Law 27/2011 of 1
August amends the regulation on retirement pensions and gradually
postpones the retirement age to 67. It also modifies the regulation on
permanent disability, the provisions on work-related accidents and
illnesses and child care allowance.
The Council of
Ministers approved Royal Decree-Law 10/2011 of 26 August on urgent
measures to promote employment of young people, stable employment and
the maintenance of the professional retraining programme for workers
whose unemployment benefit has run out.
The agreement
establishes that the social security laws of the host country (including
those on benefits) will apply to immigrant workers.
The
Constitutional Court rejected a challenge to the constitutionality of
article 23 of Law 52/2003 of 10 December, which establishes that the
labour courts do not have jurisdiction over matters related to the
social security registration of companies and workers, or any
modification thereof.
The Supreme
Court held that unless an agreement states otherwise, the end of an
individual’s post as director does not mean that he can resume his
previous special labour relationship. The corporate relationship is
therefore understood to terminate the previous labour relationship.
The Supreme
Court held that, although an employee may choose the duration of his/her
voluntary leave of absence, once that duration has been fixed, the
employee is not entitled to unilaterally extend it, even if the leave of
absence does not exceed the maximum length established by law.
In a case
involving a challenge against a medical discharge, the Spanish Supreme
Court held that a worker is not required to return to work upon
receiving a medical discharge if the worker proves that the disability
continues. The decision also indicated the manner in which that
inability can be verified.
back to index
1.Pension reform
Law 27/2011
of 1 August on the updating, adequacy and modernisation of the Social
Security system
As set out in
the preamble, the current Spanish economic and demographic climate has
led to the need to reform various aspects of the retirement pension
system. The Social Security reform will come into force on 1 January
2013 and will be gradually phased in over a 15-year period ending in
2027.
The age of
retirement is scheduled to gradually increase to 67 over a period of 15
years, starting in 2013 and ending in 2027. The retirement age will
remain unchanged at 65 for employees that have made social security
contributions for 38 years and six months. Furthermore, the incentives
for voluntary retirement at a later age are increased. Those that work
beyond the legal age of retirement will be able increase their
retirement pension by over one hundred percent of the regulatory base
rate between 2% and 4% for each additional year worked.
The contribution
period in which to calculate the retirement pension will be gradually
increased from 15 to 25 years. Additionally, the percentages applicable
to the regulatory base are modified. Consequently, a contribution rate
of 50% will be applicable during the first fifteen years; from the
sixteenth year, for each additional month of contribution, between the
months 1 and 248, a 0.19% rate will apply; and for those working beyond
month 248, the rate will be 0.18%. Accordingly, 37 years will be
necessary for the retirement subsidy to reach 100% of the regulatory
base, rising gradually from the current 35 years.
Early retirement
can only be taken in two cases: when the employment relationship ends
for a reason not attributable to the employee and when the worker
decides to retire voluntarily. In both cases the worker must have paid
social security contributions for at least 33 years. In the first case,
the worker must be at least 61 and there must also be a situation of
crisis or the continuation of the employment relationship is no longer
possible due to the closure of a company, whereas in the second case,
the worker must be at least 63 and the retirement subsidy must exceed
the minimum that the employee would have received at the age of 65.
Under the new
reform, workers that have reached the legal retirement age can still
retire on a partial basis and they will not have to enter into hand-over
contracts. In cases in which the simultaneous execution of a hand-over
contract is required, there must be a relationship between the
contribution base of the new part-time employee (trabajador
relevista) and that of the employee taking early retirement.
The regulation
on permanent disability allowance is also amended, adapting the formula
to calculate the allowance based on the new rules for retirement pension
calculation. Moreover, the regulation sets out the cases in which the
allowance can be received while carrying out other work which is
different from that which was carried out previously. Finally, it also
establishes the incompatibility of working beyond the retirement age
when receiving an allowance for total permanent disability and severe
disability.
The additional
payments to minimum amounts of contributory pensions cannot exceed the
amount of the disability and retirement non-contributory allowances,
except in the case of severe disability allowances.
The Labour and
Immigration Ministry, following the publication of this law: (i) will
determine the types of special agreement that must be entered into
within a certain period as from the withdrawal from the corresponding
scheme or the expiry of the right to receive unemployment subsidies; and
(ii) will regulate two new types of special agreement, one for Spanish
citizens receiving remuneration in a foreign country for training or
research programmes without being subject to an employment relationship,
and another for people with disabilities that find it particularly
difficult to access the labour market in respect of the retirement
pension and subsidies in the event of death.
Within three
months as from the publication of this Law and according to article
97.2.m) of the Social Security Law, the government will establish the
mechanism for the inclusion in the Social Security of individuals
participating in training programmes related to university studies or
professional training programmes that entail monetary contributions for
these individuals in cases in which they are not obliged to be
registered with the Social Security. Those that, when this mechanism
enters into force, were in this situation, may enter into a special
agreement to allow the calculation of the training periods carried out
before the relevant date, up to a maximum of two years.
In the special
agreement for redundancy programmes for companies not involved in
bankruptcy proceedings and which include employees aged 55 or over, and
which were not mutual companies on 1 January 1967, the contributions
will cover the period between the date of termination of employment and
the date on which the employee reached the age of 65. The corresponding
contributions will be paid by the employer up to the date on which the
employee reaches 63 (61 in cases of redundancy programmes based on
economic grounds) and by the employee up to the age 65.
This Law
authorises the government to create the Agencia Estatal de la
Administración de la Seguridad Social, which objective is the
administration of the Social Security and which will integrate the
Instituto Nacional de la Seguridad Social, the Tesorería
General de la Seguridad Social, the Servicio Jurídico de la
Administración de la Seguridad Social, the Instituto Social de
la Marina and the Gerencia de Informática de la Seguridad
Social.
In the case of
collective dismissals including employees aged 50 or over, the companies
must make an economic contribution to the Public Treasury, when: (i) the
company has more than 500 employees and has made a profit in the last
two years; (ii) at least 100 employees are affected in a three year
period; and (iii) the affected employees aged 50 or over are not
transferred to another position within the next six months.
As from 2012,
domestic workers will be included in the Social Security through the
establishment of a special system.
Work-related
accidents and illnesses will be covered under all the schemes.
As regards child
care allowance, maternity leave or leave for adoption of a child under
six years of age will be considered as a contribution period for social
security purposes, when the leave occurs during the period between the
beginning of the ninth months prior to the birth of the child or the
third month prior to the adoption and the end of the sixth year
following the event.
back to index
2. Promotion and
employment stability and professional retraining programme
Royal
Decree-Law 10/2011 of 26 August on urgent measures promoting employment
of young people, stable employment and the maintenance of the
professional retraining plan for workers whose unemployment benefit has
run out
This regulation
introduces a new training employment contract for young people of up to
30 years of age (25 as from 2014) who have no professional
qualifications. It also provides that 25% of the working day will be
dedicated to training. The term of the contract may range from one year
to two years, and may be extended for an additional year depending on
the training process. The incentive for the company is a 100% reduction
(75% if the company has more than 250 employees) in its social security
contributions for common contingencies, work-related accidents,
professional illnesses, unemployment, the salary guarantee fund and
professional training, during the term of the contract, provided that
unemployed workers are hired. If the contract becomes a permanent
employment contract, the company will be entitled to a reduction of EUR
1,500 per year (1,800 for female workers) in its social security
contributions for three years. Likewise, the employees’ social security
contributions will be reduced by 100% during the term of the contract,
including the extension.
The PREPARA
programme is extended for six months. Its aim is to retrain unemployed
workers, through active employment policies, offering a monthly payment
benefit of EUR 400 for a maximum of six months to those who have
exhausted their unemployment benefits.
The deadline to
convert temporary employment contracts into contracts to promote
permanent hiring is extended until 31 December 2011 (or until 31
December 2012 for temporary contracts executed after the coming into
force of this regulation).
The payment by
the Spanish Salary Guarantee Fund (FOGASA) of a portion of the severance
payment (eight days of salary per year of service) when a permanent
employment contract is terminated is extended until 31 December 2013,
although as from 1 January 2012 payments will only cover fair dismissals.
By 31 December
2013, a decision should have been reached on the creation of the
lifelong capitalisation fund for workers in an amount equivalent to “a
number of days of salary per year of employment” yet to be determined.
This regulation, which will give rise to an increase in the
contributions to be paid by companies, will entitle the worker to
collect the amounts accrued in the fund in the event of dismissal,
transfer to another area, or upon reaching retirement. The compensations
to be paid by companies in the event of dismissal will be reduced by the
number of days per year of employment equivalent to the number of days
ultimately determined to set up the fund.
Finally, article
15.5 of the Statute of Workers which establishes that workers who have
been employed by the same company for over 24 months in a period of 30
months through two or more temporary employment contracts become
permanent workers, will be suspended for two years as from the coming
into force of the Royal Decree.
back to index
3. Spain-Ukraine agreement on
immigrant workers
Spain and
Ukraine signed an agreement on 12 May 2009 regulating the movement of
immigrant workers between the two countries
Spain and
Ukraine signed an agreement on 12 May 2009 that came into force on 28
July 2011, so that workers from both countries may exercise the rights
stipulated in international agreements to which both countries are party
when they are working in each other’s territory.
The agreement
states that employment contracts of workers from the other country will
be regulated by the laws applicable to national workers. The social
security legislation of each country will also apply to immigrant
workers from the other country and they will be entitled to the benefits
stipulated in that legislation.
Provision is
also made for the creation of a programme to help workers who return to
their country of origin.
back to index
4. Contentious administrative
courts’ jurisdiction in relation to social security matters
Full bench
judgment of the Constitutional Court dated 7 July 2011
In this judgment,
the Constitutional Court ruled on an action filed by the Second Division
of the Contentious Administrative Chamber of the High Court of Justice
of Andalusia challenging the constitutionality of article 23 of Law
52/2003 of 10 December on social security matters, which amended article
3.1.b) of the Labour Procedure Law. Pursuant to the amendment, the
labour courts do not have jurisdiction over, among other matters, those
concerning the social security registration of companies and workers, or
the cancellation and modification of their registrations. These
procedures determine who may be considered a beneficiary of social
security benefits and who is obliged to make social security
contributions.
The way in which
the jurisdictions of the labour and contentious administrative courts
are defined has created some grey areas that involve matters which can
be resolved by both jurisdictions. Although the Labour Procedure Law
establishes that the labour courts are competent to hear cases
concerning social security matters, some exceptions are made in favour
of the contentious administrative courts. The legislator’s decision in
this case to give the contentious administrative courts jurisdiction
over all cases concerning registration with the Social Security was not,
in the Constitutional Court’s opinion, unconstitutional, given that the
reasoning behind this decision was to extend the scope of the
contentious administrative courts’ jurisdiction to all matters related
to the collection of social security contributions and its other
financial resources.
back to index
5. An appointment as company
director ends, as opposed to suspends, any previous labour relationship
Judgment of
the Labour Chamber of the Supreme Court dated 24 May 2011
This case
examined whether an individual can resume the special labour
relationship he previously had upon ceasing to be a director.
The Supreme
Court (“SC”) firstly analysed the nature of the
claimant’s relationship. The claimant was the representative of the sole
director of a company with which the claimant had a senior executive
relationship. The Labour Chamber confirmed the so-called “linking
doctrine” and reiterated that “in the event of simultaneously
holding the post of company director and senior executive, it is not the
duties performed by the individual that determines whether he has a
labour or corporate relationship but the nature of the relationship
itself. Therefore, if there is organisational integration in the field
of corporate management, where the duties are performed directly or
delegated internally, the relationship is a corporate one rather than a
labour one”. In applying this doctrine to the case, the SC
concluded that the claimant and the respondent had a corporate
relationship.
The SC then
analysed whether the start of the corporate relationship suspends or
ends the special senior executive relationship. The Labour Chamber
referred to its judgment of 9 December 2009, which held that the start
of a corporate link leads to the termination of the previous employment
contract and the cessation of the right to receive the severance payment
stipulated in such contract, unless a collective regulation or an
individual agreement states otherwise, which was not so in the case at
hand.
back to index
6. Voluntary leave of absence may
not be unilaterally extended by an employee
Judgment of
the Labour Chamber of the Supreme Court dated 20 June 2011
This judgment
upheld an appeal lodged by the company for the unification of doctrine
in a case in which an employee was on voluntary leave of absence and
requested that the company extend it on three occasions; the company
accepted the first two requests, but refused the last one.
The Supreme
Court (“SC”) held that the acceptance of the first two
requests did not create any rights, as the acceptance was not a more
favourable condition, but the company was merely acting liberally at its
discretion.
The SC
considered the voluntary leave of absence to be an employee’s right and
its duration was to be decided by the employee within the maximum and
minimum limits. Although the duration chosen by the employee was
inferior to the maximum limit in this case, and even though two
extensions had been accepted previously, this did not give the employee
the right to extend the leave of absence unilaterally. The reason for
this is that a voluntary leave of absence is an atypical suspension of
an employment contract which affects the normal work conditions, thus
requiring that the regulations on voluntary leaves of absence be
interpreted in a restrictive way and that the company’s interests be
taken into consideration. Once the voluntary leave of absence has been
fixed, the company is entitled to organise itself based on the duration
chosen by the employee, and this right would be breached if the employee
was unilaterally able to change the duration at a later date.
back to index
7. Exception to the obligation to
return to work following a medical discharge if the worker proves to the
company that he/she is unable to return to work
Judgment of
the Labour Chamber of the Supreme Court dated 21 June 2011
Both the
appealed and final judgments in this dispute established that there is
an exception to a worker’s obligation to return to work after receiving
a medical discharge if the worker proves to the Company that he/she is
unable to work.
In the case
being analysed, the Spanish Social Security had rejected a request for
permanent disability benefits submitted by a worker who, having received
a medical discharge, informed the company that: (i) she intended to
appeal the decision to the highest instance; (ii) she considered the
medical discharge to be incorrect given that she had not recovered
entirely, and was in fact unable to work; and (iii) she would allow the
company to confirm her medical inability of returning to work. Having
exhausted all judicial recourses without obtaining permanent disability
benefits, the worker requested that she be reinstated in the company.
The company rejected her request on the basis that it considered her to
have left voluntarily.
The worker
subsequently filed a dismissal claim with Labour Court 35 of Madrid,
which was rejected. She appealed that decision to the High Court of
Justice of Madrid, which held the dismissal to be unfair on the basis
that it did not satisfy the conditions established in case law to find
that the worker left voluntarily given that she expressly indicated to
the company in her letter that she intended to maintain the contractual
relationship.
The Supreme
Court did not examine the issue given that there was no contradiction
between the judgment on appeal and the initial judgment.
back to index
