September
2010
LABOUR LAW
1. Urgent measures to reform the
labour market
Law 35/2010 of 17 September on urgent
measures to reform the labour market was finally passed by Parliament.
This law has several differences to the original text set out in Royal
Decree 10/2010 of 16 June. (More information)
2. Salary
supplements. Pregnant employee transferred to a different post
The European Court of Justice ruled
that a pregnant employee who has been temporarily transferred, because
of her pregnancy, to another post in which she performs different tasks
to those she performed before, does not have to be paid supplementary
allowances linked to the specific working conditions of her initial job.
(More information)
3. Failure to
increase wage. Head of the works council
The Supreme Court held that a company’s
decision not to increase the wage of the head of the works council was
not based on discriminatory grounds, but rather on the basis of his low
productivity levels as a result of his lengthy temporary incapacity.
(More information)
4. Incorrect tax
withholdings cannot be amended
An employer’s decision to make personal
income tax withholdings in employees’ payslips, the year after it should
have was deemed null. However, it was held that the employer could claim
the amounts owed by other means. (More information)
5. Dismissal within
a dismissal. Effects of a second dismissal letter
This judgment of the Supreme Court
establishes the legal effects of a second dismissal letter delivered to
an employee after an initial disciplinary dismissal. (More
information)
Portuguese Labour
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1.
Urgent measures to reform the labour market
Law 35/2010 of 17 September on
urgent measures to reform the labour market (Spanish Official Gazette of
18 September 2010)
On 17 September the Spanish Parliament
passed Law 35/2010 on urgent measures to reform the labour market. Below
are some of the most significant amendments that it has introduced in
relation to Royal Decree-Law 10/2010 of 16 June. A summary of Royal
Decree-Law 10/2010, which was referred to in our June newsletter, can be
accessed by clicking [here].
Although some minor amendments have
been made, the definition of dismissals on commercial grounds is worth
mentioning. These types of dismissals must be based on economic,
technical, organisation or production needs and the requirements have
become less stringent.
Valid economic grounds will be deemed
to exist when the company’s financial results show a negative economic
situation, in terms of current or foreseeable losses, or a continued
decline in turnover, to the extent that it can affect the company’s
economic viability, or its capacity to maintain all its employees. A
company in this situation must provide evidence of its financial results
and justify its decision to dismiss employees on the basis of the need
to maintain or improve its competitive position in the market. Prior to
the reform, in order for a company to dismiss employees due to economic
reasons it had to prove the existence of continuous and substantial
losses. According to case law prior to the reform, “preventive
dismissals” based on foreseeable losses or a decline in turnover were
not allowed.
Conversely, technical grounds refer to
changes affecting production instruments and means, while organisation
grounds require the implementation of changes in the employees’ working
systems and structures.
Finally, production grounds involve
changes in the demand for products or services offered by the company.
In all these cases, the company must
evidence the grounds on which its decision to dismiss is based and prove
that its decision is reasonable in order to maintain or improve its
competitive position in the market.
2.
Salary supplements. Pregnant employee transferred to a different post
Judgment of the European Court of
Justice dated 1 July 2010
This judgment concerns the
interpretation of Article 11(1) of Council Directive 92/85/EEC of 19
October 1992 on the introduction of measures to encourage improvements
in the safety and health at work of pregnant workers and workers who
have recently given birth or are breastfeeding (the “Directive”).
In this case, a pregnant employee was
temporarily transferred to a post where she performed different tasks
than those performed before her pregnancy. The reason for the transfer
was that her original post posed a risk to the health and safety of her
foetus.
As a result of the employee’s transfer,
her employer stopped paying her the salary supplements relating to her
original post, which was equivalent to 40% of her total remuneration.
Although the Directive establishes that
the employee must be paid the same salary as before the transfer, the
nature of the work done and the conditions in which it is carried out
may, if appropriate, be considered to be objective factors unrelated to
any discrimination such as to justify any differences in salary between
different groups of employees.
The court therefore ruled that a
transferred employee whose remuneration before the transfer was made up
of a basic salary and a series of supplementary allowances cannot claim
that she should continue to receive all the remuneration if the
allowances are connected to the performance of specific tasks that she
no longer carries out.
In this case, some of the supplementary
allowances to which the employee was entitled before her temporary
transfer were dependent on the performance of specific functions in
specific circumstances which, during the temporary transfer to another
post, she did not perform.
The court therefore concluded that, in
this case, the employee was not entitled to those specific supplements.
3.
Failure to increase wage. Head of the works council
Judgment of the Labour Chamber of
the Supreme Court dated 12 July 2010
In this case, an employee claimed that
his employer had not increased his wage based on discriminatory grounds,
namely, due to his position as head of the works council.
The company made discretional wage
increases based on the productivity of its employees, given that no
collective agreement had been reached regarding a fixed salary increase
for the entire workforce.
The Supreme Court upheld the judgment
of the High Court of Justice of Madrid, which held that there were no
grounds for discrimination regarding the company’s decision not to
increase the employee’s salary. The reasoning of the Supreme Court’s
decision was that: (i) the employee had not been prevented from carrying
out his duties as head of the works council, bearing in mind that he was
allowed the freedom and time to carry out these duties, (ii) the company
had increased the salary of other works council members and (iii) the
company’s decision had been based on the employee’s temporary incapacity
to work for a six month period and on the low level of productivity on
his return to work.
4.
Incorrect tax withholdings cannot be amended
Judgment of the Labour Chamber of
the Supreme Court dated 22 June 2010
A company made insufficient employee
personal income tax withholdings for the year 2006. In order to
compensate for these amounts and to correct its mistake, the company
decided to make the withholdings the following year.
The employees filed a claim against the
company for its actions. The Labour Chamber of the National Court upheld
the employees’ claim and ordered the company to return all the 2006
withholdings it made from its employees in 2007.
The Supreme Court rejected the company’s
appeal against the National Court’s judgment but clarified that the
company could claim the withholdings from 2006 separately if they were
owed by the employees.
5.
Dismissal within a dismissal. Effects of a second dismissal letter
Judgment of the Labour Chamber of
the Supreme Court dated 30 March 2010
This case involved an employee who
received a dismissal letter for alleged disciplinary reasons. Following
an IT check, the company issued a second dismissal letter 27 days later
on the grounds of his misuse of a computer. The second letter was
delivered to the employee on the day of the conciliation hearing.
The Supreme Court determined that the
second dismissal letter was not issued in order to rectify or extend the
previous letter. The Supreme Court held that two dismissal letters
issued on different days cannot be merged, especially when, as in this
case, the legal effects of the first letter had already taken place.
The Supreme Court cites previous
judgments on preventive dismissals based on dismissals directly and
immediately effecting a labour relationship, a second dismissal being
possible during the appeal of the first dismissal, a second dismissal
being considered a preventive measure if the first one has not become
final, and if the first dismissal becomes final, the second no longer
having effect.
