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


 

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 Law Newsletter

Click here to access to the Portuguese Labour Law Newsletter


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.

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