Pursuant to
Order ESS/487/2012 of 5 March, permanent and temporary collective
redundancy procedures approved by Royal Decree 801/2011 are to enter
into force temporarily
Royal Decree
451/2012 of 5 March regulates the remuneration of senior executives in
the public business sector and other public entities
Royal Decree
9/2012 of 16 March amends the labour aspects of Law 3/2009 of 3 April on
structural modifications of corporate entities
In a case
concerning the transfer of undertakings the Supreme Court reaffirms
precedents on the maintenance of the identity and the continuity of the
activity.
The Supreme
Court holds that there may be a transfer of undertakings even if not all
employees are transferred to the new company and the transfer is carried
out through the sale of assets to a third party which leased them to the
new company
In an appeal to
unify doctrine, the Supreme Court held that if an unfair dismissal
provides for readmission of an employee, the company must return the
unemployment benefits collected during the proceedings
The Supreme
Court held that overtime should be paid at the same rate as ordinary
working hours provided the overtime is performed under the same
conditions
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1. Transitional regulation of
permanent and temporary collective redundancies
Pursuant to
Order ESS/487/2012 of 5 March, specific articles of the Regulation on
collective redundancies and the role of public authorities in collective
transfers of workers, approved by Royal Decree 801/2011, enter into
force temporarily
Royal Decree-Law
3/2012 of 10 February on urgent measures to reform the labour market (“RDL
3/2012”) significantly modifies the procedures to be followed
to implement temporary and permanent collective redundancies and
reductions in working hours, and redrafts articles 47 and 51 of the
Statute of Workers (the “SW”). The Government must now
enact new regulations on these matters following the modifications
introduced by RDL 3/2012.
The transitional
procedure retains the important requirement that a consultation period
be undertaken with the employee representatives. The labour authority
must ensure that this consultation period is respected.
Royal Decree
801/2011 of 10 June, which approves the Regulation on collective
redundancies and the role of public authorities in collective transfers
of workers, remains applicable provided it does not conflict with the
new wording of articles 47 and 51 of the SW.
The most
important change introduced by the reform is that an administrative
authorisation is no longer required for permanent and temporary
collective redundancies or to reduce working hours. It also established
new grounds on which collective redundancies may be carried out. The
previous requirement that market forecasts should be provided, which may
be difficult to evidence, is removed. This change may limit the courts’
control over business decisions.
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2. New salary framework for senior
executives in the public business sector
Royal
Decree 451/2012 of 5 March regulates the remuneration of senior
executives in the public business sector and other public entities
(Spanish Official Gazette of 6 March 2012)
Royal Decree Law
3/2012 significantly modifies the salary regime for senior executives in
the public business sector, introducing new criteria based on logical
and objective principles. The new regime is intended to encourage
austerity, efficiency and transparency.
Public entities
are classified in three groups based on multiple variables such as total
turnover, number of employees, public budget requirements or any sector
specific characteristics. The classification will be provided by the
Ministry of Finance and Public Administration (the “Ministry”), which
will also determine the maximum number of members on the board of
directors and higher governing bodies, including their structure.
The remuneration
established in commercial or senior executive contracts will be itemised
into basic and supplementary salary. Basic salary will include the
minimum wage established by the Ministry for the group in which the
entity is classified. Supplementary salary includes both a variable
supplement and a position supplement that rewards the specific nature
and duties performed by the senior executive. The position supplement is
determined by the entity in charge of supervising the entity’s finances,
by the shareholders or, alternatively, by the relevant Ministry based on
competitive criteria, the business structure that the position manages
and the level of responsibility. This supplement may not exceed the
maximum percentage established for the entity’s group and is calculated
according to measurable parameters. Retributions in kind will also be
taken into account for the calculation of the maximum salary.
The remuneration
regulated by RD 451/2012 will be incompatible with compensation received
for attending meetings with government bodies or the board of directors
meetings of public authorities.
The remuneration
of senior executives and directors will be included in the company’s
annual activity report.
Any contracts
executed with senior executives prior to the entry into force of RDL
3/2012 must be consistent with the provisions of RD 451/2012 by 13 April
2012.
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3. Simplified notification and
documentation means for mergers and split-offs
Royal
Decree 9/2012 of 16 March amends labour aspects of Law 3/2009 of 3 April
on structural modifications of corporate entities (Spanish Official
Gazette of 17 March 2012)
Royal Decree
9/2012 of 16 March on the simplification of information and
documentation duties for mergers and split-offs (“RDL 9/2012”) aims to
continue with the simplification of commercial regulations by reducing
costs and simplifying duties, enhancing the importance of the use of
websites and email communications. In relation to labour law, the new
legislation refers to the information on the merger that must be
provided according to article 39 of Law 3/2009. The new regulation
establishes that managers must upload on the company website, among
others, documents such as merger projects, management reports of all the
companies involved in the merger project and expert reports. These
documents must be uploaded before the general shareholders meeting are
called or before it is individually communicated to the shareholders.
If the company
does not have a website, managers must make the documents available to
shareholders, bondholders, owners of special rights and employee
representatives at the company’s registered office.
According to RDL
9/2012, merger agreements may be executed without the requirement that
the above documents be published or made available if each company
involved in the merger unanimously approves the agreement in a universal
shareholders meeting. The employee representatives’ right to be informed
of the merger and the effects on work relations may not be restricted
because the merger is unanimously approved by the shareholders.
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4. A transfer of undertakings may
occur even if 100% of the staff or assets are not transferred directly
Judgment of
the Supreme Court dated 27 February 2012
The Supreme
Court (the “SC”) rejected the appeal concerning an alleged breach of
article 44 of the Statute of Workers (the “SW”). The appeal was based on
two arguments. Firstly, the human resources necessary to ensure the
continuity of the company were not transferred: only 22 of 26 employees
were transferred to the new company. Secondly, the production means were
not transferred and were in fact sold by the company to a third party,
which leased them to the new company.
The SC rejected
both arguments. Although only 22 out of 26 employees were transferred,
article 44 of the SW remained applicable. The SC held that the mere
exclusion of 4 workers is insufficient cause to allege that there is no
economic identity in the transfer of undertakings. Legal precedents
establish that a substantial part of the staff must be transferred. In
this case, over 84% of the employees were transferred. Furthermore, the
SC held that article 44 of the SW still applies even in the case of the
sale of assets to a third party which leases them to the new company.
Given that the company continues with the business activity and the
production means, the economic identity remains. Whether the company is
the owner or lessee of the means is irrelevant.
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5. Company must return unemployment
benefits in unfair dismissal with readmission
Judgment of
the Supreme Court dated 14 February 2012
The Supreme
Court (“SC”) was asked to determine who is liable to return unemployment
benefits arising in an unfair dismissal with the possibility of being
readmitted.
When a company
complies with the back-pay obligation after a dismissal appeal hearing,
the employee will have received unemployment benefits from the start of
the dismissal proceedings until a ruling is issued. In this case, back-pay
and unemployment benefits were paid corresponding to the same period of
time. The SC held that the unemployment benefits were not due as the
employee had received a back-pay award. It confirmed that the employment
relationship did not end on the dismissal date when the employee opted
to return to his position.
The SC held that
the company had an obligation to pay the unemployment benefits received
by the employee, and to discount them from the employee’s salary.
The employee
would only have to return the difference if the unemployment benefits
were higher than the back-pay awarded after the dismissal appeal hearing.
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6. Overtime wages cannot be less
than wages for ordinary hours performed under the same conditions
Judgments
of the Supreme Court dated 29 February and 1 March 2012
The method of
calculating compensation for overtime was resolved in two Supreme Court
(“SC”) rulings. Collective bargaining agreements or
individual contracts can establish whether overtime will be compensated
by paying a specific pecuniary sum or by being given an equivalent
period of time off. If it is decided that overtime will be compensated
by paying the employee a specific monetary amount, it may not be less
than the ordinary hourly wages.
Following this
interpretation, the SC considered that, if an ordinary hourly wage
includes additional payments such as those for hazardous working
conditions or night shifts, the hourly wage for overtime must also
include the additional payments if the work is carried out under
identical conditions. If the overtime is not carried out under identical
conditions, the corresponding additional payments would not be included.
As a consequence, there is a possibility that the hourly rate for
overtime could in fact be higher than the ordinary hourly rate if
overtime is worked under different conditions.
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