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


August 2010

LABOUR LAW

1. Unemployment benefits for self-employed workers

Law 32/2010 of 5 August establishes an unemployment benefits system for self-employed workers. (More information)

2. Imposing both criminal and administrative sanctions is not contrary to the “non bis in idem” principle if there is no unity of the parties

According to the judgment of the Administrative Chamber of the Supreme Court dated 31 March 2010, the “non bis in idem” principle (one cannot be punished twice for the same offence) is not breached when an individual is held criminally responsible for an offence against the rights of workers and for recklessly causing injuries, and a company is held administratively liable for non-compliance with regulations on the prevention of occupational hazards in relation to the same work accident. (More information)

3. Employment contract. Disciplinary dismissal. Payment of additional compensation

According to the Labour Chamber of the Supreme Court, an agreement to pay additional compensation to the statutory severance payment for unfair dismissal is not applicable when the dismissal, even if it was unfair, was based on the employee’s misconduct. (More information)

4. Provisional wage rises not a vested right

According to the Labour Chamber of the Supreme Court in its judgment of 12 May 2010, the provisional wage rises agreed by the Government of the Basque Country, pending the approval of the collective bargaining agreement applicable to its employees, cannot be considered to be vested. (More information)

5. Disciplinary sanctions. Calculation of “dies a quo

The deadline to object to a disciplinary sanction is calculated from the date on which the sanction was communicated to the employee. (More information)

6. Agreement to pay compensation to a secretary non-member to a board of directors is legitimate

The Civil Chamber of the Supreme Court confirmed that an agreement to compensate a secretary non-member to the board of directors and general secretary of a group of companies was legitimate because he was not a director and thus the corporate law prohibitions regarding the validity of this type of agreements did not apply. (More information)

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1. Unemployment benefits for self-employed workers

Law 32/2010 of 5 August establishes an unemployment benefits system for self-employed workers

Pursuant to the Fourth Additional Provision of Law 20/2007 of 11 July on the Self-Employed Workers Statute, Law 32/2010 establishes a series of unemployment benefits for self-employed workers. The Law will come into effect on 5 November, except for those workers included in the Special System for Self-Employed Agricultural Workers, for whom the Law will enter into force once the appropriate legislation has been passed to adapt the specific situation of these workers to the new regulation (which must be done within 12 months).

Chapter I regulates general aspects of the system. It applies to all self-employed workers included in the Special Scheme for Self-Employed Workers who are covered for work-related injuries and occupational illnesses, including workers included in the Special System for Self-Employed Agricultural Workers or in the Special Scheme for Sea Workers. To be entitled to the benefits offered by the system, the workers must meet certain requirements established in Law 32/2010, and their unemployment situation must be involuntary. The assistance offered by the system consists of: (i) an economic benefit for the temporary or permanent cessation of all activity; (ii) the payment of the self-employed worker’s social security contributions for common contingencies; and (iii) training, career guidance and business promotion.

Chapter II sets out the rules on applying for and entitlement to the benefit. The duration and amount of the economic benefit received are in proportion to the social security contributions that the self-employed worker has made. It also regulates the situations in which the economic benefit is suspended or terminated, incompatibilities, and the simultaneous occurrence of the cessation of activity and temporary disability, maternity or paternity leave.

Chapter III provides that the system is funded from the contributions made by self-employed workers, which are to be set each year in the State Budget Law. The system will be administered by mutual accident and occupational illnesses societies. The regional employment services and, where appropriate, the Social Marine Institute, are responsible for managing the training, career guidance and business promotion activities.

Finally, Chapter IV regulates obligations, infringements and penalties, and gives the labour courts jurisdiction to resolve disputes arising in connection with this new benefit.

2. Imposing both criminal and administrative sanctions is not contrary to the “non bis in idem” principle if there is no unity of the parties

Judgment of the Administrative Chamber of the Supreme Court dated 31 March 2010

Pursuant to Supreme Court (“SC”) case law, in order for the principle of “non bis in idem” (one cannot be punished twice for the same offence) to be breached there must be a unity of parties, of the cause of action and of the subject-matter.

In this judgment, the SC reversed the decision of the High Court of Justice of Valencia because it considered that the latter had not applied the right doctrine since, although there was unity of the cause and of the subject-matter, there was no unity of parties. Three individuals (the head architect, the technical architect in charge of the works where the accident took place and the head of security) were held criminally responsible for an offence against the rights of workers and for recklessly causing injuries. Separately, the company was held administratively liable for failing to adopt safety measures at work. Therefore, given that the threefold condition was not met in this case (as there was no unity of parties), the SC concluded that the principle of “non bis in idem” was not breached.

3. Employment contract. Disciplinary dismissal. Payment of additional compensation

Judgment of the Labour Chamber of the Supreme Court dated 18 June 2010

In this case, the SC rejected the appeal filed by an employee who was dismissed because she used a company credit card to pay for personal expenses during her holidays.

The employee claimed payment of additional compensation to the statutory severance payment for unfair dismissal that she had negotiated with the company.

Under the arrangement reached with the company, if it unilaterally terminated he employment contract by the company, the employee would be compensated with twice her total annual remuneration, unless the termination was based on disciplinary reasons.

The SC stated that although the dismissal was declared unfair, it was evidenced that the employee had used the company credit card to pay for personal expenses. Therefore, even though the facts alleged were not sufficient to justify a disciplinary dismissal, there were grounds for dismissal and evidence employee misconduct. As a result, the SC held that the additional compensation was not payable.

4. Provisional wage rises not a vested right

Judgment of the Labour Chamber of the Supreme Court dated 12 May 2010

The Chamber held that the wage rises agreed by the Basque Country Government prior to their publication in the applicable collective bargaining agreement are provisional, and paid on account of the rises to be applied retroactively pursuant to the collective bargaining agreement. These provisional amounts cannot be considered to be vested or form a consolidated part of the employees’ salary, as to do so would mean the employees would receive a second rise upon the entry into force of the collective bargaining agreement.

5. Disciplinary sanctions. Calculation of “dies a quo"

Judgment of the Labour Chamber of the Supreme Court dated 17 May 2010

On 3 May 2007, an employee who worked as a cleaner was notified that she was to be suspended without pay for committing a very serious offence.

On 3 July, the employee received another notification which stated that the sanction would be effective from 8 to 23 August 2007. On 14 August, the employee filed a conciliation request. The conciliation meeting was held on 26 August and on 3 September the employee filed a claim before the labour courts.

The Labour Court upheld the company’s objection that the claim was time-barred. The High Court of Justice of Catalonia (“HCJC”) dismissed the employee’s subsequent appeal on the grounds that the term to challenge the sanction had expired because the 20-day term to file a claim starts on the day the company communicates the sanction to the employee, regardless of when the company communicates the enforcement of the sanction.

The Supreme Court concurred with the HCJC and dismissed the appeal holding that the rules to establish the “dies a quo” (the day from which a time-limit runs) to bring an action in dismissal proceedings cannot be applied to the term to challenge sanctions.

The judgment stated that the effects of enforcing a dismissal decision are very different from those of enforcing a sanction. In a dismissal, the employment relationship is terminated and the reciprocal obligations between the parties are cancelled. By contrast, when a sanction is imposed, the employment relationship prevails regardless of whether or not the sanction is enforced and when the enforcement is carried out.

Consequently, the calculation of the term to challenge a sanction is dependant upon the moment from which such action could have been disputed. Therefore, in this case, the term started on the day the employer communicated the sanction to the employee.

6. Agreement to pay compensation to a secretary non-member to a board of directors is legitimate

Judgment of the Civil Chamber of the Supreme Court dated 24 June 2010

This appeal decision concerned the termination of a services contract entered into by a company and an individual for the performance of the functions of secretary non-member to the company’s board of directors and of general secretary to the company’s group. The services contract provided that a severance payment would be paid if the company unilaterally terminated the contract.

The SC stated that the prohibition on compensating directors according to corporate law and to its judgment of 30 December 1992 (Huarte case) exclusively refers to directors and is only applicable to the functions and duties of such a post in order to prevent abusive situations that restrict the freedom of the board of directors to remove directors that it appoints. Since the severance payment claimed did not derive from the dismissal of a director, the SC saw no reason to render the agreement null.

Moreover, the SC held that the agreement was a standard one rather than a penalty clause, thus it could not reduce the payment pursuant to article 1,154 of the Spanish Civil Code.

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