June
2010
LABOUR LAW
1. Labour reform
The expected reform on urgent measures to reform the labour market
was provisionally adopted by the Council of Ministers under Royal Decree
Law 10/2010 of 16 June,. This was approved by the Parliament on 22 June.
The main changes enacted are: (i) measures to reduce the duality in
terms and conditions of employment under the contracts currently used,
and the overuse of temporary contracts; (ii) measures to promote
negotiated internal flexibility in companies and to encourage the
reduction of working hours as a means of temporary employment adjustment;
(iii) measures to promote employment of the young and the unemployed;
and (iv) measures to improve labour intermediation and the performance
of temporary work. (More information)
2. Effect of the amendments to the Criminal Code on labour and
social security matters
Basic Law 5/2010 of 22 June has amended the Criminal Code in several
areas, including labour and social security. The novelties introduced
comprise (i) the criminal liability of legal persons, (ii) mobbing
classified as a crime, (iii) crimes against the Treasury and (iv) crimes
against the rights of workers. (More information)
3. New Catalan Labour Inspectorate
Law 11/2010 of 19 May, has established the Catalan Labour
Inspectorate. The regional authority of Catalonia (the “Generalitat”)
will carry out inspections on labour matters as provided in the 2006
Statute of Autonomy of Catalonia. (More information)
4. Registration and deposit of collective bargaining agreements
Royal Decree 713/2010 of 28 May develops article 90.2 of the Statute
of Workers and regulates the registration and deposit of collective
bargaining agreements. (More information)
5. System for the submission of report-proposals in relation to the
reduction of company social security contributions for occupational
hazards
Order TIN/1448/2010 establishes the design and content of the
electronic files to be used by managing entities and mutual insurance
societies to submit non-binding report-proposals to the General Office
for the Regulation of the Social Security referred to in Royal Decree
404/2010 of 31 March, which establishes a system for reducing the
contributions made by companies for occupational contingencies when they
have specifically contributed towards decreasing and preventing labour
accidents. (More information)
6. The accrual of back pay is stopped, when it is clear from the
company’s conduct that it has acknowledged a dismissal as unfair
The accrual of back pay is stopped even if the acknowledgment of a
dismissal as unfair is not notified to the employee, provided that such
acknowledgment can be easily inferred from the employer’s conduct.
(More information)
7. Employer and employee liability in the event of an accident
suffered by the employee and the employer’s failure to comply with
required safety measures
An employer cannot be exonerated from liability in the event of a
work accident for which both the employer and the employee are liable.
The liability must instead be weighed up and the compensation moderated
accordingly. (More information)
8. Objective dismissal: workers’ entitlement to variable
remuneration in proportion to their length of service
The Supreme Court acknowledged that dismissed workers are entitled to
variable remuneration. However, it rejected the claim regarding the
exercise of stock options since the workers had been dismissed under
fair grounds, which according to their employment contract, meant that
they lost their right to exercise the stock options.
(More
information)
9. The partial nullity of a collective bargaining agreement has
effects as from the date on which provisions contrary to law were agreed
The partial nullity of a collective bargaining agreement has ex
tunc effects. Therefore, the nullity is effective from the moment
the agreement was signed and not from the date of the judgment annulling
the agreement. Only actions endorsed by a final judgment before the
declaration of nullity will be unaffected. (More information)
10. A dismissed employee registered under the special
system for self-employed workers (régimen especial para trabajadores
autónomos) is entitled to receive back pay for the period up to the
date of readmission to the company, with a deduction corresponding to
the minimum inter-professional wage
When back pay is owed to a dismissed worker that registers with the
special system for self-employed workers and is then readmitted to the
company, it will be understood that the worker is earning an amount
equal to the minimum inter-professional wage, unless proved otherwise by
the worker. (More information)
Portuguese Labour Law Newsletter
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1. Labour reform
Royal Decree-Law 10/2010 of 16 June, on urgent measures to reform
the labour market (Spanish Official Gazette dated 17 June 2010)
The main changes enacted are: (i) measures to reduce the duality in
terms and conditions of employment under the contracts currently used,
and the overuse of temporary contracts; (ii) measures to promote
negotiated internal flexibility in companies and to encourage the
reduction of working hours as a means of temporary employment adjustment;
(iii) measures to promote employment of the young and the unemployed;
and (iv) measures to improve labour intermediation and the performance
of temporary work.
This law aims to fulfil three objectives:
1. Reduce duality in employment conditions: some measures have been
introduced in order to limit the unjustified use of temporary contracts.
For instance, introducing a time limit in the duration of some types of
contracts and the inclusion of measures to prevent a chain of temporary
contracts in the future. In addition, measures have been implemented to
promote indefinite contracts by extending the groups that can have
access to contracts, to facilitate the development of permanent hiring.
The Statute of Workers (the “SW”) now defines (albeit in
general terms only) what is meant by economic, technical, organisational
or production reasons in the case of collective dismissals. The company
must prove the existence of any of the reasons identified, and justify
the reasonableness of the measures adopted.
Article 52 c) of the SW now refers to the reasons established in
article 51.1 of the SW. Similarly, the reform has reduced the prior
notice period in a dismissal for redundancy reasons to 15 days.
2. Strengthen the use of instruments promoting internal flexibility:
with the amendment of the SW, the negotiations regarding the
modification of working conditions will be more flexible and efficient.
Additionally, some changes have been introduced in order to review the
conditions, so that the procedure for a company to be exempt from paying
the salaries stipulated in a collective bargaining agreement (descuelgue
salarial) can be conducted in arbitration tribunals. Other changes
include the extension of the means to suspend, instead of terminate,
employment contracts, and to reduce working hours in the event of
economic difficulties within the company.
3. More opportunities for the unemployed, in particular, for young
people: some measures have been included in the reforms, such as,
increased regulation and selectiveness concerning bonus policies for
permanent contracts, the extension of the use of training contracts for
young people (up to 25 years of age) and the development of mechanisms
for intermediation.
2. Effect of the amendments to the Criminal Code on labour
and social security matters
Basic Law 5/2010 of 22 June, amending Basic Law 10/1995 of 23
November, on the Criminal Code (Spanish Official Gazette of 23 June
2010)
This Law introduces some major changes in the Spanish criminal
justice system. The focus in this article will be on criminal liability
of legal persons and provisions relating to labour law-related crimes.
There are now two ways of determining the liability of legal persons:
(i) for offences committed in their name, and for their benefit, by
people who have representative powers, and (ii) for offences committed
as a consequence of the failure to exert control over their employees.
The criminal liability of a legal person can be declared regardless of
whether it is possible to identify the criminal liability of an
individual.
As regards specific labour law matters, mobbing is defined as a crime.
The only criminal offence in the workplace until this amendment was
introduced was sexual harassment. In relation to crimes against the
Treasury and the Social Security, there are two amendments: (i) the
maximum penalty for a person that defrauds the Treasury or the Social
Security by acting or failing to act has been increased and (ii) the
maximum penalty for a person that receives a grant, allowance or any
form of aid from the public authorities and distorts the requirements
for granting has been increased. This Basic Law also amends the articles
on crimes against the rights of foreign nationals.
3. New Catalan Labour Inspectorate
Law 11/2010 of 19 May, on the Catalan Labour Inspectorate (Spanish
Official Gazette of 15 June 2010)
The main purpose of this Law, which develops articles 170.2 and 138.2
of the Statute of Autonomy of Catalonia, is to set up the Catalan Labour
Inspectorate (the “CLI”), through which the Generalitat will
conduct the inspections on labour matters.
The CLI combines duties of inspection of health safety standards at
work, with the provision of technical support to the State Labour
Inspectorate. The CLI also integrates part of the technical services
provided by employment departments, with the aim of optimising resources
and procedures.
In terms of structure, the governing bodies of the CLI are formed by
a president and a council. The executive bodies are divided into central
services (the management and the executive committee), territorial
services and control bodies (the council’s monitoring committee and the
auditing body).
The Law also provides that the CLI’s relations with the relevant
employment departments will be governed by a temporary contract.
4. Registration and deposit of collective bargaining agreements
Royal Decree 713/2010 of 28 May on the registration and deposit of
collective bargaining agreements (Spanish Official Gazette of 12 June
2010)
The registries of collective bargaining agreements regulated by this
Royal Decree are electronic. In addition, to facilitate and make the
registration of agreements more efficient, workers and companies must
apply to register these agreements by electronic means.
This Royal Decree contains a list of acts that must be registered. It
also creates a national public registry of these agreements for which
the Ministry of Labour and Immigration is responsible.
As regards the registration procedure, the application must be
submitted within fifteen days after the date the collective bargaining
agreement is signed or, where appropriate, the date on which the start
of negotiations or withdrawal is notified. The Royal Decree establishes
the content of the application and the documentation to be submitted.
5. System for the submission of report-proposals in relation
to the reduction of company social security contributions for
occupational hazards
Order TIN/1448/2010 of 2 June develops Royal Decree 404/2010 of 31
March on the reduction of social security contributions made by
companies for occupational contingencies when they have specifically
contributed towards decreasing and preventing labour accidents (Spanish
Official Gazette of 4 June 2010)
Pursuant to article 7.2 of Royal Decree 404/2010, this Order
regulates the non-binding report-proposal that must be submitted by
managing entities and mutual insurance societies to apply for social
security contribution deductions.
The Order also approves the electronic file that must be used to
submit the report-proposal and sets the limits and contribution levels
applicable to 2009. It clarifies the requirements established in Royal
Decree 404/2010 pursuant to which an applicant must not have been
sanctioned in an administrative procedure during the period in question
for the commission of a serious or a very serious infringement relating
to the prevention of occupational hazards or its social security
obligations. Finally, the Order establishes the procedure to file and
process the applications.
6. The accrual of back pay is stopped, when it is clear from
the company’s conduct that it has acknowledged a dismissal as unfair
Judgment of the Labour Chamber of the Supreme Court dated 18
January 2010
The Spanish Supreme Court (the "SC") has clarified the effect
of failing to notify the acknowledgment of a dismissal as unfair to a
dismissed employee in connection with the accrual of back pay, when such
acknowledgment can be easily inferred from the company’s conduct.
In this case, the company had sent letters to three employees
informing them about their dismissals for economic reasons. They were
also informed about their entitlement to the severance payment for
dismissals on objective grounds. If they did not accept their severance
payments, the company said it would nevertheless deposit them at the
Labour Court within 48 hours. Following this communication, the company
sent another letter to the three employees four days later. In these
letters, the severance payment was increased to conform to the statutory
severance payment for unfair dismissal.
The case was heard at first instance in the Labour Court and went on
appeal to the High Court of Justice of Catalonia. In both decisions it
was held that the dismissal was unfair because the company had not
fulfilled the requirements of article 56.2 of the SW. Specifically, the
employer had not formally informed the employees that the company
acknowledged the unfairness of the dismissals. The employer had only
informed the Labour Court.
According to the SC, the SW does not specify the way in which a
company must notify the unfairness of a dismissal to the employees
affected. Under past decisions of the SC, the acknowledgment can be
either express or tacit. In the latter case, there must not be any doubt
or ambiguity about this recognition.
In this case, although the company failed to expressly communicate
the unfairness of the dismissal, a tacit acknowledgment could be easily
inferred from the employer’s actions.
7. Employer and employee liability in the event of an accident
suffered by the employee and the employer’s failure to comply with
required safety measures
Judgment of the Labour Chamber of the Supreme Court dated 20
January 2010
The SC upheld the 30% surcharge to be paid by the company due to its
failure to impose safety measures at the workplace and for the work
accident suffered. In this particular case, the deceased worker had
acted recklessly by entering an area, other than where he usually worked,
without permission.
The appealed judgment concluded that the conduct of the victim had
broken the causal link and, therefore, even if the SC acknowledged that
there was a lack of certain safety measures, the employer could not be
held liable for the accident. However, the SC considered that both the
employer and the employee were liable for the damages suffered. The
employer was liable since it had not complied with the safety standards
and the employee was liable for entering a hazardous area.
According to previous SC rulings, the fault of the victim does not
break the causal link arising from an external agent (in this case, the
employer’s failure to comply with the safety standards), except where
damages have occurred exclusively due to a wrongful act of the victim.
In this case, the company was also liable for the damages because if it
had implemented the required safety measures, the accident would not
have taken place. In accordance with article 1103 of the Civil Code,
liabilities must be weighed up and the compensation moderated
accordingly. In this case, the 30% surcharge was the lowest that could
be imposed pursuant to the Social Security Law and could therefore not
be reduced.
8. Objective dismissal: workers’ entitlement to variable
remuneration in proportion to their length of service
Judgment of the Labour Chamber of the Supreme Court dated 5 April
2010
This case related to two workers who had provided services in a
company until they were dismissed for objective reasons in May 2004. The
workers lodged an appeal at the SC after their dismissal was held to be
fair at first instance.
Part of the workers’ remuneration was fixed and the other variable.
The latter was calculated in accordance with reaching certain objectives
in each fiscal year which were set annually in July and paid with the
September salaries. Although no objectives were set for 2003 and 2004,
the workers claimed the variable remuneration amounts for these years in
accordance with their length of service. They also claimed the right to
exercise their company stock options.
The Supreme Court partially upheld the appeal by accepting the
workers’ claim for variable remuneration. However, it rejected their
claim to exercise their stock options because the company had dismissed
them under fair grounds, which according to their employment contract,
meant that they lost their right to exercise the stock options.
9. The partial nullity o collective bargaining
agreement has effects as from the date on which provisions contrary to
law were agreed
Judgment of the Labour Chamber of the Supreme Court dated 12 April
2010
The SC cited previous judgments stating that decisions that held all
or part of a collective bargaining agreement to be void are declarative,
since they merely confirm the nullity of a provision.
On that basis, the SC held that a judgment of this kind has ex
tunc effects, unless the law establishes a different effect for
specific violations of the law.
10. A dismissed employee registered under the special system
for self-employed workers (régimen especial para trabajadores
autónomos) is entitled to receive back pay for the period up to the
date of readmission to the company, with a deduction corresponding to
the minimum inter-professional wage
Judgment of the Labour Chamber of the High Court of Justice of
Galicia dated 19 January 2010
In January 2010, the High Court of Justice of Galicia ruled on
a case concerning the period for which a worker is entitled to back pay
if he is registered with the special system for self-employed workers
and is subsequently readmitted to the company from which the worker was
originally dismissed.
The High Court of Justice’s decision cites rulings of the SC stating
that back pay is compensatory in nature. The decision also states that
back pay can be reduced if the dismissal is void, unfair, or if the
dismissed worker finds another job or becomes a self-employed worker.
In view of the potential difficulty of proving the earnings of a
dismissed worker who becomes self-employed, and given the ease for the
worker to prove his earnings, the High Court of Justice of Galicia held
that, unless the worker proves otherwise, it will be assumed that the
worker earns at least the minimum inter-professional wage.
