff. The accrual of
the bonus was collective as no requirements were established in the
applicable collective bargaining agreement other than the joint
achievement of the established targets. As such, the NC held that the
bonus must be shared equally among all the employees and that the
company could not set the amount allocated to each employee based on his/her
individual contribution to the achievement of the target.
The NC reaffirmed its approach in its judgment
dated 6 November 2009 in which it held that employees with part-time
contracts and those on temporary disability leave have the right to
receive the same variable remuneration if a joint target is achieved.
8. Income tax.
Compensation for arranged dismissal
Judgment of the Administrative Chamber of the
National Court dated 30 September 2009
In this case, the National Court (“NC”)
analysed the tax exemption for severance payments established in article
7.e) of Law 40/98.
The claim involved an appeal against a decision
of the Central Economic and Administrative Tribunal that had held that
the income tax exemption was not applicable to the severance payments
paid to a group of employees given that they were made according to a
mutual agreement between the employer and employees to terminate
employment.
The NC found that the compensation and the
surrounding circumstances did not serve to compensate the forced loss of
jobs, but rather to encourage employees over the age of 50 to take early
retirement. Given the true purpose of the compensation, the NC held that
the income tax exemption was not applicable.
The NC emphasised that the compensation bore no
relation to that established in the Statute of Workers for dismissals or
the employees’ lengths of service. The NC also considered it highly
unlikely that every employee had committed a breach justifying
disciplinary dismissal. The company also continued to pay the dismissed
employees financial assistance for retirement.
9. Fair
dismissal based on presumptions
Judgment of the Labour Chamber of the High
Court of Justice of Castilla y León (Valladolid) dated 16 September 2009
The case involved security guard that worked
night shifts in a slaughterhouse. The individual worked in a hut to
which no one else had access during the night. The employee was
dismissed for disciplinary reasons after an antivirus programme detected
a virus on the computer in the hut.
After a detailed investigation, it was evidenced
that the antivirus programme detected the infection at 3 a.m. At this
time, the security guard would be the only person in the hut.
The company justified the dismissal based on the
presumption that the employee was the only person who misused the
computer given that nobody else could have been in the hut at 3 a.m.
Moreover, the arrival of a truck was registered seven minutes after the
virus was detected and the security guard therefore had to be in the hut
at that time in order to let the truck enter the premises.
The High Court of Justice accepted the
presumptions stating that the reasons for a dismissal do not necessarily
need to be evidenced with direct evidence. However, the High Court of
Justice did state that, when a dismissal is based on presumptions, the
requirements established in the Supreme Court’s judgment of 16 April
2004 must be complied with.
10. Void
dismissal for lack of justification
Judgment of the Labour Chamber of the High
Court of Justice of Aragón dated 10 July 2009
The High Court of Justice of Aragón (“HCJ”)
rejected the appeal and upheld the judgment of the lower court declaring
the dismissal void.
Following a corporate restructuring, an employee
was dismissed for economic and productive reasons based on article 52.c
of the Statute of Workers (“SW”). Immediately after his dismissal,
his former duties were assumed by an employee who had been working in
another department. Shortly afterwards, the company hired another person
to carry out the same duties.
The company based the dismissal on the evolution
of the market and the negative trend in production levels in recent
years. The HCJ followed the Supreme Court’s (“SC”) case law, and
stated that although the SW establishes that the dismissal must be
previously communicated to the employee “explaining the cause”, it must
be similar to the “facts” referred to in article 55 of the SW for
disciplinary dismissals.
The SC’s case law has established that dismissal
letters must take into account a variety of circumstances. In addition,
the case law of the HCJ states that these letters must be specific about
the facts justifying the dismissal, in order to allow employees to
exercise their right to self-defence.
The HCJ stated that the dismissal letter had not
fulfilled these requirements as it only referred to the negative
evolution of the market and did not mention if the company was affected.
Furthermore, the company that dismissed the employee had not suffered
losses as the rest of the group’s companies.
Following the SC’s case law, the HCJ held if an
employee is made redundant and the company is not closing down, the
dismissal must be based on measures designed to achieve a certain
balance in the company.
The HCJ upheld the judgment of the lower court
and declared the dismissal void.
