The Council of Ministers has approved Royal Decree-Law 5/2011 of 29
April on measures to regularise and combat undeclared employment, and to
promote renovation works for habitual residences. The Royal Decree-Law
has created an amnesty period, from 7 May to 31 July 2011, for employers
to register undeclared workers.
Law 10/2011 of 19 March amends Law 10/1997 of 24 April on the
information and consultation rights of employees of Community-scale
undertakings and Community-scale groups of undertakings. It updates the
Spanish transposition of the EU legislation in this area.
Order TIN/1362/2011 of 23 May regulates the incompatibility between
individuals registered with professional associations working in a self-employed
capacity at the same time as claiming social security retirement
pensions.
With a view to clarifying the legislation in this area, Regulation
492/2011 of the European Parliament and of the Council of 5 April on
freedom of movement for workers within the Union has replaced Regulation
1612/68.
The Constitutional Court develops and clarifies constitutional doctrine
on the content and scope of the right to equality in employment
relationships and especially in relation to wage differences.
The Supreme Court holds that the calculation period for back pay awarded
following judicial proceedings concerning an employee’s dismissal
extends to the date on which the court issues an explanatory opinion of
its judgment, or the date of its ruling refusing to issue the requested
explanatory opinion.
The Supreme Court states that, in transfer of undertakings cases, a
collective bargaining agreement that was applicable to the transferor’s
employees will continue to apply to them, despite it having expired,
until the transferee implements a new collective bargaining agreement.
This judgment analyses the concepts of mobbing in the workplace, burnout
and similar situations, identifying its main features.
The High Court of Justice of Castilla y León clarifies which dismissals
should be taken into account when determining whether it is necessary to
follow the collective dismissal procedure.
VAT returns are sufficient evidence of an employer’s adverse economic
situation justifying an objective dismissal for economic reasons.
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1.
Regularising undeclared employment
Royal Decree-Law 5/2011 of 29 April on measures to regularise and
combat undeclared employment, and to promote renovation works for
habitual residences
The Council of Ministers has approved this Royal Decree-Law (“RDL”)
in order to regularise and combat undeclared employment. Measures
included in the RDL begin with an amnesty period from 7 May to 31 July
2011, during which employers can register workers with Social Security.
The social security contributions payable for these workers may also be
postponed.
Employers who decide to register their workers under this process will
not face administrative penalties, unless their employment contracts are
terminated within six months following their workers’ registration, a
social security inspection had begun before the employers opted to
regularise their workers’ circumstances, or complaints or claims had
been submitted to the labour inspectorate or to the labour courts.
For the abovementioned purposes, employers must enter into a permanent
or temporary contract with their workers, which states that the workers’
situation is in the process of being regularised. Temporary contracts
must have a duration of at least six months. Article 15.2 of the Statute
of Workers (“SW”) on acquiring permanent employee
status due to the failure to register with Social Security will not
apply.
The RDL also provides several measures that aim to combat undeclared
employment after the amnesty period. These measures tighten the current
regulations. Furthermore, the RDL adds new outsourcing obligations with
the corresponding infringements for breaches, it increases the penalties
for infringements relating to undeclared employment, and amends the
Public Sector Contracts Law to prohibit contracting with companies that
seriously breach these obligations.
Furthermore, the RDL amends the current regulation on the tax deduction
for improvement works to habitual residences.
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2. Workers in Community-scale
undertakings. Information and consultation rights
Law 10/2011 of 19 March amends Law 10/1997 of 24 April on the
information and consultation rights of employees of Community-scale
undertakings and Community-scale groups of undertakings
Directive 94/45/EC of 22 September 1994 on the establishment of a
European Works Council or a procedure in Community-scale undertakings
and Community-scale groups of undertakings for the purposes of informing
and consulting employees was approved to enhance employees’
participation. This Directive was transposed into Spanish law by Law
10/1997 of 24 April on the information and consultation rights of
employees of companies and corporate groups with a Community dimension.
The revision of Directive 94/45/EC (provided for in the Directive itself)
culminated in the approval of Directive 2009/38/EC of the European
Parliament and of the Council of 6 May 2009, which significantly amended
Directive 94/45/EC. This new Law (the “Law”) has been
passed to include the developments and amendments set out in Directive
2009/38/EC in Spanish law.
There are now several terms ("information", "consultation” and
“transactional issues”) that were either not defined in Directive
94/45/EC or were covered inadequately.
Other significant aspects of Directive 2009/38/EC set out in the Law
are: (i) the rights of employee representatives to attend training
without loss of wages when this is necessary to perform their
representative duties; (ii) the possibility of special negotiating
bodies holding preparatory and follow-up meetings without company
representatives being present; (iii) the right of special negotiating
bodies to request assistance and advice from experts of their choice,
including Community-level trade union representatives; and (iv) the
obligation of the company to inform European social partners about the
commencement of negotiations to set up a European Works Council.
The employees’ representatives’ mandate states that they are obliged to
inform employees about the content and results of the information and
consultation procedure. The Law also establishes the company’s duty to
provide the appropriate means for Community-scale employees’
representatives to perform their representative duties.
Amendments are also made to the formula used to determine the
composition of the employees’ representation in Community-scale
undertakings and Community-scale groups of undertakings so that both the
special negotiating body and the European Works Council are
proportionately representative. This ensures that employees located in
each Member State will have a representative in these bodies.
Finally, the Law provides that it will not apply to Community-scale
undertakings and Community-scale groups of undertakings with their
central management in Spain, provided an agreement was reached with
employees’ representatives prior to 5 June 2011 and that certain
conditions are observed.
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3. Incompatibility of
pensions with self-employed work
Order TIN/1362/2011 of 23 May on the incompatibility between
individuals registered with professional associations working in a self-employed
capacity at the same time as claiming social security retirement
pensions
This Order was approved to define the scope of section 16 of the Order
of 18 January 1967, which sets out the rules governing the
incompatibility between a pensioner working and claiming a state pension
at the same time.
According to the new order, the receipt of social security pensions will
also be incompatible with professionals registered with professional
associations working in a self-employed capacity (unless previously
authorised). This prohibition will apply even when the professionals do
not need to register with the Special Scheme for Self-Employed Workers
in accordance with the fifteenth additional provision of Law 30/1995 of
8 November on the regulation and supervision of private insurance.
However, this incompatibility will not apply to registered professionals
who are working and claiming a state pension prior to the date on which
this order comes into force (1 July 2011).
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4. Free movement of
workers within the Union
Regulation 492/2011 of the European Parliament and of the Council of
5 April on freedom of movement for workers within the Union
Regulation 492/2011 (“Reg. 492/2011”) has substituted
Regulation 1612/1968 of 15 October on freedom of movement for workers
within the Community, which had been amended several times. It seeks to
achieve greater clarity and to rationalise the codification of this area.
Reg. 492/2011 aims to ensure the free movement of workers within the
Union through the abolition of any discrimination based on nationality
between workers of the Members States as regards employment,
remuneration and other conditions of work and employment. Thus, these
workers’ right to free movement requires that there be equality of
treatment for employment and access to housing, so that all nationals of
Member States are given the same priority as national workers as regards
employment.
Reg. 492/2011 also sets out mechanisms for direct cooperation between
the Member States’ employment services to ensure greater transparency in
the employment market.
Finally, Reg. 492/2011 highlights the close connection between the
freedom of movement of workers, employment and vocational training,
which requires that issues concerning these matters are addressed
together, not in isolation.
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5. Right to equality
and non-discrimination. Double pay scale
Judgment 36/2011 of the First Chamber of the Constitutional Court,
dated 29 March
This judgment resolved the appeal lodged by several employees of a
foreign cultural and educational entity, who claimed that their employer
had violated their right to equality by establishing a double wage scale.
The Constitutional Court ("CC") stressed that article
14 of the Spanish Constitution ("SC"), which includes a
general provision on equality, is not a closed list despite providing a
number of specific cases of discrimination. Moreover, the CC stated that
the principle of equality does not imply equal treatment in all cases.
There are instances when differences in equivalent situations may be
objectively justified and proportionate to the aim pursued.
The CC then analysed the application of the principle of equality in
various areas. In collective bargaining, fundamental rights (among which
equality is included) must be qualified. Consequently, collective
bargaining cannot establish a different set of employment conditions for
no objective reason and without proportionality, nor can the specific
circumstances that negotiators take into account be ignored, provided
that they are in accordance with the SC. Beyond the scope of collective
bargaining, the principle of equality also applies to employment
relations, although its implementation is subject to essential
qualifications. In order for a matter regarding equality to have legal
significance, it must derive from a legal principle that creates the
need for equal treatment of unequally treated persons. In this regard,
articles 4.2 c) and 17 SW set out situations in which workers cannot be
discriminated, but do not categorically establish that workers must be
treated equally (as this would contravene the principle of free will).
Therefore, in deciding whether a different salary constitutes a
violation of the principle of equality, the source of the alleged
violation (whether a law, a contractual provision or a unilateral
decision) and whether the salary difference is discriminatory must be
analysed.
The alleged violation in this case derived from a unilateral decision of
the employer. The CC examined whether the inequality was due to any of
the types of discrimination established in the SC or the SW. Focusing on
the criterion leading to the different treatment of the employees (the
date on which the employees joined the company), the CC stated that this
approach could be deemed discriminatory in the absence of any other
factors. However, the CC concluded that in this case having two pay
scales based on the date on which the employees joined the company was
not a violation of the principle of equality because it was a decision
taken by the employer in the exercise of its free will. In fact, the
prohibition to discriminate stems from the indefensible nature of the
distinction criterion that turns a characteristic inherent to an
individual or an ordinary decision deriving from the exercise of
freedoms, into an instrument of segregation.
Finally, the CC stated that a company’s decision may not be strictly
speaking discriminatory but may still be constitutionally reprehensible.
However, the CC held that this was not the case here, as the company had
created the new remuneration system to adapt to the current economic
situation.
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6. Calculation of back
pay. Explanatory opinions
Judgment of the Labour Chamber of the Supreme Court dated 4 November
2010
The Supreme Court ("SC") examined whether the
calculation of back pay awarded following judicial proceedings
concerning an employee’s dismissal in which an explanatory opinion of
the judgment has been requested ends when the judgment is notified or
when the court issues the explanatory opinion.
The SC adopts a systematic interpretation of article 56.1.b) SW, holding
that an explanatory opinion is merely an extension of a judgment and
therefore constitutes a fundamental part of the same. As such, a
judgment will not be considered as having been properly delivered until
an explanatory opinion, when requested, has also been issued. As a
result, the endpoint for calculating back pay awarded upon the
termination of judicial proceedings involving dismissals is the
notification date of the explanatory opinion, or of the ruling rejecting
the request for an explanatory opinion, as applicable. One exception to
this holding exists if the request for an explanatory opinion has been
submitted simply to delay proceedings.
The SC also reinforced its systematic interpretation with a teleological
interpretation emphasising the compensatory purpose of awarding back pay.
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7. Application of
collective bargaining agreements after expiry
Judgment of the Labour Chamber of the Supreme Court dated 12 April
2011
The SC overruled the appeal lodged by the transferee in which it claimed
that the employees from the transferor company were not entitled to a
salary increase that accrued after every three years of service.
At
the time the transfer of undertaking took place, a collective bargaining
agreement that had already expired was being applied to the transferor’s
employees. The new employer continued to apply this collective
bargaining agreement until a new state-level collective bargaining
agreement was agreed. The new collective bargaining agreement
established that the length of service supplement had retroactive effect.
Therefore, although a different bargaining agreement had been applied to
the transferred employees during the period in which their length of
service was calculated, at the time when the salary increase accrued,
the new collective bargaining agreement was applicable to them.
The SC referred to article 44 SW and stated that the new employer had to
respect the former collective bargaining agreement governing the
employment of the transferred employees. Unless otherwise agreed, this
obligation must continue beyond the transfer of undertaking and until a
new collective bargaining agreement comes into force that applies to the
transferee company.
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8. Mobbing in the
workplace, burnout and similar situations
Judgment of the Labour Chamber of the High Court of Justice of
Galicia dated 18 October 2010
This case involved a lawsuit for mobbing filed by the head of
administration of a company in which his brother was managing director.
The claimant had held the post of managing director until they were
given new roles in the company pursuant to a conciliation agreement.
The Labour Chamber (“LC”) dismissed the appeal lodged
by the employee and analysed the concept of mobbing and how it differs
to similar concepts, such as, burnout and “fake mobbing”.
The LC defined mobbing as abusive or psychologically violent behaviour
that a person is systematically subjected to in the workplace. This
includes repeated behaviour, words or attitudes that violate his or her
dignity or psychological integrity and threaten or degrade his or her
working conditions. This phenomenon is contrary to the principle of
equal treatment, the right to moral integrity and the prohibition
against inhuman or degrading treatment, enshrined in article 15 SC.
Moreover, it breaches the employee's right to dignity (article 4.2.e SW).
The LC also distinguished between the different forms of mobbing:
mobbing, horizontal mobbing, bossing, upward vertical mobbing, etc.
To
establish that there has been mobbing, certain objective (consistent
pressure, a causal link with work, a lack of support from company
management, and seriousness) and subjective factors (an intention to
denigrate aimed at a specific individual) must be present. These factors
help differentiate mobbing from other similar situations such as burnout
(in which the employee shows symptoms of emotional exhaustion and
feelings of inadequacy or professional frustration), and “fake mobbing”
(in which the employee’s perception does not reflect the real situation
in the workplace). Thus, while mobbing attacks fundamental human rights,
in these other situations only labour rights are breached. There are
also differences in the motives behind each concept, given that mobbing
aims to injure the employee and the management’s actions are motivated
by a (misinterpreted) business interest.
The LC held that there had been no mobbing in this case because the
necessary factors had not arisen, although it did find that the facts
seemed to indicate that it was a case of fake mobbing. The LC reasoned
that the change of the claimant’s post under his brother’s management,
among other circumstances, might well have contributed to his distorted
perception of reality despite there being no evidence that these factors
caused the depression and anxiety disorder from which the employee
suffers.
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9. Collective
dismissals. Qualifying dismissals
Judgment of the Labour Chamber of the High Court of Justice of
Castilla y León dated 3 November 2010
This decision upheld the appeal lodged by an employee who, after being
dismissed for objective reasons in accordance with article 52 SW
challenged the company’s decision on the grounds that under article 51
SW the company had carried out a collective dismissal without following
the correct legal procedure.
The judgment clarifies which dismissals are to be taken into account
when determining whether or not there is a collective dismissal for the
purposes of article 51.1 SW.
The High Court reversed the ruling of the first instance court, which
held that previous disciplinary dismissals in the company were not to be
taken into account to determine if the threshold had been exceeded.
According to paragraph 4 of article 51.1 SW, all dismissals must be
taken into account that (i) occur during the 90 days preceding the
claimant’s dismissal, (ii) are for reasons unrelated to the personal
characteristics of the employee and different to those set out in
article 49.1 c) SW, and provided that there is a minimum of five
dismissals.
The first instance court’s decision failed to take into account the 40
disciplinary dismissals that took place in the company during the 90
days prior to the claimant’s dismissal. The High Court considered that
since the employer had not proved that these dismissals were fair (the
employer bears the burden of proof in accordance with article 217.4 of
the Civil Procedure Law and article 52 SW), these dismissals must be
taken into account to determine whether the thresholds in article 51.1
SW were exceeded. As the threshold (30 dismissals) was clearly exceeded
in this case, the claimant’s dismissal was held to be null and the
company was obliged to reinstate the employee and pay him his back pay.
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10. Objective
dismissal for economic reasons
Judgment of the Labour Chamber of the High Court of Justice of the
Balearic Islands dated 19 November 2010
The Court upheld the first instance court’s decision that considered
that the economic reasons behind an objective dismissal had been
adequately evidenced.
In
this case, the Court set out the means through which an employer can
evidence the economic reasons leading to an objective dismissal
according to article 51.1 SW. The Court held that VAT returns constitute
valid evidence of a company’s negative economic situation (because they
show a reduced taxable base), as does a reduction in the withholdings
made from employees’ salaries.
Furthermore, companies which turnover has decreased (after obtaining
negative results during previous financial years) and which production
continues to fall are allowed to eliminate job positions in order to
overcome an adverse economic situation.
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